Corporate governance – the big opportunity

Corporate governance is often seen as a time-consuming and expensive distraction from ‘real business’, adhered to largely due to the significant personal and corporate fines that can be levied for non-compliance.  Business publications abound with horror stories of Sarbanes-Oxley implementation, such as the reported costs of $1 million per $1 billion of revenue.  

Too few organisations have seen the potential to use regulatory requirements as a platform from which to create competitive edge.  The really successful businesses will be those which take the chance to review and update their control processes, building in strong governance, effective change management and transparent reporting as an integral part of value creation and management.  Although the Sarbanes-Oxley regulation only relates to business operations listed in the US, UK-only corporations could benefit from adopting the same approach now, pre-empting the inevitable onward march of British and European regulation.   

The aim of regulation is neither to enforce unnecessary tasks on business, nor to eliminate risk entirely, but to encourage (or, failing that, coerce) businesses to understand and manage it effectively.  By identifying risks at an early stage the organisation can adopt one of three management routes: accept, reduce or avoid, as appropriate. 

This proactive and integrated approach to risk management, coupled with effective reporting, yields significant operational benefits for businesses in terms of cost efficiencies, management information, decision making and control.  PwC’s annual Value Reporting survey shows that companies who report on how they create and manage for value benefit from a direct positive impact on their cost of capital as their shares tend to trade at a premium and remain more stable than those of competitors in turbulent markets.

Change your approach to change

One area in particular coming under increasing regulatory scrutiny is reporting on the performance of investment programmes involving organisational and systems infrastructure change.  UK organisations have a poor track record on delivering the benefits from change programmes and in the worst cases significant value has been destroyed through underperformance.

Where to start?  By understanding your current level of competence.  No business has a 100% flawless track record on implementing change, but how close is yours?  75%?  50%?  Do you even know?  Many organizations take a piecemeal approach to change, focusing on the project or programme of the moment and failing to link it to what they have learned (or not) elsewhere.  Project managers are doomed to repeat the mistakes of the past and the organization cannot break the cycle.

Pelicam provides an independent assessment of your organisation’s capacity to manage risk and deliver change through the Pelicam Health Check, a robust 450-point review that can be applied to processes, suites of programmes or individual projects.  Based on Pelicam’s Project Intelligence methodology:

Identifies the critical success factors of each subject under review;

Assesses the ability of each to deliver planned benefits;

Provides early warning of problems and risks;

Recommends pragmatic solutions.

The Pelicam Health Check is carried out by a senior Pelicam practitioner – an experienced project director with over 10 years’ experience in health checks and 15 years’ in successful project delivery.  The toolkit can also be provided under licence along with training and quality assurance, enabling organisations to develop the skills to carry out regular reviews in house.

Once you have established a benchmark, you can begin the process of improving risk and change management processes – and more importantly, systematising and integrating them with operational controls.  In this way your organisation will be ready to adapt to future changes in its environment smoothly and cost efficiently, be they regulatory, operational or competitive. 

 

Posted on September 24, 2014 and filed under 2010, Corporate Governance.