by Siobhán Cahalan
Published in Kingstown College Coaching Magazine
Corporate Governance is the overarching structure in place to direct and manage a company.
The role of the CEO is challenging with wide-ranging and significant responsibilities. Siobhán Cahalan outlines the elements which contribute to an effective corporate governance system and how executive coaches can support organisations in the current uncertain environment.
According to the PWC 23rd Annual Global CEO Survey, “no matter where CEOs look or from where they are looking, the path forward is fraught with uncertainty. “
The report cites the top concerns fuelling this uncertainty as over-regulation, trade conflicts, uncertain economic growth, cyber threats, policy uncertainty, availability of key skills and geopolitical uncertainty.
Couple with this the factors impacting corporate governance such as social and political volatility, board composition, corporate accountability, meaningful purpose, risk management, emphasis on innovation, gender equality, talent development and integration of compliance culture, it is clear that the role of the CEO is not an easy one.
The Role of the CEO
The senior executives known as the C-Suite are responsible for leading the business and its respective departments. Of the C-Suite executives, the CEO is the most senior and is responsible for managing the organisation as a whole.
What is intriguing about the role of the CEO is that they are the centre point of the organisation and act as a communication bridge between the Board and the rest of the organisation. Their role is wide-ranging and significant with responsibilities including implementing strategy, leading the management team, managing the overall operations and ensuring that effective corporate governance is in place at all levels in the organisation.
CEOs play a primary role in ensuring organisations operate within effective governance practices.
Structure of an Organisation
Typically in a large organisation, there are three parts to its structure: The Board of Directors, the Corporate Officers and the Shareholders. The Board of Directors consists of the Chairman, Executive Directors and Non-Executive Directors. The Corporate Officers are the Chief Executive Officer (CEO), the Chief Operating Officer (COO) and the Chief Financial Officer (CFO). The shareholders are those who own the company, through holding shares.
Having a structure in place is needed in order for the company to meet its objectives through dividing functions and assigning responsibilities.
The responsibility of the Board of Directors is to make decisions with regards to strategic policy, dividends and group budgets, as well as the approving the risk appetite of the organization.
What is Corporate Governance?
Corporate Governance is the overarching structure in place to direct and manage a company. According to Best Practice Governance™, “the meaning of effective governance for an organisation is to manage the day-to-day operations, in line with the vision, strategy and planning, with integrity and in the best interests of all stakeholders.”
A well-governed organisation operates in the best long-term interests of the company. Factors which support this are appropriate board composition, transparent and honest financial reporting, fair remuneration of senior executives, stakeholder relations and communication, risk management and ethical behaviour.
What is the Role of the CEO with regards to Corporate Governance?
CEOs play a primary role in ensuring organisations operate within effective governance practices. The CEO is often best placed to oversee the running of the organisation due to the widespread nature and holistic overview of the CEO function.
In keeping with good governance practices in the long-term best interests of the company and of the stakeholders, the success of a CEO will be underpinned by his/her characteristics and experience. The former is reflected in his/her values and behaviours and the latter in knowledge of the business environment. Exhibiting good leadership traits is key such as the ability to make timely decisions, being innovative and reliable as well as setting the vision and following through. Examples of values that underpin such traits are integrity, independent thinking and transparency.
How can Executive Coaches Support CEOs to Navigate and Conquer the Myriad Responsibilities and Tasks Before and Around them?
In supporting a CEO, Executive Coaches can bear in mind five elements which contribute to an effective corporate governance system. The five elements are:
- Processes and systems
- Values typically associated with good governance are outlined above – integrity, independent thinking and transparency. These values form the foundation for ethical behaviour and building a culture of trust and reliability. It is worth spending time with the CEO evaluating if the values of the organisation and the values exhibited by the employees support an environment of good corporate governance. Where appropriate values are recognised, how is each individual held accountable to uphold those values as exhibited in their behaviour? And are individuals genuinely performing with integrity, independent thinking and transparency?
