We rely upon history to learn from our mistakes and not repeat them. The Enron scandal and the other major corporate scandals that followed it taught us many things. Corporate boards have learned that they need to stay on their toes. Boards also learned that fraud and corruption can happen to any company where boards fail to practice good governance.
The financial crisis of 2008 gave shareholders a stronger voice. The added pressure from shareholders reminds board directors about how accountable they really are.
Good corporate governance has many dimensions. Board directors need to pay strict attention to every area of governance. Ultimately, good governance will pave a smooth path to strong corporate performance and success.
Perhaps, technology has advanced in just the right time to keep corporations honest. Automation and digital software solutions continue to advance, which only makes corporate governance better. It’s safe to say that digital tools are becoming the norm to help fight fraud and corruption. Board portal technology is quickly becoming an important key to upholding ethical corporate behavior.
Characterizing Good Corporate Governance
In simple terms, corporate governance refers to how boards of directors work together to direct and manage corporations. Good corporate governance encompasses the manner in which boards carry out their business so that it ends up being profitable for shareholders and stakeholders.
Good corporate governance manifests in a balanced landscape. When boards are successful in their duties and responsibilities, they’re also successful in balancing individual and societal goals, as well as balancing economic and social goals.
Another facet of good corporate governance is reflective of a variety of healthy relationships. Good governance promotes trust, good ethics, openness and honesty in all transactions and interactions. The board of directors has complete responsibility and the ultimate authority for the actions and decisions of the board. In respect to that, effective boards pursue healthy relationships with senior managers, their peers, and the shareholders or stakeholders.
Good board dynamics consider the best interests of the majority and the minority shareholders, as well as a variety of important stakeholders. Good relationships require strong and healthy communication where all parties feel safe in discussing conflicts and problems. Strong business relationships consider the rights of everyone involved.
Benefits of Good Corporate Governance
While it’s true that board directors are legally accountable for good corporate governance, there are many benefits that result from board directors who give their duties and responsibilities the utmost time and attention. Good governance benefits organizations, communities and the people they serve.
Good governance leads to lower capital costs while minimizing waste. In addition, making a commitment to good governance reduces the chance of fraud and mismanagement. A well-run organization motivates boards and managers to work for the best interests of those they serve. The organization also benefits from strong branding and reputation.
Communities and the economy also have much to gain from good corporate governance. The overall impact ensures transparency, which leads to strong and balanced economic development.
Board Portal Technology Improves Board Governance
The pinnacles of good board governance are accountability, efficiency, compliance, transparency, effectiveness, security and timeliness. Well-composed, skilled boards are just one vital component of good governance. People need assistance from tools and resources to help them maximize the results of their efforts. One of the main tools that technology has brought forth is board portal technology, which is something that helps to make good boards great.
As noted earlier, boards are fully accountable. Board portal technology provides unlimited cloud storage for financial records, policies, agendas and meeting minutes. Portals keep confidential, sensitive paper documents safe from the elements and natural disasters. Electronic document storage also needs to be safe. Whether that happens depends on having strong security within the board portal, such as the encryption and other security features that BoardEffect offers. Board documents that are accurate and safely maintained prove that the board is giving due diligence to strategic planning and other board matters. Board agendas and meeting minutes prove that boards are doing their best to oversee the organization’s operations and departments. Safe document storage is a strong indication of accountability for shareholders, stakeholders, employees and the general public.
Efficiency is an important part of governance because organizations manage the money and assets of others. Board portals are the fastest and most efficient way to create board books, board agendas and board minutes. A board portal is one secure platform that incorporates and fully integrates multiple processes. Board directors can access board materials, reports and documents remotely at any time of day or night and using any electronic device. Most importantly, they can get updates and other information in real time. Board portals reduce human error and support financial accuracy. In addition, board portals save organizations enormous costs in materials and time.
The media has exposed numerous incidences of vast corporate fraud. These scandals have highlighted the importance of transparency. Board portals make it possible for boards to pull reports and data so they can share it with the appropriate parties in a timely manner, which is greatly important to stakeholders.
The media has also brought numerous data breaches to light. Boards cannot place enough emphasis on cybersecurity. BoardEffect provides strong security measures, including encryption and third-party testing. Board directors can easily communicate securely inside the board portal, alleviating risks of data breaches, malware and viruses.
Compliance is another component of good board governance. Board portals simplify board activities for audits and annual filings because they create a permanent electronic record for regulators, auditors, shareholders and others. BoardEffect software solutions effectively reduce the possibilities for internal and external fraud. BoardEffect’s security features make it possible to ensure compliance with HIPAA and PHI.
Annual board self-evaluations are instrumental in aiding boards in how they can improve their own performance. BoardEffect provides a fully integrated tool for board surveys, which means that boards get the same security as their other board activities.
Technology is no longer a new thing and people around the world are getting more comfortable with using it. Even so, most boards are aware of the need to have some level of technical expertise on their boards. The combination of technology and human skills is the best way to keep up with the demands for competitiveness and good board governance.