GRC Journal - (Page 12) ACTIVE AND DECISION-READY Governance, Risk & Compliance 10 CHARACTERISTICS OF EFFECTIVE BOARDS boards also improves, focus will likely shift away from feeding Wall Street’s hunger for short-term returns to maintaining superior performance over the long-term – an elusive goal for many companies and a much more valuable role for boards to play. In Europe, for example, public corporations do annual – rather than quarterly – projections, giving them more leeway to operate. The increase in the privatization of companies in the United States due to private equity fund buyouts also means that those companies are not required to generate quarterly reports. Not wanting to lose competitiveness, it’s likely that U.S. capital markets – and the boards that oversee capital market companies – will become more long-term focused as well. A BOARD FOR ALL SEASONS The focus on improving governance is not solely the realm of publicly traded companies. All types of organizations, from private companies to universities to government agencies to nonprofits, have sought to improve the role of the board. The need and desire to have the right people in place, asking the right questions, and focusing on the important issues are pervasive. The simple premise is this: the more effectively its board operates, the better an organization performs. CHAIRMAN • Led by a non-executive chairman or lead director with new and comprehensive responsibilities for creating assertive independence with clear board and leadership team accountabilities • Designs and implements a governance system and information architecture that is highly engaged, working on the most important valuecreating issues • Oversees and approves the establishment and execution of effective strategies • Oversees, approves, and monitors the financial plans and performance of the company, especially enterprise risk assessment and mitigation • Enables constructive compliance with all relevant laws and regulations • Leads in the selection of a highly capable CEO • Negotiates strategic and performance goals with the CEO, provides mentoring and development, and formally assesses CEO performance ACTIVE GOVERNANCE STRATEGY PERFORMANCE & RISK COMPLIANCE CEO STRUCTURE • Designs effective board/committee structure • Performs regular self-assessment MEMBERSHIP • Is populated by directors with specific functional, strategic leadership, and industry knowledge and skills • Creates a governance environment that is attractive to the most experienced and effective board candidates This publication contains general information only and Deloitte Consulting LLP is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte Consulting LLP, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication. ENVIRONMENT • Creates an environment of high-performance expectations • Aligns compensation philosophies and practices to maintain that environment • Mentors and develops the leadership team to objective standards of excellence ETHICAL CULTURE • Sets the tone for ethics and responsible stewardship to be embedded in the culture Lee Dittmar is a Principal with Deloitte Consulting where he leads the Enterprise Governance Consulting practice, and serves as CoLeader of Deloitte’s Sarbanes-Oxley services. Lee is a highly sought after speaker for governance issues, SOX, and how companies can improve financial information, financial performance, and investor confidence. Treasury and Risk Management magazine identified him among the 100 most influential people in finance in 2005 and 2006. Consulting magazine named him to its list of The Top 25 Consultants in 2006. Thomas L. Doorley is the Founder and CEO of Sage Partners, LLC, a strategy and corporate governance advisory firm. Tom and his partners bring hands-on experience by serving on boards themselves, thus bridging the theory-practice gap. As co-founder of Braxton Associates (now embedded in Deloitte Consulting as its strategy practice), Tom is an experienced leader and builder of an enterprise, as well as an effective advisor to the leadership teams of clients, globally. 4 BTQ Business Trends Quarterly Q1 2007 | www.btquarterly.com http://www.btquarterly.com
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.