The biggest casualties of the global financial crisis have been trust and confidence. Both private companies and public institutions now attract much greater scrutiny. They’re expected to explain their business practices, disclose key relationships, justify their remuneration models, discuss their succession plans and make a wider contribution to society. It’s not just investors they have to satisfy. They also have to answer to regulators and the general public. And, as many organizations move into new markets, they’re engaging with a more diverse mix of stakeholders, each wanting different kinds of information.
The digital technologies are simultaneously transforming the way we communicate. People can see – and say – more about the organisations that serve them than ever before. New risks, including new forms of risk, are also emerging, and the regulatory burden is increasing. So the pressure to be transparent, accountable and socially responsible is greater than at any time in history.
What does this mean for your business?
Any organisation that wants to survive, let alone succeed, will have to embrace new regulations and technologies, manage new risks and prepare for the future with robust succession planning. That means many private companies and public institutions will need new governance models. Top management will also have to assume more supervisory responsibilities, and simple compliance with the rules won’t be enough. The management team will have to communicate its governance policies, processes and organisational culture to all its stakeholders. It will also have to go beyond traditional reporting and address issues such as sustainability and tax contributions. Transparent disclosure is the key to building trust and changing the way stakeholders and the external markets view your business. But transparency alone isn’t sufficient. Demonstrating good governance involves creating a true dialogue with stakeholders, not just communicating openly.