For most multinational firms, the slow but steady return of economic growth across the world’s most important economies means a welcome shift from retrenchment to expansion. Any expansion in a firm’s capacities that increases the number of entities operating within its scope, however, brings potentially increased scrutiny from regulators. This is why firms need to determine whether they are compliant with the most effective and up-to-date governance practices.
Governance deals with the style and quality of leadership within entities and across a business, as well as who has the power to make decisions and who is accountable for them. At their best, governance practices allow an entity to have appropriate decision-making processes and controls in a way that balances the interests of competing stakeholders while maintaining effective management, clear lines of communication and a good relationship with the state.
This post is a quick introduction to the role of the governance department and practices within the emerging science of entity management, paying special attention to how sophisticated technology can leverage best governance practices to help your entities and the broader enterprise.
Q: What exactly falls under “corporate governance,” and why is it important?
A: Governance includes the processes through which a company’s objectives are set and pursued in the context of the market and the regulatory environment. The purpose of having a governance department and established best practices for governance, therefore, are twofold: making sure a company achieves its objectives and keeping shareholders satisfied that their trust in company leadership is well founded. Five of the most common objectives in a sound governance strategy are:
- Establishing boards of directors with a wide range of experience and evaluating their methods
- Defining roles, responsibilities and accountabilities from the Board to the chief officers
- Holding and practicing sound ethical practices and principles
- Tying compensation of company leaders to performance in order to create incentives
- Ensuring the board is responsive to senior management, especially with respect to risk factors
Q: What role do entity management practices play in the governance framework?
A: How the most basic entity management tasks are performed in a corporate environment has strong implications for the governance strategy. In other words, there’s a correlation between the tasks of entity management. Sound governance practice cannot exist in the realm of poor entity management, and vice versa. There are three basic tasks when it comes to entity management:
- Staying up to date on the responsibilities of an entity and its leadership
- Advising the leadership on the corporate governance matters listed above
- Actively maintaining the corporate record for transactions, filings, reports and audits
In performing these tasks day in, day out, it’s common for management, boards, auditors, and legal and other departments to make frequent requests for entity information. Traditionally, these requests were fielded by the corporate secretary. A governance department with instant, real-time access to the data and documents needed to perform these tasks of entity management is more suited to the responsibilities of contemporary enterprise.
Q: How can technology facilitate the adoption of successful governance?
A: It starts with the requests we were just talking about — managing thousands of different data points having to do with even the most basic entity information requires a software platform where this information is instantly accessible to the people whose business it is to know it while still being secure against data breaches. This means a platform that is sophisticated enough, for example, to assign permissions for different types of information.
Recent developments in entity management software allow governance processes to be supported directly with automated approval processes, the establishment and maintenance of audit trails and so on. Like other corporate functions, governance increasingly relies on appropriate technological solutions to underpin and support its framework.
An effective platform for document management is increasingly essential for modern enterprise. Blueprint OneWorld’s platform offers a number of secure, elegant and affordable solutions to some of the problems discussed above. Our document management platform attaches files to different entities and departments, stores them by a unique serial number, and performs check-in and check-out processing, with edit-only and read-only rights for various users.
Our data management system tracks all of your firm’s data and accurately records the changes to it for auditing and reporting purposes. Our system also can relieve you of many of the headaches of governance through automated creation, checking and filing of statutory forms in a number of different frameworks.
We hope to be your organization’s first entry point into a reliable and effective strategy of document management. Please call or email us today to discuss these and other solutions.