Find out why effective corporate governance is an integral part of running a business and how Simon Johnson can help.
How Simon Johnson can Help with Corporate Governance Strategy
Simon Johnson is one of the most respected strategy and governance advisers having taken a central role in complex governance reviews of leading sports organisations, including The Football Association, The Rugby Football Union and World Rugby, each of which led to significant constitutional changes to these complex, high-profile, multi-stakeholder organisations. He has conducted governance reviews in a wide range of charities, including political charities, cultural charities, and philanthropic foundations and charities. As CEO of the Jewish Leadership Council, he oversaw and implemented the recommendations of a Governance Review in 2019 as well as an Independent Review of Historical Allegations carried out on behalf of the Charity Commission.
He has also overseen governance restructures in a number of private companies, primarily in the Sports and Leisure Sector.
Simon Johnson is an experienced NED and Chair. He is Chair of the Rugby Football League, and a number of related businesses, He is also Chair of Sports Information Services, a leading supplier of betting services and content to the betting industry.
He has practical, hands on experience, of how Corporate Governance can be used to improve the performance of a business for its stakeholders. In addition, he can conduct a wide range of practical Governance Reviews.
Most industries now have regulations and best practice guides that encourage compliance with standards of governance, and some even go further. So, good governance is not only good practice, but it is also increasingly a requirement. So, the general Corporate Governance Code applies to major companies, but smaller and mid sized companies are encouraged to also comply. The Sport England Sports Governance Code is about to publish its latest iteration — compliance with it remains a condition of Government funding. And Charities are encouraged by the Charity Commission to comply with the Charity Governance Code.
Simon Johnson has practical experience of working under all of these Codes.
What is Corporate Governance?
Corporate governance is a system of rules, practices and processes that dictate how a firm is directed and controlled. It is a method of identifying who has power and accountability within an organisation and whose job it is to make decisions.
Essentially, corporate governance acts as a toolkit that enables company directors and Board members to more effectively deal with the challenges involved in running a firm. It is a complex balancing act which attempts to equally satisfy the interests of an organisation’s many stakeholders — such as shareholders, senior management, suppliers, and customers.
Since corporate governance also provides the framework for achieving the firm’s goals and aspirations, it ecncompasses practically all areas of management — including developing action plans and internal controls, measuring performance, and carrying out corporate disclosure.
A company’s Board is the primary direct stakeholder that influences corporate governance. It is tasked with making essential decisions, such as corporate officer appointments, dividend policy, and executive compensation.
It is the responsibility of the Board to ensure that the company’s corporate governance policies incorporate its corporate strategy, accountability, transparency, risk management, and ethical business practices.
An effective corporate governance strategy need not be expensive or overly complicated to administer. It can be carried out remotely and alongside the day-to-day operations of a firm. That being said, it is more efficient to work with a team who has wide-ranging experience in governance, as they will be able to guide the process efficiently, with minimal impact on the everyday functions of the organisation.
There are several important steps to a successful corporate governance strategy, which include:
Reviewing and analysing the effectiveness of the current governance structures in the context of the strategic plan, the business objectives and any relevant Codes and applicable Best Practice Guidance.
Performing a comparative analysis of similar businesses and other relevant businesses in comparative sectors
Consulting with key stakeholders on the appetite for and scope for change and to explore likely reactions to possible areas of change.
Preparing initial recommendations for change.
Consulting with stakeholders on the impact of those changes and likely response to the recommendations.
Drafting of legal documents (Articles, Resolutions etc) to give effect to the changes.
Agreeing a timetable for the implementation of changes.
A governance review must never be conducted in isolation, as it will likely have far-reaching implications within the organisation. This is why it is important to ensure that all stakeholders are kept properly informed at every step of the way. The best governance reviews will proceed with a strong level of consensus and ensure that everybody is on the same page and in agreement.
The reason for this is simple. Any stakeholder will have the right to vote on any changes in governance. They are also able to block or veto anything they are unhappy with, something that could cause serious problems if left to continue. It is therefore advisable to ensure that stakeholders feel their voices are being heard and their opinions matter.
With so much at stake, it is essential that corporate governance is carried out to the best of a company’s ability. Yet this need not be a daunting prospect. It can be done efficiently in the hands of trusted and experienced advisers and can be conducted smoothly. If you feel that any outside assistance is required, working with a specialist corporate governance advisor can help take a lot of the weight off your shoulders and guide you in the right direction.
Why is Corporate Governance Important?
Strong and effective corporate governance fosters a culture of integrity that can lead to a positive performance and a sustainable business overall. As long as the governance framework is well defined and adequately enforced, it should be working for the benefit of everyone and ensuring that best practices are being followed across the board.
Corporate governance essentially exists to increase the accountability of all individuals and teams within an organisation, enabling them to work together to avoid mistakes before they even happen. It can promote flexibility, the ability to be nimble and agile, to take advantage of opportunities and to respond to threats. It can also promote creativity and growth. The right governance structure enables teams to drive a business forward and to achieve results.
Potential benefits of effective corporate governance includes:
Efficient processes: due to repeatability and consistency of tasks
Visibility of errors: repetition of tasks can quickly highlight inconsistencies in the process
Reduced costs: repeatability and consistency eliminates potential wastage and other costly inefficiencies
Smoother operations: the need for ‘fire fighting’ is negated
However, there are a number of additional benefits that corporate governance can bring. When it comes to the culture of a firm, a successful governance strategy can create a philosophy of excellence. It can also enhance a firm’s reputation, given that it ensures the company performs to the best of its ability.
Furthermore, effective corporate governance can reduce the threat of safety, legal, performance, and warranty concerns that can seriously impact an organisation and its stakeholders and/or interested parties.
Potential investors will also be more interested in a company that displays effective corporate governance. Before parting with their money, investors will often carry out in-depth due diligence into the background of an organisation and how it operates. A company that has solid corporate governance procedures in place will be seen as a much safer option than one that could put an investor’s finances at risk.
Nothing can disrupt the running of a business more than having to deal with a disgruntled stakeholder group who have lost faith in those in charge. On the positive side, having a positive stakeholder base can generate benefits for a business through social and emotional support. Having an effective corporate governance policy in place can ensure everybody is on the same page and working together to achieve a common goal.
Many companies have found themselves in serious trouble as a result of poor corporate governance. From having to plug huge financial holes in their accounts to dealing with potential scandals, the effects can be far reaching.
In more extreme circumstances, poor corporate governance can lead to the collapse of a company. When good governance is abandoned, all checks and balances will be forgotten and if left to fester, it could cause the firm to implode on itself — leading to stakeholders of all types losing out significantly.
Even if a firm manages to steady itself and avoid failure, an ineffective corporate procedure can cause a great deal of damage to its reputation. The reputation of an organisation is often its greatest asset, as it makes people feel more confident about doing business with them. If a reputation is tarnished, it can be extremely difficult to recover from and things may never be the same again.