Corporate governance has not necessarily become more difficult of late but it has definitely come under greater scrutiny. With national leadership looking shaky and the economy still in the doldrums, much can go wrong and the C-suite will, as always, cop much of the flak if things go awry.
Here are six areas on which you should focus to keep ahead of the curve.
1) Commitment
Board service involves a commitment of time and effort, resources that few of us have to spare. Meanwhile, the scope and magnitude of issues that require board attention and action increase every year. Ignorance does not constitute a viable defense when things go pear-shaped. Review your knowledge of, and familiarity with the things that fall under your purview.
2) Responsiveness
Despite having to contend with curveball after curveball, some business leaders continue to underestimate the totality of the repercussions from Covid-19. We have come too far for more knee jerk reactions. The lessons along the way give us the blueprints to respond to further developments, even if they are on another scale.
3) ESG Management
Environmental, Social, and (Corporate) Governance (ESG) refers to the three main areas that appeal to investors who wish to be socially responsible. As a larger number of younger investors enter the pool, an organization’s ESG credentials carry increasing weight. Your responsibilities may involve setting ESG targets and assessing metrics as well as keeping abreast with federal and state laws and guidelines from investment managers.
4) HR Management
The past two years have upended most of what we thought we knew about working in the office and remotely. The latter has become the norm for large swathes of people but it has also had a devastating impact on their mental health. Managers also have to contend with the “Great Resignation” and understand its effects on those who remain and work ethic as a whole.
5) Activism
No matter how you try to straddle the aisle on a divisive issue, you will be judged harshly by a small – but often very loud – minority. That was bad enough in the past but social media amplification can make the fallout exponentially worse. The best advice is to refrain from engaging in conversations that divide on the usual fracture lines, especially if the issue does not have a direct impact on your business model.
6) Artificial Intelligence
AI is undoubtedly one of the most promising areas of modern technology in terms of simplifying processes, eliminating dead weight, and increasing profits. Every responsible executive should develop a good understanding of how AI can be integrated into areas of the organization under their purview. There is also another facet to employing AI; we must ensure that the people who interact with these advanced systems are aware of its vulnerabilities as well as its advantages.
For assistance navigating governance trends in 2022 and beyond, please reach out to me today.
