The key function of an organisation’s Board is to provide and support strategic direction, continuity, risk management and wealth creation. However, corporate governance within the UK has sharpened the focus of Boards by placing greater emphasis on best practice with more robust checks and balances. As stated recently by Patricia Hewitt: “We see good governance as a way for companies to enhance their long term value and competitive advantage.”
This is true for all companies, whether listed or unlisted, and there is now some compelling evidence supporting the relationship between good governance and corporate value and performance. When governance is embedded within the values and behaviour of the Board, there will undoubtedly be better internal and risk control procedures.
But here is the rub: structures, processes and codes are only part of the answer. The real issues are the integrity, understanding and competence of the Board. This applies to Executives and Non-Executives alike. Boards are going to have to perform under ever-increasing scrutiny, demonstrating an ever-higher level of professionalism.
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