Board Effectiveness & Corporate Governance
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Good governance processes and practices are very important for the Boards and board/ management committees of all companies and businesses to ensure Board and company performance. Those entities listed on the Australian Stock Exchange are required to follow the ASX Principles of Good Governance, which serve as a benchmark for all businesses.
Prospect believes that good governance requires a combination of effective transparent processes and constructive relationships.
Transparent processes form the foundation of good governance, while the development, implementation and monitoring of these processes relies on constructive relationships between board members, and critically, between the board and management.
Prospect’s work in this area is predominantly in the areas of Governance Best Practice and Board Performance Evaluation.
The Governance Best Practice service is upon the ASX Principles of Good Governance, a model for good governance and current research findings which demonstrate, for example:
- Most boards spend too much time in monitoring and supervision and insufficient time on strategy and strategic direction setting.
- Many boards see their role as “second – guessing” management which is not the role of the governing body.
- Agendas are structured to deal with the most important matters last: restructuring of the agenda aids strategic debate.
- Most boards have not clearly delineated their role (governance) from management’s role (operations). Lack of clarity here can cause tension and lead management to believe the board is interfering in operational issues.
- Latest research supports the conclusion that the behaviour of directors impacts the effectiveness of the board’s decisions.
Our sessions allow the Board to form a view on changes the Board would like to make to enhance the company’s governance.
The benefits and outcomes from the Governance Best Practice Session include:
- A Board which operates more strategically
- A forum to discuss issues that directors normally do not have an opportunity to discuss
- Heightened director awareness about the Board’s role and how this is different from management’s role
- A list of practical governance practices that the Board wants to adopt to enhance its performance
