Modern governance relies on strong governance professionals to execute the insights, technology and processes required for their organizations to thrive and endure. To elevate governance in every organization, it's essential to align the learning and development of governance principles with the business's strategy. Modern governance is the practice of empowering leaders with the right tools to fuel good governance. Leveraging technology that supports governance principles helps in overseeing compliance measures, addressing culture risk and aligning learning and development governance for the widest impact.
Elevating Oversight of Compliance
For many boards, compliance seems to be somewhat of a check-the-box activity ' either they're in compliance with laws and regulations or they're not. Modern governance requires taking a broader view of compliance, which calls for taking a new view of culture and incorporating it with addressing culture risk. Addressing culture risk means that organizations need to act in ways that reflect their core values.
It's possible for employees to conduct themselves within legal and regulatory parameters and still behave in ways that generate cultural risk. Negative behaviors by employees can be contagious, which can extend negativity to customers, suppliers, investors and other stakeholders. Some circumstances can even lead to reputational risk.
Regulatory risks are inherently complex, and stakeholders are often confused by them. It's far easier to understand cultural risks, which, when built over time, can result in vast reputational damage.
As part of the process of elevating governance, boards need to view culture risk as part of their strategic risks because it can undermine their ability to fully implement their strategies and achieve their goals. In addition, culture risk also poses financial risks, data risks, and risks to intellectual property and other assets. Boards need to consider the impact of reputational risk as a serious threat because it can set organizations back for months or even years.
The board of directors is the ultimate risk overseer. They're responsible for setting the proper culture risk tone at the top to help protect the organization's reputation. Also in consideration is the fact that regulatory noncompliance presents reputational risks as well. Boards need to ensure that the organization is identifying insider threats, which are a type of conduct risk. Conduct risk shouldn't be confused with culture risk, which has more to do with adhering to the organization's core values.
Elevating governance related to compliance oversight means promoting the use of technology and using technology compliance programs. Technology automates much of the box-checking activities so organizations can focus more intently on overseeing cultural risk. Technology enables management, audit committees and the board to know on a monthly or quarterly basis that the organization is in compliance with applicable rules and to help them better understand where noncompliance issues could emerge.
Aligning Learning and Development Governance for Wide Impact
Modern governance practices include strengthening the learning and development governance model and aligning it with the business strategy. This is a new thought process that can provide credibility to the learning function over the long term. Learning and development governance practices support the organization's goals by aligning the stakeholders' interests with learning initiatives for key employees.
Learning and development governance comprises the mechanisms, processes and relationships that control and direct learning and development. Many learning and development functions struggle with governance, in part, because of the lack of defined learning and development governance models. Good learning governance helps to bolster the organization's goal to drive business value and enhance its reputation.
A McKinsey survey of learning and development governance professionals indicated that 57% of the responses noted that their function is 'very or fully aligned' with the company's strategic priorities. The low percentage could be attributable to the lack of leadership and technological resources in the learning and development governance area.
Forbes cites a survey of 200 learning and development senior decision-makers by the Open University Business School in which 42% of them stated that they 'lack direction from the top and the leadership team does not value learning."The same article includes a quote by Bernd Vogel, director of Henley Centre for Leadership at Henley Business School, who said, 'L&D is often seen as a 'token' activity and that is the underlying philosophy that top managers have about it."
In light of these attitudes, to elevate governance within an organization, boards and senior leaders need to make a greater commitment to learning and development of governance principles within their organizations.
Leveraging Technology to Elevate Governance
A 2017 report by McKinsey Global Institute states that '62 percent of executives believe they will need to retrain or replace more than a quarter of their workforce between now and 2023 due to advancing automation and digitization.' This statistic speaks to the growing need for the importance of using technology to address the need for learning and development governance.
Learning and development functions give governance a boost and align it with the organization's overall strategy, giving it stability and long-term credibility. To elevate governance, organizations will need to define a clear vision that ties into their business plans and obtain resources to develop programs and increase their learning and development capabilities.
Elevating governance requires creating learning and development governance programs, using new governance models, embracing a modern approach to governance, and being willing to use quality board management software solutions.
As digital tools to enhance corporate governance have become available, they've historically been disparate. The lack of integration of new technology has created cybersecurity risks and issues with convenience and user-ability.
Diligent Corporation brings modern governance solutions together with Governance Cloud and fully integrates them for the top in secure digital governance solutions. Within the product offering for Governance Cloud, boards and executives have access to electronic solutions for board meetings, voting and resolutions, evaluations, collaboration tools, document sharing, committee intelligence, candidate search, entity management and much more. It's the modern solution to elevating governance.