MyCIMA

Shedding light on enterprise governance

Gillian Lees's picture

After a few drafts and re-drafts, I am happy to say that the report that I have been working on has just been launched.  Enterprise governance - restoring boardroom leadership looks at what boards need to do to be more effective - and how management can support them in that task.

The key themes are the responsibility of the top management and directors to set the ethical tone from the top and ensure that what they do will put the long-term sustainability of the enterprise above short-term profits. We also argue that a board can only be as effective and as healthy as the underlying business that it governs.  

The report presents a practical, integrated model which shows all the key factors that support board effectiveness. People, behavioural issues and risk management are considered as well as supporting frameworks, processes and structures. In light of recent failures, there is a particular focus on how organisations can create a culture of ‘effective challenge’ where boards are encouraged to scrutinise management proposals.

This represents part of CIMA's response to what we regard as the biggest and most damaging failure of corporate leadership of recent times.  Understandably, there is a growing public expectation for organisations to operate ethically and responsibly as leaders look to restore trust in the corporate world.

I hope you find it interesting.  This is the first in what we plan to be a series of reports over 2010 (and beyond!), covering a wide variety of themes with global appeal, for example, business in Asia, public sector performance management - I could go on.  So even if this one is not quite your cup of tea, watch the new CIMA website for details of reports as we publish them.  Let us know what you think.  

And sorry if I am acting a bit like a London bus.  For the uninitiated, the joke is that you wait for ages for a bus - and then two turn up at once.  Bit like my blog posts..

 

Help?

Gillian, I cannot find your report. The link doesn't connect. (Maybe you could send me a copy via email - thks)

Best regards

Cliff Moggs

Probelm with Enterprise Governance report webpage link

Hello Cliff,

I've clicked that link a few times since it was published (including a minute ago) and it has worked fine for me. It may have been a temporary glitch you experienced. Would it be possible for you to try again. If it still doesn't work please let us know and I will see about getting a copy emailed to you.

Regards,
Deirdre
(CIMAsphere community manager)

I tried

Yes  a link was made - the date of the report is 31 March 2008. Gillian is talking about a 'new report' just finished? Look forward clarification, thanks CM

Some thoughts

“A ‘business enterprise’ is a ‘system’ of ‘interdependence’. What matters is that it performs as a ‘whole’, growth, balance, adjustment and integration. Managing an enterprise, the risk making, risk taking, and the decision making is the work of top management. The issue is not on ‘techniques’ but on principles, not on ‘mechanics’ but on decision making, not on ‘tools’ but on results and overall not on the efficiency of the part but on performance of the whole. What is the business enterprise? What is managing? What do the two do, and what do the two need? Managing is not in ‘minimizing the risk’ or even ‘eliminating the risk’ but to take the right risk. For growth it must be able to take ’greater’ risks. Managing is to seek knowledge and understanding of alternative risks and alternative expectations; by identifying the resources and efforts needed for desired results; by mobilizing energies for contribution; and by measuring results against expectations, thereby providing means for early correction of  wrong or inadequate decisions. Top management is to ensure that the right questions have been set and the possible solutions have been fully evaluated as to their consequences. A judgement is made on what to pursue. Top management should ensure that the ‘management science’ is capable of contributing in which the assumptions are tested.” (Some thoughts from 1973 – Peter Drucker). My observation, ‘it’ continues with more prescriptions but as such remains incomplete. To realise the long term requires ‘creation of demand for your product’, with the acknowledgement that directors are ‘to be competent’ there is hope but they should not rely upon the guidance of the ‘Corporate Governance Code’ there are superior templates available. Regards Cliff Moggs 

Date of report

The official publication date of the report is 18 January 2010.  The 2008 date is, I think, just a glitch relating to the launch of the new website which is being addressed.

Best wishes

Gillian 

Governance

This publication is a great piece of work. There’s a multitude of governance codes existent in the developed and the developing world, some being voluntary and others mandated. In many jurisdictions the belts are tightening. However fraud, malpractice and acceptance of undue risks continue to exist. This proves nothing but, governance is less to do with codes - but more to do with behaviour of individuals and/or groups of individuals who are empowered. It is also about behaviour driven by value or rather value system of these individuals. I like the fact that these aspects are addressed in this publication. At the end of the day, the behavioural commitment to a set of positive values of those who execute and oversee marks the difference between good or bad governance. Law can cover only so much of loopholes in the system. When one loophole is closed, the creative human mind would invent another. So the need of the hour is to focus on inculcating the right values and the right behaviours. Whether these can be ever taught in a business school is a question to ponder upon? Perhaps, the best focus would be those little-ones in kindergarten. If we do, we would see a positive transformational change in the next thirty to forty years.    

Behaviours and governance

Hello Nilushika

Glad to hear that you enjoyed reading the report.  We are working with some other organisations this year to look at how to address values and behavioural issues in more detail.  So hopefully, I will have more to say in the coming months.

 

Best wishes

Gillian