In general, governance is important to all types of organizations — public, private and nonprofit. Good governance is essential for organizations to achieve their goals and objectives, which will ultimately lead to strong performances and success. Good governance practices ensure that corporations remain in compliance with applicable laws and regulations.
A decade later, the world is still reeling from the fallout from the financial crisis of 2008. The financial industry has yet to fully recover from the scandals of major corporations and banking institutions. Such an overarching crisis placed a new and heavier emphasis on the role that good corporate governance plays in the corporate marketplace. Humans can lie and make mistakes, but automation and documentation support the truth. Digital tools are becoming central to good governance because they reduce opportunities for corporate fraud and corruption.
Good Board Governance Matters
Good governance encompasses the processes, practices and policies that form the cornerstone of companies so the leaders can responsibly manage the company. Governance includes how board directors and managers make decisions that affect shareholders and stakeholders. The basic components of good corporate governance are accountability, efficiency, compliance, transparency, effectiveness, security and timeliness, to name a few.
Good corporate governance holds board directors accountable for meeting on a regular basis to fulfill their fiduciary duties. Accurately maintained books, records, agendas and meeting minutes stand as proof that board directors are actively participating in strategic planning, oversight and risk management. Accountability and transparency help to protect shareholders, stakeholders, employees and communities.
How Technology Can Improve Board Governance
The financial crisis taught us many things, including the fact that we can’t and shouldn’t rely entirely on human resources to run corporations. It was around the same time that board portals began making their way into boardrooms with the original intent that technology could help to streamline board activities and create greater efficiency.
The implementation of board portals proved that technology could do more to support good governance than just increase efficiency. Developers began to delve into governance beyond the use of board portals, questioning themselves about what types of additional programs they could create that would support board processes and enhance good corporate governance at the same time. The developers at Diligent Corporation sought feedback from board directors on the types of tools that would make a difference for them. Diligent software designers wisely realized that it was important to create an offering of digital tools that fully integrated with each other. Essentially, what today’s corporate boards need is a total enterprise governance management solution.
One of many things that the financial crisis brought to light was that financial reports of the past were inherently complex and difficult to understand. Automation and technology have combined to bring board directors financial reports in formats that they can understand and in timeframes that make sense.
Technology also reduces human error, which supports accuracy in financial reporting.
Digital Tools and Technical Expertise Combine to Enhance Board Governance
Another thing that boards learned from the financial crisis is that they needed a resource for technical expertise to help the board understand and manage technical matters. Past boards were primarily composed of retired senior managers and finance experts.
Boards are now starting to factor in the level of technical expertise new board directors can bring into the boardroom. According to Deloitte, over the last six years, the percentage of boards adding board members who have meaningful technology expertise has grown from 10% to 17%. High-performing companies were more likely to appoint board directors with technology expertise.
In addition to adding board directors with the necessary technical experience to the board, corporations are exploring how board portals and other software solutions can contribute to good corporate governance. Their commitment to good governance, supported by digital software solutions, sends a strong message to shareholders and stakeholders about their willingness to govern their companies ethically and transparently.
Governance Cloud Is a Total Enterprise Governance Solution
In Diligent Corporation’s quest for a total enterprise governance solution, developers created Governance Cloud, a suite of digital tools that support every aspect of good corporate governance. The tools that make up the Governance Cloud ecosystem are fully integrated with the Diligent Boards portal system and the other tools in the system.
Diligent Boards is a board portal system that allows boards to access their board books completely online 24/7. Directors can complete questionnaires, collaborate, vote electronically, provide electronic signatures and more, anywhere in the world, with or without access to Wi-Fi. Directors can use the system to annotate documents, record notes and get updates from other directors in real time. Diligent Messenger is a highly secure communications tool that eliminates the need for board directors to risk security and confidentiality by providing a communications platform within the safety and security of the board portal.
Diligent has total control over their facilities, servers and cloud-based applications, so there’s no worry over hacks and leaks. Also with regard to security, Diligent’s developers recognized that board directors are often traveling and like to handle board business using their tablets and mobile devices. While electronic mobile devices are handy and convenient, they’re also commonly stolen, lost or misplaced. Diligent solved the problem of confidential board information getting into the wrong hands with a remote wiping feature that erases information stored on mobile phones and tablets.
The digital tools within Governance Cloud simplify the processes for auditing and compliance because they create a permanent record for regulators, auditors, shareholders and others. Diligent’s software solutions effectively reduce the possibilities for internal and external fraud.
Governance Cloud provides tools that board directors can use around the clock. Timeliness is often an important factor for busy board members. Having quick access to important and sensitive documents assists board directors in being flexible, responsive and efficient, which helps to erase any appearance of mistrust.
Shareholders are looking for proof that boards are committed to good corporate governance. Adding board directors with technical expertise and bringing digital governance solutions into the boardroom by an industry leader such as Diligent demonstrate boards’ commitment to the principles of good corporate governance all year long.