“The governance professional of the future will have to deal with a different regulatory framework, greater complexity and technology shifts, each occurring at an increasingly rapid rate. Over 83 per cent of governance professionals expect their roles to change by 2025.”
So says The future of the governance professional, a report commissioned by the Governance Institute of Australia to explore key governance challenges and trends between now and 2025. The Institute interviewed 11 senior governance professionals early in 2019; their insights helped shape a survey that was completed by nearly 300 Australian governance professionals. The respondents identified three drivers of governance change:
- Increasing complexity (including internal operations and stakeholder influence)
- Regulatory change (including non-financial metrics)
- Technological disruption (including new technologies and the rate of change)
The report notes that as more ‘Millennials’ (those born between 1981 and 1986) move into board positions, “they are likely to place greater emphasis on ethics and social good than on ensuring risk systems and structures are in place”. The picture that emerges is of a changing landscape for boards, governance professionals and directors alike.
Boardroom decisions will become more complex, especially for smaller organisations that use technology to scale rapidly. Boards will also need to consider more stakeholders when making decisions, as customers remain a focus and investors and advisors increase their scrutiny of decisions and strategies. Stakeholders will demand information, and action, on environmental, social and governance (ESG)-related topics and policies, and corporate culture will be more closely interrogated.
Regulatory reform was seen as the most important challenge facing boards today, with a horizon reaching to 2025 and – most likely – beyond. In an Australian context, this is being driven by the discovery of significant governance failures and poor corporate behaviour, but there is also a global move towards increased regulation. Data security and privacy is a key concern alongside corporate behaviour and governance. Thus, compliance and relationships with regulators become more important, and accountability regimes will become more widespread.
Governance professionals are excited by the possibilities of artificial intelligence and machine learning, particularly in the context of automating routine tasks such as taking minutes and packaging information for consumption. The hope is that this will allow company secretaries to focus on relationship building and using their wisdom and experience to the fullest. They also see the impact of disruptive technologies on their industries and society at large, and understand the need to help their organisations become flexible enough to respond and adapt to disruption as needed.
The times, they are a-changin’
The report further lists several likely changes to governance professionals’ roles and responsibilities. These include:
- Directorships will become more demanding
- Succession and board renewal will become more important
- Businesses will need more sub-committees to deal with emerging challenges
- Culture and risk will become more closely aligned
- Ethics and social goods will increase in importance
- More organisations will embrace governance
- Pay and incentives will come under greater scrutiny
- The company secretary role may be separated from other roles
- Company secretaries will work more closely with risk, technology and human resources officers
- Company secretaries may be asked to sit on other organisations’ boards, to broaden their perspectives
This is good news, coinciding as it does with the expected influx of millennials into boards. Governance Institute of Australia CEO Megan Motto notes that “millennials will make up three quarters of the workforce by 2025.
“Any progressive board with a strong long term strategic focus should be looking at how they are working to bring millennials on board by then.”
Another expectation is that governance professionals should see increased remuneration to accompany their changing, and more demanding, roles.
The key to weathering these changes – and even thriving on them – is to ensure your board has the skills and mindset to embrace new ideas and more diverse thinking. This may put company secretaries’ and other professionals’ interpersonal skills to the test, but the potential benefits are considerable.
Who governs the governors?
The report makes clear the governance’s importance will only grow, which makes it imperative for companies to begin equipping themselves with the tools they’ll need to adapt. Diligent strongly advocates the ‘Modern Governance’ approach.
This entails deploying a single, unified governance platform to provide controlled, secure access to communications, information and toolsets (such as voting and minuting) on almost any device and at almost any location (depending on local network access).
The benefits are many and considerable. Good corporate governance is in many ways its own reward; risk is reduced, operational efficiency increased, and financial returns improved.
But the benefits go further, especially for risk professionals. Company secretaries and other senior risk and governance officers will find that a Modern Governance toolkit frees them from many routine tasks, such as information-gathering so that they can focus on strategic decision making and relationship building.
Better still, the toolkit can assist even with these two more ‘human’ tasks by using advanced data analytics to generate insights and business intelligence, uncovering new risks, new opportunities and new strategic possibilities.
That’s a future we can all embrace.
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