The following contribution was penned by Etika Services Directors Christine Bezzina and Jonathan Taylor-East
One of our areas of increased focus at Etika is corporate governance. Whether prescribed by law and regulation or driven by business needs, we provide our clients with the tools to manage and ensure they are ahead of the requirements.
Here at Etika we believe that corporate governance is the foundation of any good business. It brings together processes, practices, and policies that a company relies on to make formal decisions and to manage the company in an organised and transparent manner. Good corporate governance focuses on effective planning and decision-making for a company to strive.
Traditionally, when corporate governance was used as a term, one might have been forgiven for thinking it was confined to the realms of board meetings and minute taking. However, the meaning of the term has evolved over the years. Today we understand that corporate governance is an integral part of an organisation’s fabric and culture, based on ethical principles of the directors and management, portrayed in the how the business is managed. Social and environmental responsibilities are also impacting how an organisation is run and while not every organisation might have the same resources or possibilities, all aspects may be considered in a proportionate manner.
Christine Bezzina - Director, Etika Services
Every organisation has some form of governance practices in place; however, we often see that many have room for improvement or modernisation. Moving from governance to good governance will require looking closely at the structure of the company which should be built on transparency and clear communication through tiers, both top-to-bottom and vice versa. Having robust internal controls with a check-and-balance approach ensures the culture of the company is indeed being implemented. Ultimately, the leadership of an organisation should remain accountable for the business and its people.
For the organisations which believe they already have good practices in place how can they invest more in corporate governance? Organisations are increasingly required to be more aware of the impact they have on society and the environment. Deeper consideration of these aspects is expected and while large organisations likely can and should do more, smaller organisation may start with changes that impact them and their employees directly.
Bringing social and environmental awareness within an organisation, albeit by making even the smallest of changes, will set the right mindset for employees. This doesn’t necessarily require large budgets and can at times be easily incorporated within an organisation’s existing practices. It is crucial, however, for management to practice what they preach and lead by example.
Jonathan Taylor-East - Director, Etika Services
We recommend our clients build a robust corporate governance structure and implement checks to ensure what has been set up is being exercised as expected to the organisation’s benefit. Setting the right culture and scaling it to the size of the organisation may not necessarily be an expensive task and may change the way it’s perceived, even by its own employees.
Social and environmental aspects play an important role in an organisation’s standing within society, especially in small countries like Malta where it’s easier to make comparisons. Integrating environmentally conscious decisions in the day-to-day running of an organisation and being open to accepting a diverse work force improves morale within the organisation, making it more appealing to employees and in turn reduce g employee turnover.
Technology is also gaining ground in the corporate governance field with many probably already asking themselves whether AI will take over the board room in the future. The significant benefit of AI in the board room shouldn’t be overlooked or dismissed, such as powerful data sourcing and rapid data analyses relevant to board room discussions. This does not mean it should or shall replace the human experience and diversity that a well-structured board brings to the table but it can definitely be seen as an aid to be used in different aspects of corporate governance.
Culture change can only happen if every organisation starts recognising the small changes it can make within.
Organisations are increasingly recognising corporate governance as an opportunity to upscale their business value proposition. Here at Etika our experienced team of professionals can assist you in strengthening and structuring your organisations good corporate governance practices, allowing you to focus on what you do best, running your business.
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