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Effective corporate governance lies at the heart of long-term, sustainable company growth. However, recent years have witnessed corporate governance requirements becoming increasingly onerous, with regulators across the world placing greater emphasis on the impact businesses have on stakeholders beyond their immediate shareholders, including their employees, customers, suppliers, and society at large.
While companies are increasingly establishing (or bolstering) boards of directors to oversee and implement corporate governance matters, many organisations continue to be plagued by scandals, which have wiped billions of dollars off company market capitalisations and led to the complete collapse of several firms. In the end, it’s the company stakeholders who suffer.
At its core, sound corporate governance is built on a number of key pillars, including (1) responsibility delegation, (2) rigorous policies, and (3) transparent disclosures, along with both upwards and downwards (4) communication and (5) monitoring. With regulators imposing increasingly stringent governance requirements on companies, both listed and unlisted, a growing number of companies are establishing their own boards and / or increasing the size of their boards. Given such trends, we forecast the number of board members globally to grow by ~60% from 36 million in 2018 to 58 million in 2024.
Despite its importance, most companies rely on archaic and outdated processes to manage their corporate governance responsibilities, leading to operational mishaps, abuses of power, and chaotic disclosures. We believe a comprehensive digital transformation process across all key governance pillars can significantly minimise these risks; through the implementation of appropriate technological solutions, relevant policies and protocols can be rapidly developed and communicated, automatically refined, and continuously monitored, allowing companies to swiftly identify and address any corporate governance shortfalls.
In addition, we also see ample scope for boards to utilise technology in order to streamline their day-to-day operations, particularly with respect to digitalising board meetings. In fact, we estimate that companies worldwide currently spend ~USD 5 billion p.a. on the preparation and distribution of paperbased board packs alone.
While board processes have undoubtedly evolved over the years in response to the arrival of new technologies (including e-mails, online networks, and collaboration tools), these mass market solutions still fail to fully address the specific needs of boards, particularly with respect to supporting their key responsibilities and providing institutionalgrade data governance.
Recognising this gap in the market, several firms have developed board portal solutions, providing a tailored digital platform to streamline board operations, along with a robust data governance. While still in its infancy, board portals will ultimately become mainstream collaboration and workflow solution tools for boards worldwide, and we forecast global spend to surge from USD 1.1 billion in 2018 to USD 10.9 billion in 2024. For companies that use them, we believe such solutions can provide meaningful enhancements to board productivity, reduce operating costs, and help minimise regulatory fines and penalties.
Corporate governance is key to the survival and long-term sustainability of every organisation, and its digitalisation should be treated as a core priority. For companies that are still reliant on archaic governance protocols, it’s time to get on board.
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© QUINLAN & ASSOCIATES LIMITED – 2022
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