- CEOs have a myriad of responsibilities which require a sturdy ability to manage effectively. Maintaining a resilient organisation calls for management skills such as the ability to set a clear vision and strategy, as well as planning and coordinating ensuring the goals and milestones progress the organisation in the direction of the vision.
- Much of the role of the CEO is about leadership. Communication has a large role to play in engaging the dedication and loyalty of employees as well as preserving a trustworthy relationship with external stakeholders. Once the vision is defined, the ability to clearly articulate and communicate this to stakeholders is key. Coaching conversations with CEOs often revolve around their role between stakeholders – the Board, the executive and non-executive directors, and the other officers – the COO and the CFO, as well as being concerned with the performance of everyone in the organisation.
- Appropriate values, effective management ability and leadership skills are key to good corporate governance. So too are having suitable processes and systems in place. It is important to critically evaluate those currently in place as well as the gaps which may exist. An intelligent oversight will ensure optimal processes and systems are in place where duplication is eradicated and where the organisation manages the technology instead of the technology managing the organisation.
- Documentation can be seen as burdensome with the rise in regulations fuelling the surge. Having the ability to step back and reflect upon what is the ask and why that ask is there encourages an attitude of doing it for the right reasons as opposed to seeing it as an external obligation being imposed. Understanding the reason for the regulations, for example, to protect the public interest supports intrinsic motivation.
It’s a real juggling act to keep interests of all stakeholders in view, as well as continuing to innovate, attract new clients, ensure adherence to regulations and make a profit/attract funding.
The value of supporting a CEO can range from building awareness of the organisation’s current governance practices, to recognising and closing gaps, and developing leadership traits which support building cultures of effective governance.
This support continues through examining the values, vision and purpose of the organisation in the life cycle of the business with the CEO, asking questions such as “How do my values/the values of the organisation contribute to sustained appropriate actions and behaviour?” and “How do I/the organisation keep consistent focus on the long-term strategy while operating day-to-day?” and through using the GOVERN™ model.
the pursuit in coaching is always to add value for our clients
The GOVERN model may be used to support building awareness of the current governance culture and what is needed to close the gaps to establish a best practice governance environment. Understanding the value of these enhanced practices, along with the return on investment will refine the articulation and execution of the vision to the diverse stakeholders.
Goal. What is the goal?
e.g. to implement a culture of effective governance in the organisation.
Opportunities. What are the opportunities available?
e.g. resources, support groups, committees. What is already in place? What can be strengthened? How can the skill set composition on the board be utilised for best effect?
Value. What additional value will this bring to the organisation?
e.g. a better defined strategy, a more robust operational environment, an alignment of the vision with the operational reality, an alignment of values with behaviour, an elimination of overlapping tasks freeing up resources.
Execution. What action will the individual take?
e.g. setting up an advisory board, managing succession planning, developing delegation skills, disbanding futile committees, setting up constructive committees, clearly outlining the allocation of roles and responsibilities.
Return-on-investment (ROI). How will ROI be measured?
e.g. greater stakeholder satisfaction, leaner processes, benefits of automation, less stress as roles are more clearly defined and healthy borders are put in place.
Next steps. What are the next steps?
e.g. milestones, deadlines, actions.
The pursuit in coaching is always to add value for our clients. How can we support them and help them to move positively forward? It is a dark time for many now. We simply have no idea what is around the corner, if we ever did. Engaging with an Executive Coach provides a safe space to express fears and concerns, as well as an opportunity to air innovative ideas and possibilities, to evaluate them and of course, to make them happen.
By Siobhán Cahalan
Siobhán supports CEOs who strive to develop effective Corporate Governance practices in their organisation. She is a European Mentoring and Coaching Council (EMCC) Accredited Coach, educated through the Advanced Diploma in Personal, Leadership and Executive Coaching and holds qualifications in Corporate Governance, Third Party Risk and Global Financial Compliance. Her global management and leadership expertise spans from working with The Wall Street Journal to working on Wall Street. Her coaching practice follows the EMCC Global Code of Ethics which supports best practice of coaching professionals internationally.