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Deloitte governance framework
Framing the future of corporate governance
For those interested in the topic of corporate governance, these are dynamic times. The events of the past decade have led to the publication of a mountain of articles and research reports focusing on different aspects of governance, such as the role of the board, executive compensation, strategic oversight, and so on. But the literature rarely considers the issues holistically, looking at the entirety of governance structures.
As a result, many boards of directors still struggle with several fundamental questions, including:
- What is the role of the board in the company’s corporate governance program, and how does that differ from the role of management?
- Where should we be spending the majority of our time?
- Compliance with laws and regulations is an important starting point, but how do we position the board as a strategic partner with management?
- Exactly what should we be doing in the critical areas of oversight such as strategy and risk?
- How does the work of the committees relate to and differ from the work of the full board?
Introducing the Deloitte Governance Framework
Designed to help ease this frustration, the Deloitte Governance Framework offers an end-to-end view of corporate governance. This Framework forms the basis for the tools that help boards and executives quickly identify potential opportunities to improve both effectiveness and efficiency.
Bringing the Framework to life: A practical application
The versatility of the Framework allows companies to apply their principles in a variety of situations, ranging from key board member transitions to preparing for an IPO, or even as a guide in conducting annual board evaluations. Examples of how Deloitte has helped boards to apply the Framework include:
- Board chairperson transition. The Framework gave structure to the Deloitte Chairman Transition Lab, which was designed to help newly appointed chairpersons make an effective and efficient transition. The key objective of the lab is to help an incoming chairperson consider the board’s key oversight activities and develop a plan to address challenges. The Framework organizes and creates a methodical yet dynamic context for the lab by structuring the discussion around the organization’s “maturity” in each of the board governance elements.
- IPO readiness. Enhanced corporate governance has become an important component in a company’s preparation for going public. Governance-related rules for public companies affect board activities and structure. In assisting companies with their IPO readiness, we utilize the Framework to build a desired “future state,” recommending the key areas of board governance that should be addressed in the months leading up to the IPO. The Framework helps to ensure that the structural and other changes made today position the company’s board for the long-term, not just the initial offering.
- Board performance assessment. When performed effectively, board assessments are a strategic activity for the company, bearing long-term benefits for both the board and senior executives. The Framework provides the construct for the design of an assessment that allows the board to isolate board governance elements that deserve the most attention, and the attributes (skills and knowledge, process, information, and behaviour) within each that provide the most opportunity for improvement.