Engineering effective governance and management solutions

IR Global – Meet the Members Asia-Pacific and The Middle East & Africa

Nothing is what it seems when you only look in front of you. The obvious is just that, the obvious. Yet there is always a bigger picture. Only when you start looking from the top down, towards the smallest detail, then you have the perspective that lets you make appropriate, responsible and effective decisions.

Others would say that there are layers too, or there are many underlying factors in play, or there is a long-standing history to consider. Keep in mind, however, that in our understanding of things: ‘there is the way it is, the way you see it, and the way it should be.”

Applying this rationale successfully in work is something you can only gain outside of academia: it is, in fact, a learning experience accumulated over years of trial and error, communication and miscommunication, hits and misses, failures and successes, owning up to mistakes and implementing corrective measures.

Within companies today, there is no doubt a dire need for specialist support on the different levels of management towards:

  1. Realising organisational strategic goals beyond the administration of day-to-day operations
  2. Rising to challenges against uncalculated risks. Addressing this need requires a broad understanding of governance.

The four layers of governance

“If management is about running the business … governance is about seeing that it is run properly. All companies need governing as well as managing.” Visualising this statement, a company or organisation is composed of multiple structural levels, each needing attention and care in different capacities.

At the very top, there are the owners or high net-worth individuals. These look to effectively and strategically manage:

  • Ownership structures
  • Assets and wealth
  • Tax impact

Management in most cases is delegated, on a second tier, to specialised persons in the role of board members.

At this second level, these boards, along with their committees, seek advice on matters such as compliance and best practices, audits, data security and privacy, environmental and social issues (ESG), etc…

On the third level, the executives charged with the day-to-day management of the company, use necessary tools, systems, processes, and business solutions to ensure smooth operations within a solid and supportive infrastructure.

While on the fourth and last level, staff and personnel look for support, guidance, and assurance on the quality of their work apart from the need to review controls and processes to address, improve on, or resolve inherent control risks.

So, wherever the organisation’s ultimate need lies, whether it be structural, governance, risk mitigation, or elsewhere, then keep in mind the answer is just as much about leading, not leadership; communicating and taking action, not just decision-making; sustaining and not just planning; accountability and good governance in the long run; and not short-term solutions or quick fixes. So, the questions are:

  • How can long-standing businesses stay ahead of the curve & implement solutions for growth?
  • How can startups seek financing to expand?
  • How can businesses adapt to technological developments or regulatory changes?
  • How can owners and shareholders then protect their investments and wealth?

As useful examples, (1) tax continues to grow in complexity as authorities introduce new taxes or rates, enforce new regulations in connection with cross-border transactions, require transfer pricing guides, and demand ultimate beneficial ownership disclosure. (2) Without proper communication channels and succession plans, management teams face countless problems as undocumented practices weaken the quality of reporting, ultimately disrupting decision-making processes and missing potential opportunities. (3) Poor budgeting often leads to cash flow shortages; inadequate financial literacy complicates fundraising; weak controls leave room for acts of fraud… the list can go on. Needless to say, there is no magic fix here.

However, there are reliable specialists with not only the experience and know-how to provide the necessary and adequate technical support at all organisational levels and functions but also to challenge existing practices to adapt towards new ones. All of is regardless of the business’ size.

The first step is to know the client & their needs

Knowing the client means gathering enough information on their history, current situation, and their aspirations.

This all starts with asking the right questions and following methodological processes accompanied, preferably, by conducting a health check, followed by the next step of using the information we have to identify the areas of weaknesses, gaps, non-compliances, and risks.

The third is to design a plan, determine the tools to use, and define the processes or actions necessary to take the business from point A to point B while continuously weighing up the risks and deliberating alternative options.

The fourth is to implement the change, not simply by using customised tools or processes but by involving, supporting, and more importantly, coaching staff towards these goals to take ownership.

The task isn’t complete yet: review, follow-up, and tweaks are necessary to ensure that all the bases have been covered and that the ship isn’t just safe to sail, but that it is also able to do so and get there on time with all the cargo intact.

When all this is said & done, at some point in time, all, or some of these steps, need to be revisited or some areas polished to perform better. From my own experience, the areas that need the most attention are:

  1. Clear and transparent communications and reporting channels
  2. Sustainable planning
  3. Good governance practices
  4. Data accuracy, privacy, and security
  5. Consistent & reliable accounts, budgets, and finance
  6. Efficient internal controls with respect towards the regulatory environment.

In the end, we do what we can with the time we have. I suggest that we give it our best.

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