Corporate Governance KPIs in turbulent times

Defination of Corporate governance: It is a field in economics that investigates how to secure/motivate efficient management of corporations by the use of incentive mechanisms, such as contracts, organizational designs and legislation. It is about promoting corporate fairness, transparency and accountability. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as, the board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs.

Mr. Raju of Satyam has made a joke of corporate governance. The law has finally caught up with Satyam former chairman Ramalinga Raju. Nobody knew what was the real truth all the answers or comments in media by associates, auditors, bankers, employee’s, management team and directors just “We do not know”. Ramalinga Raju, the man who confessed the largest corporate fraud was a software icon in India. It had best of business intelligence practices business still management of the company did not apply those principles of keeping track of key performance indicators related to corporate governance. It is sad to see that the eminent board which Satyam had they missed out on the irregularities of this size. It is unfair that a director should accept a board seat if they didn’t have the time and attention to fulfill to the designation. So what will differentiate a company with good corporate governance and bad one is the setting the right key performance indicator of the board using business intelligence technology. This will help investor, employee’s, auditors and bankers timely monitor and review performance of the board of directors.

KPIs – which should be applied to board or directors individually and collectively – include:
- attendance and time spent at board meetings;
- adequate data verification and self report preparation for board meetings;
- regular contribution to board debates on strategy and direction;
- alarming of perceived as well as actual conflicts of interest and threats.

Our Suggestion for companies to get on Corporate Governance KPI, they need to take a major step forward by establishing initial key performance indicators (KPIs) for each of their most material issues. Then in the course of reviewing the KPI data, they have to update and implement improved processes for data collection, analysis and reporting. Working with subject-matter experts and their internal audit team, they should have clear terms and instructions, developed additional reporting cubes, and worked with internal & external staff to strengthen their understanding of the process. KPIs will help drive the business in the desired strategic direction and serve as guideposts for quality and value innovation. They will aid in identification of excellent performance (strategic and tactical) and the correction of poor execution. With this KPI reporting, companies will be able to report metrics representing a greater number of markets with improved accuracy.

Corporate Governance KPI dashboards must support and drive corporate strategy and associated planning. Only by properly defining potent KPIs will it be possible to always know if the business is traveling in the right direction and instill a culture of continuous improvement and accountability.