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Governance Board Management

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By Uade Ahimie

Corporate Governance – Board or Management Responsibility

What is corporate governance, it is the system of rules, practices, processes and procedures by which a company is managed and directed. My first knowledge of corporate governance was through the Cadbury Committee 1992 definition “the system by which companies are directed and controlled”. This brings to fore the relationship between a company’s management and all other stakeholders.

Over the years, the management of an effective and efficient corporate governance system has been the responsibility of the Board of Directors and as such a lot of the discussions, learning and development programs have been tailored to members of the Board. However, when you consider the role of Boards – Advisory and Supervisory – it becomes apparent that for them to be able to carry out their functions, they must rely on the management of the company who are responsible for the day to day operations of the business to provide the right operational framework for adherence to corporate governance requirements.

As such, the question arises, how are we developing the management and other employees of an organization to help the members of the Board fulfil their advisory and supervisory expectations in ensuring that an organization operates an efficient and effective corporate governance system.

Considering that Boards of organizations usually delegate their authorities for the successful management of an organization to the management of the organization, it becomes apparent that we should start to place more emphasis and focus on the management and employees of an organization to embed the right corporate governance system and structure in their daily activities towards creating an atmosphere of trust, transparency and integrity in the business.

Today the implementation and integration of the ideal corporate governance system in an organization is the responsibility of every member of the organization starting from the security desk to the front desk officer through other staff members to the chairman of the Board of Directors. As such, it becomes essential for organizations to develop the right strategies for creating a learning and development system that will ensure the training of the management and employees alongside the Board members on embedding a culture of corporate governance. This is because a management staff and/or other employee today, is a potential member of a Board of Directors tomorrow.

It then goes without saying that a Corporate Governance Framework and/or system that does not include the management and employees of an organization, might be heading in the wrong direction. This is because the people who will drive the embedding of a sustainable governance, risk and compliance culture are those who have the delegated authority to drive the culture and system in their day to day activities towards continuous wealth creation for the organization.

The focus of this paper is therefore to provide guidance on how to create a system of embedding the most efficient and effective governance structure, which I term Operational Governance. The term operational governance can be defined as “A system of ensuring an efficient and effective corporate governance culture, that includes the management and employees of an organization in applying the principles of Corporate Governance in their daily activities”. For this to happen, then organizations must ensure the following;

  1. That the organizations’ corporate governance framework is developed on four cardinal principles – People, Conduct, Society and Environment
  2. That the Board of Directors in implementing the framework, create policies, processes and procedures that empower their people, towards ensuring the right conduct.
  3. That the Board of Directors of organizations create a learning and development system that provides the right trainings for the management and employees to understand their roles in driving an efficient and effective corporate governance culture.
  4. That the organization develops the right business principles which are directed at empowering their people, thereby ensuring that their conducts reflect the organization’s principles in carrying out their functions
  5. That the management and employees of the organization understand their role in creating a CRAPI – FART system in carrying out their activities and transactions.
  6. That the organization creates an atmosphere where the management and employees understand their role in delivering quality service as per the diagram below

7. That in carrying out the expectations in (6) above, the management and employees of the organization will create a system which enables them to FART. See details of FART

  1. FAIRNESS
  2. ACCOUNTABILITY
  3. RESPONSIBILITY
  4. TRANSPARENCY

8. By so doing, the organization will implement a more stable and sustainable future where the management and employees FART so hard that the entire globe perceives it in the atmosphere, thereby bringing about –

  1. Hope
  2. Trust
  3. Fairness
  4. Equality
  5. Accountability
  6. Transparency
  7. and above all a Sustainable Environment for future generation

In today’s global economic village, the need for business and governmental sustainability hinges on the concepts of CRAPI – FART, which would bring about greater opportunities for business partnerships across regions.

As earlier stated, in as much as the responsibility lies on the Board of Directors to create the right conditions for building the most efficient and effective systems of Governance, Risk and Compliance, the role of the management and employees of an organization to drive the implement the systems from been reactive to been proactive is the key to business sustainability.

GRC though a top-bottom system of governance should take on a participatory approach on all levels, ensuring that every stake/stockholder – F-A-R-T as they carry out their C-R-A-P-I (Corporate law, Risk Management, Accounting, Project strategy & internal audit) TASKS.

This can only be achieved where organizations understand the role of management and employees in the implementation of embedding the right GRC culture.

This is because, members of an organization (Employees and Management) should be made to understand that these C-R-A-P-I operations must function effectively and efficiently to ensure that the working environment within the Company is saturated with an atmosphere and/or culture of Fairness, Accountability, Responsibility and Transparency-   F-A-R-T. 

The transition from piloting to full scale operation governance has evolved as businesses are now being publicly scrutinized and as such mandated to give account of their operations (Transparency) as well as made responsible for non-compliance.

So inconclusion, it is important to note that the responsibility or the Board of Directors is to develop the right framework for an efficient and effective GRC system, however the role of management and employees is critical in the implementation and operations of this framework, otherwise organizations become like a football team where you have the manager responsible for developing and selecting the strategies to enable them win matches, but don’t have the right players to implement these strategies on the field of play.

As such to have a winning mentality, then all the members of the squad must be participants in the development and implementation of the strategies towards achieving the goals and objectives of winning. A winning mentality is the responsibility of all and not just the Board the Directors. So it goes without saying that the responsibility of an efficient and effective governance systems lies with everybody most especially the management and employees to implement the strategies of the framework.

Let us start today by putting in place an operational governance system and not just the framework.

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