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Good governance goes unnoticed

04 September 2018 by Henry Ker

Good governance goes unnoticed

If governance is working well it is unlikely to be seen

‘Usually, if you notice good cinematography, then the cinematographer’s failing,’ says Rachel Morrison, the first woman ever nominated for a cinematography Oscar.

Effective governance is similar to good cinematography. It makes everyone else look good and when everything is going well, few outside the secretariat or governance teams pay much attention. Only when things go wrong is governance suddenly thrust into the limelight.

The Financial Reporting Council’s executive director Paul George, touches on this in our interview: ‘It is a challenge, especially during the good times, to explain the UK’s regulatory framework and our role in it. Once something happens, attention increases on our role…’ It is also discussed by our columnist Anthony Hilton, as he explores the differences between the US and UK systems and questions whether ‘companies perform better with or without governance?’

It is something that is difficult to quantify. Business is of course capable of succeeding without good governance, but, because of its partly preventative nature, it is also impossible to know how many problems have been averted because of it. And of course, by itself, governance cannot prevent unscrupulous actions or safeguard against wanton disregard for best practice. As George says, this can make it a difficult discipline to advocate outside the profession – and can explain why it is seen by some individuals as purely red tape.

“When everything is going well, few outside the secretariat or governance teams pay much attention”

But those who work in governance know its value to a company – the benefit of an engaged and effective board and a positive culture, which can maximise the potential of the workforce and protect it when problems arise. As George explains, ‘The telling factor is whether, when there is pressure on the organisation, the culture shines through – or have shortcuts been taken that are then exposed.’

The UK Corporate Governance Code is key to all this, setting the standards for organisations for over 25 years. The new code was released in July and we have explored it in detail. Alongside the interview with George, ICSA’s Peter Swabey analyses the code’s new developments and Charlotte Fleck of Pett, Franklin & Co explores the remuneration aspect.

ICSA and its members are the advocates for good governance and should be proud of the enthusiasm the profession has for its work. We know the worth of good governance, even if to the rest it goes relatively unnoticed.

Henry Ker is editor of Governance and Compliance

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