Our Governance practice has developed from our work for the World Bank and other multilateral agencies as investors and lenders in developing and transitional countries, and it now extends to assignments for important companies in OECD countries and regions, as well as in the Middle East, Eastern Europe, and Asia.
Governance practices for companies.
We advise on companies’ Corporate Governance practices and policies, helping them to establish Governance Codes that reflect the unique environment of their respective markets, their customs, and their ways of doing business. We strongly believe that the ‘one size fits all’ template so often imposed by international consultancy firms is inappropriate and often quite counter-productive. Yet we also believe it essential to incorporate our knowledge and experience of the global and the latest ‘best practices’ increasingly being demanded by investors worldwide.
In addition to preparing Corporate Governance codes for individual companies, where required, we will also prepare documentation and descriptions for use in the company’s published material – especially on its website, an invaluable channel of communication in today’s business environment.
We are frequently called in to provide orientation and development programmes for board directors, to help them meet the growing challenges of their board responsibility in a rapidly changing environment.
We conduct this on an in-house company basis, and we also undertake major programmes for groups of companies at the behest of regulators, stock exchanges, and governments for director training across an industry, especially a regulated industry such as banking and finance.
Corporate Governance reviews
We undertake reviews of Corporate Governance practices of individual companies, analysing their current procedures, and providing a critique and a comparison with other benchmark companies, both local and international. As part of the Review, we will also provide a step-by-step programme of practical recommendations for enhancement. Corporate Governance Reviews are often required by major institutional investors looking to make an ownership commitment, as well as by companies themselves who want to improve their standards and meet ‘best practices’ benchmarks, and who want to win the international recognition and competitive advantage of being recognised as well-governed companies.
Such reviews involve us meeting with board members and key senior management, and from our experience of similar companies both local and worldwide we are able to provide a valuable comparison and helpful and realistic recommendations on proposed courses of action.
Board evaluations are the most important single tool for the continuous upgrading of the quality and usefulness of the board: they form the starting point of any serious commitment by companies to improve. Effective evaluations are being increasingly demanded by major shareholders, and – for financial institutions – by more and more regulators. Yet, repeated surveys show that most boards of directors find their current evaluation process less than optimally helpful: at the same time, many boards admit that their own performance needs improvement.
Much of the work of evaluations can and should be initiated by the board itself, but it is evident, not least from boards’ general dissatisfaction with their in-house processes, that professional experienced external advisors have a valuable facilitating role to play. As outside advisors, we bring our experience of other companies, and we ensure objectivity and rigour in the assessment process and resultant recommendations. The use of outside professionals, at least on a periodic basis – every two or three years – is being increasingly mandated by regulators’ Governance rules and by many active institutional shareholders.
Training and education for executives and management
Not just board members need to understand their responsibilities and the demands of Corporate Governance – it is also essential that key individuals in the management ranks of the company also understand and ‘buy in’ to the issues. Accordingly, we undertake training sessions for groups of governance professionals, or key management individuals who have specific responsibility for governance.
These include company secretaries, corporate legal staff, human resource professionals, as well as line management and department heads and executives. Often, senior line executives find themselves sitting on boards, especially boards of group subsidiaries, and may need to acquire specialised knowledge of the Governance principles they must apply in their duties as board members.
We have found working with these highly motivated and senior management to be very rewarding – they are immediately engaged in the issues, they quickly grasp the concepts, and they are motivated to expand their knowledge base. Indeed, for some professions, such as company, or corporate, secretaries, their professional qualifications often now require a comprehensive understanding of Corporate Governance, and they are often in turn the most important and most effective resources for Governance development in their companies.
Country/Industry Corporate Governance codes
In addition to constructing Corporate Governance Codes for individual companies, we are also engaged by regulators and stock exchanges to advise on and to write codes for their industries and companies. Over the past few years, we have been retained by the respective Central Banks to write new Codes of Corporate Governance for the banking systems in several countries, and we have also advised on appropriate structures, and provided recommendations for improvement, in the codes of other countries and stock exchanges.
Our process involves a thorough understanding of the structure of the financial system, as well as of the current governance and legal framework, important local market practices and issues that need to be addressed. We work in close consultation with the authorities – the banking supervision departments of the regulators, for banking system Codes – and with industry organisations and individual institutions. We also advise on promulgation/communication, and implementation procedures to ensure the smooth and effective roll-out of the Code provisions.
Bank regulation and supervision officials confirm to us that the successful and effective introduction of Corporate Governance Codes in their financial systems is a vital part of reforming and upgrading their oversight functions, and is a critical component of ensuring that best international practices are imbedded in local institutions.
Professionally drafted industry and banking system Corporate Governance Codes send a clear message to the international financial and investment community of the seriousness and effectiveness of the local regulatory function, and demonstrates a commitment that the local system conforms to the highest prevailing global standards.