Sound governance is essential for your business’ sustainability and growth. What principles should guide you?
Good governance is key to the success of any organization, regardless of its size, industry or service offer. Since effective oversight affects all corporate processes, practices and structures, it can help you meet your financial, strategic and operational goals.
Taking a proactive approach
You may need to review your governance periodically to make sure it’s properly aligned with your business’ current reality. Because of the pandemic and the pending economic recovery, this need has become more critical than ever. Business models have changed and your objectives probably aren’t the same as they were before the pandemic.
“This isn’t optional. Businesses that remain static in the current context will fall behind their competitors and find themselves out of step with the expectations of their customers and employees,” said Emilio B. Imbriglio, President and CEO at Raymond Chabot Grant Thornton.
By proactively reviewing your corporate governance, you can:
- Manage risks and reduce blind spots;
- Establish a healthy balance sheet and get financing if you need it;
- Anticipate future developments and prepare to respond quickly;
- Innovate and develop your business;
- Retain workers and attract new talent.
Applying the principles of good governance
To be effective, your governance structures need to reflect your organization’s strategic plan as well as its values, mission, vision and succession plan. Here are some key principles to follow:
- Review your game plan regularly;
- Put the right people in the right positions;
- Assign responsibilities wisely;
- Get an outside perspective;
- Increase diversity on your board;
- Embrace human leadership.
Review your game plan regularly
It’s important to review your company’s action plan, business strategies and priorities on a regular basis.
“Your organization needs to turn a critical eye on itself. Questioning your practices is the only way to evolve and adapt to new market realities,” explained Éric Dufour, Vice-President and Partner, Management Consulting at the firm.
Put the right people in the right positions
Make sure each position is filled by the right person and then make changes as needed to reach your strategic targets.
Assign responsibilities wisely
Be judicious when assigning duties to the various members of your management team. The head of the company shouldn’t be left stranded, shouldering all the responsibility.
“You definitely need to have good chemistry between the board chair and the CEO,” stressed Mr. Imbriglio.
Get an outside perspective
Even the smallest companies should look for external board members who bring complementary skills to the table, especially in the area of technology. With fresh ideas and an outsider’s perspective, they can shake things up and spur innovation.
Increase diversity on your board
Boards should be more inclusive. “Aim for diversity in age, gender, experience, and cultural and social background,” advised Mr. Dufour. “Diversity is important because it leads to productive discussions and can help organizations meet their environmental, social and governance (ESG) criteria.”
Embrace human leadership
“Tomorrow’s leaders will need to be more approachable, people-centric and able to communicate more effectively with stakeholders, especially employees,” advises Mr. Dufour.
With this in mind, you want people with strong interpersonal skills and emotional intelligence to sit on your board. Directors with these qualities will be better able to anticipate the impact of key decisions.
Get help with your governance review
Our firm has developed a comprehensive approach called the ABCDs of Good Governance to help you establish or review your governance structure.
The government offers a number of financial assistance programs to support organizational change and procedural reviews. Up to 50% of the associated costs are covered.
Remember, investing in your corporate governance isn’t just profitable, it’s essential for your business’ survival and growth.
Contact our experts today for advice on setting up a sound governance structure.