Charging into the Future - Top Trends in Corporate Governance
2018 was a year that saw companies grappling with cyber threats, an ever-increasing increasing regulatory burden, social and environmental pressures, geopolitical risks and so on. Corporate Governance has been adapting to these changes and trying to keep pace with a business environment that is rapidly changing, perhaps faster than ever before in history.
However, along with new challenges, there are also many new opportunities. Technology is making things easier and cheaper to manage, increased diversity is bringing in more ideas and access to a bigger talent pool, there are better opportunities to outsource non-core activities and so on.
Let’s look at some of these and other top trends in Corporate Governance for 2019.
Diversity, inclusion, gender equality, etc.
These have all undoubtedly been part of a very positive and demonstrably beneficial trend over the last few years. Our Renaix guide to Gender Equality, Cultural Diversity and Inclusion highlights this trend rather well and demonstrates the positive impact that this is having in employee morale, happiness, and even the corporate bottom-line.
This has also been becoming harder for companies. With the rise of the gig economy and a generally casual culture at start-ups and tech firms, employees are now expecting a similar work environment in all businesses. This has meant a higher employee attrition rate for some, while for others it has made recruitment harder. Providing the ideal and desired working space for employees (which is also free from any sort of discrimination or harassment) should be a top priority for 2019.
A greater emphasis on transparency has been another key trend. Although transparency is something that has been demanded a while now, the pressure has increased tremendously due to social media. Now millions of consumers are directly confronting companies online whenever there is some news of a harmful product or other such issues. Unfortunately, malicious actors can sometimes even spread fake news which can become rather hard to combat. Corporate Governance in 2019 must focus heavily on this aspect.
Training and Re-tooling
Training and Re-tooling employee skillsets can help companies get the most out of their employees. Decades ago, people would learn a job and work at it their whole lives. Today, tools and processes can change every year! Rather than finding fresh talent every time such a change happens, companies must focus on building a continuous learning mindset amongst its workforce. The focus should be on promoting internal training to address the demand for new skills and this push must come from the very top.
Social and environmental pressure
This has been piling on for a while now, but things have really come to a head in 2019. The warnings about climate change are dire and people are losing patience with governments and corporations which are seen to be not doing much to tackle this crisis of unmatched importance. Corporations as citizens have a responsibility to ensure that they have a net positive impact on the environment. This can not just be a tick-mark exercise and must be part of a concerted effort form the leadership to make a clear and demonstrable impact on the carbon footprint.
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Our Renaix guide to governance, risk, compliance and internal controls provides information on trends in the industry.
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