Achieving strong corporate governance through technology
Technology offers corporations a new dimension of tools that enhance their ability to conduct business efficiently. Good governance is in a state of vast transformation. Technology has played a major role in the evolution of what constitutes good governance.
Areas Where Technology Makes a Significant Contribution to Good Governance
It's possible to classify the positive effects of technology on governance in four major areas:
- Technology increases transparency, information and accountability.
- Technology increases public participation.
- Technology promotes efficient delivery of public goods and services.
- Technology offers a level of security to combat cyber risks.
Utilizing technology to improve governance requires innovation and technical expertise combined with a corporate culture that fosters and supports best practices for good governance.
What is Board Governance
In essence, corporate governance or board governance is the standard of rules that allows organizations to ensure that they are serving the needs of their shareholders, stakeholders, management team and customers effectively and responsibly. However, included in this is that they are running the company in a way that meets the company's short and long-term goals.
For each type of organization, corporate governance strategies and policies will vary as each business has different objectives, customers and overall goals; however, board governance is generally associated with a group of overarching principles. PricewaterhouseCoopers (PwC) describes these as:
- Honesty
- Transparency
- Accountability
- Responsibility
- Independence
- Fairness
- Social responsibility
What is the Purpose of Corporate Governance
Corporate or board governance puts these principles into practice by making improvements to operational procedure and internal controls. A well-aligned board will make sure that their governance goals are well aligned and are clearly followed to avoid any issues at the organizational level. In fact, the board develops these overall goals, which then trickle down to management teams and align how the organization is run. According to PWC, corporate governance applies to the following areas of focus:
- The company's performance
- The relationship between the board of directors and the company's president/CEO
- Recruiting new board members
- The performance and conduct of the board's directors
- How transparent the company is about its behavior and its actions
- Managing corporate risk and compliance
- Communication between the board and company management
- Communication among the board, the company, and the shareholders
- Assigning individual responsibilities to the board and the management team
- Internal and external financial reporting
This list only scratches the surface of what's involved in corporate governance, which also extends to increasingly urgent issues like cyber security, ensuring diversity on the board to facilitate more efficient and secure board activities and communications. In general, the place to begin with board governance is to appreciate that it is about more than just enforcing a series of laws in the name of compliance. Board governance is a state of mind, in which those who hold the power commit to doing all they can for the good of the company.
Business Technology Trending Toward Comprehensive Enterprise Management Solutions
Most corporations have caught on to how technology helps to address and to solve individual problems. They are starting to look first to technology to find action-oriented solutions for business needs. In looking toward the future of good governance, technological innovation is starting to develop comprehensive business solutions. Technology developers are starting to look for answers to questions like how programs should work together and interconnect with each other to fill the gaps in solutions. The future of technological innovation will also work toward enhancing good governance principles.
The Marketplace Demands Transparency, Accuracy and Expediency
The financial crisis of 2008 was a devastating blow to Wall Street that our nation has yet to recover from fully. As with any major tragedy, some good things have emerged from the fallout. The crisis forced the marketplace to look beyond the ups and downs in the final numbers and to take a deeper look at what drives change. One of the most positive things that arose from the rubble was a newfound eagerness for transparency, accuracy and expediency in financial business dealings.
The fallout from the financial crisis left shareholders and other stakeholders with a desire to better understand financial reports. The calls from the trenches rang loud and clear with requests for data that was easier to read and to understand.
Benefactors of the marketplace suddenly became eager to gain assurance that the reports they were getting were highly accurate. They were looking for affirmation that current reports correlated to earlier reports without containing information gaps.
Delays in releasing information often equated to suspicions of cover-ups, leading to the loss of trust. The emphasis on expediency requires corporations to be flexible, responsive and efficient by providing shareholders with swift responses to planned and unplanned events.
How Electronic Board Portals and Management Systems Support Strong Corporate Governance
With all of the demands on today's corporations, there's a lofty trend toward corporate boards enlisting the help of technology as much as possible. Electronic board portals are becoming staple tools for board directors in much the same way that electronic management systems have become standard tools for manufacturing and operations.
Good Governance Incorporates Technological Solutions for Strong Security
Along with cyber technology comes security risk, which remains one of the top priorities for corporations.
Concern over security is a very good reason to transfer some of the mechanics for communication and storage to third-party technical partners. Board technology service providers focus solely on helping boards and corporations perform functions with increased efficiency and accuracy, so that board members and managers can focus on the most pressing needs of the business.
Security is robust among the electronic products and programs that board portal service providers and agency management systems provide because it's the whole focus of what they do. They have the time, technical expertise and resources to maintain systems in a manner of the utmost safety and security.
Technological service providers give board directors and senior executives the confidence and assurance that their corporation's data is secure from hackers.
In addition, technological solutions also provide board directors with the ability to conduct board business securely from their mobile devices anywhere in the world and at any time of day or night. Technological service providers have the expertise to create passwords, user authentications, encryption and secure workflows faster and easier than most corporations can do on their own. Rigorous security measures protect communications between board members and managers, protect stored documents and other data, and ultimately limit the probability of a data breach.
Good Governance Incorporates Technological Solutions That Promote Efficiency
Technological solutions have streamlined many of the cumbersome board duties of the past. Board directors are now able to get their board packets in seconds rather than waiting for them to arrive in the mail. Faster delivery means that board directors will have more time to review the agenda, financial reports and committee reports. Having more time to prepare for meetings means they'll consider the decisions they need to make before the meeting date, alleviating last-minute changes to the agenda.
Boards can save money on travel and other expenses because technology provides them with the opportunity to attend meetings and place votes via teleconferences and videoconferences.
Good Governance Incorporates Technological Solutions That Enhance Accountability
Automated solutions enhance accountability because they reduce human error. Software solutions can track changes in discussions that will clearly demonstrate how boards arrived at their decisions. Most software programs record who made revisions to documents and when they made them. A board portal archives previous board packets, past meeting minutes and other documents, and board directors can retrieve them at any time.
Technological solutions like board portals simplify processes for auditing and compliance because they create a permanent record for regulators, shareholders and others to review as needed.
Diligent's Board Portal Products Bring Comprehensive Technological Solutions Together
Diligent Corporation is ahead of its time in bringing a comprehensive set of technological solutions together to meet the governance requirements of transparency, accountability, efficiency and security. Starting with a secure board portal, Diligent added cloud-based governance tools to form the Governance Cloud, a complete governance solution for boards that aspire to effectively mitigate risk and govern collectively at the highest level. Diligent's Governance Cloud offers the following products:
- Diligent Minutes: electronic minute-taking software for simplified and efficient board meeting minutes
- D&O questionnaires: electronic program for completing D&O questionnaires in a productive and pain-free manner
- Board evaluations: electronic board assessment tool that allows directors and board administrators a simplified way to conduct board evaluations
- Voting and resolutions: electronic voting software included in Diligent Boards'Ѣ
- Entity management: electronic solution for managing any entity-related information
- Insights: curated content customized to board director preferences
The Governance Cloud by Diligent Corporation alleviates the need for board directors to piece together various software programs in order to meet the individual needs of their board. All programs in the Governance Cloud are integrated so that they work together cohesively and seamlessly.
These technology tools work together to meet the expectations that board members have for themselves and for those they serve. The tools aid board directors in their work to make governance transparent, accountable and efficient in a way that also offers the highest levels of security, which is exactly what board directors need.
