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Why do consultants spend so much time on hobby horses, promoting their own capabilities and frameworks? Shouldn't the focus be on thinking about and promoting options that are genuinely in the best interests of the clients and marketplace they seek to serve? Take this example, which suggests that good governance is built on good information and data governance. The author cites several technical frameworks and acronyms (COSO and COBIT are mentioned), none of which I understand. That a strong focus on standards and frameworks might be sufficient to ensure good governance (an oft cited but rarely defined term) is misleading in the least. Necessary maybe, but sufficient? No. The root of governance emerges from the Greek word kubernetes, which means to steer or pilot, typically a ship. This suggests governance is an activity associated with movement; with setting direction, navigating or guiding something—presumably towards a longer-term or major goal, or at least with a purpose in mind. I have no doubt that frameworks are necessary within organisations to support regular business activity. However, to imply that good governance (and, presumably, business performance, although the author makes no mention of this) will emerge from the application of standards and compliance frameworks is misleading. Looking backward (monitoring) or to standards (compliance) may satisfy egos that work is being performed, but to think that either will drive performance is folly. Compliance with standards can only ever achieve one of two things: compliance or dissidence. Compliance-based frameworks (Sarbanes-Oxley, amongst others) did little to prevent the GFC of 2007–08. Some say the focus on compliance may have contributed to the failures. If businesses expect to achieve certain desired outcomes, the board needs to look to the future by building appropriate plans (strategy); providing resources to the chief executive; and, monitoring and verifying the agreed strategy is being implemented and expected performance targets achieved. Consultants that continue to promote compliance-based technical frameworks as 'solutions' and associate them with 'good governance' are, quite frankly, doing their clients a disservice. Business leaders need to test consulting proposals thoroughly, by asking how (ask for specifics, don't accept general statements) the suitor's proposal will assist with the achievement of the business's strategy. This will probably be threatening to some consultants—but if it moves the focus onto business performance and economic growth, wouldn't that be a good thing?
Randall Steinmeyer
25/3/2015 02:48:19
You have no idea how right you are. CG is now a boiler plate term. Unless the internal controls work and corporate governance is aligned with those internal controls, divergence roots it's ugly head. Which, by way of example, is why we have in a post-Enron era, restatements on a daily basis (annualized). What did Sox do? Seriously? It made the CEO and CFO oh swear that the financials were accurate and internal controls are sound. Reality check? What were they doing before? The fact is to the scented corporate governance is A term that rings as hollow as The true desire to implement it. These companies have become fiefdoms and corporate governance is way oversold as something that it's not - in many cases. You're the first person I've seen bring this to the surface. God speeed!
Peter Crow
25/3/2015 03:00:28
Your example rings true. The focus of corporate governance is weighted well towards compliance. Sadly, many boards offer little if anything in terms of performance and focussing the business on value creation. My quest(!), through research, advisory services and real-world application as a director, is to try to move the focus. Comments are closed.
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