Modern governance is empowering leaders with the technologies, insights, and processes necessary to achieve good governance, which helps businesses thrive and endure. The importance of good governance becomes especially clear when it is not in order. There are several action points for modern Governance.
Be critical of the governance structure in your company
As a (new) director, you initially "inherit" the structure of governance as it was before you became a board member (i.e. the rules, roles, and processes within the board and the company in general). Too often, boards don't ask themselves why things are the way they are. This adopted governance structure is not necessarily wrong, but it must be and remain effective. Boards must always be able to explain this structure and the reason why it is constructed in this way, to investors.
Focus on the composition of the board of directors.
Today's organizations must have the right people in the boardroom. Modern governance organizations ensure that the skills within the boardroom and the long-term vision of the board are aligned, and they recognize the added value of diversity. After all, diversity is an opportunity, not an obligation. Yet many boards fall short when it comes to planning the composition of boards of directors. This is an area where too little use is made of data and technology.
For example, with technology and the right tools, modern boards can have the entire network of candidate directors at their fingertips. This functionality can then be used for good governance by identifying different aspects: skill gaps, the composition of other similar boards, available candidates, and conflicts of interest.
Provide more insight into risks and opportunities.
Risks are increasing in number and complexity in today's world, and blind spots can easily arise in such an environment. Boards cannot be indifferent about this; organizations that are not prepared for these changes will no longer exist after a few years.
It is not enough to simply identify the risks – boards also need to collect information about them appropriately and communicate them to others in order to spot risks in time. A modern governance solution can alert boards to predicted shareholder voting actions and can help monitor the reputation of the organization.
Avoid cyber risk mistakes.
Directors and other leaders are sometimes guilty of using insecure communication tools or personal email addresses to share sensitive information and materials. Even if this information is not too sensitive, such insufficiently secured channels can be an entry point for third parties with bad intentions. Embracing modern governance means avoiding such mistakes as modern governance organizations centralize communications with secure governance communication tools and share documents and files in secure data rooms. Secure communication does not come at the expense of convenience in this situation. In fact, these tools have all the functionality and ease of use of well-known communication apps and collaboration tools.