Good governance is key to managing today’s risks – and unlocking future growth
It says a lot about the state of our world that seemingly every week, a new event arrives that unnerves business and the markets. Whether it’s geopolitical tension, climate change, soaring inflation, interest rate hikes or recessionary pressure, there’s no shortage of challenges.
And while the worst of the COVID-19 pandemic appears to be behind us, it’s far from over, as new variants emerge and weave their way through society.
These multiple shocks, emerging in succession with many interlinked, are having a detrimental impact on supply chains and the economy.
Businesses are acutely experiencing the effects of this backdrop. Material and labour costs are rising. And for all the good that accelerated digitalisation brings, new innovations and technology are also disrupting traditional business models.
Yet it’s not all bad news. Businesses that can navigate today’s change and uncertainty will be well positioned to thrive.
As Nelson Mandela puts it, “the time is always right to do right”. Good governance, which protects businesses while simultaneously enabling them to grow, will be key to capitalising on this opportunity.
Setting the right business priorities
To build and enhance governance structures, organisations should prioritise two areas. First, secure the fundamentals. Ensure all employees and suppliers are motivated and engaged in their role, and keep a careful eye on how risks impact revenues. Digitalisation is also too big to ignore. To remain competitive, businesses should adopt new technologies, processes and skills that meet our digital-first world.
Second, work to build a sustainable business. Businesses can influence a wide variety of pressing issues, ranging from environmental challenges like climate change and waste, to social matters such as inclusivity or health and safety. Just as stakeholders rightfully expect companies to be environmentally and socially considerate – likewise, our customers, employees and regulators demand our businesses are governed well.
Good governance is a core component of sound corporate sustainability – being transparent, consistent and inclusive, and supported by strong values and a positive culture will encourage good corporate and individual behaviour.
Building business resilience
Our governance frameworks must be resilient. Agility enables us to respond to fast-changing market conditions. As such, our people should be empowered to make decisions within their own remit. Mutual trust and accountability across all seniority levels are essential to a nimble business.
Agility at the workplace means our workforces can shift seamlessly to new ways of working, like working flexibly from multiple locations. These contingency measures have proved invaluable and will remain critical should another pandemic strike. Increased nimbleness also equates to greater inclusivity – a more open and inclusive workforce and a more diverse pool of suppliers.
Providing the necessary upskilling and education to enable our labour force to set and execute the right business priorities that will help organisations achieve sound governance is also key.
Indeed, the words of Confucius over 2,000 years ago, “If you think in terms of a year, plant a seed; if in terms of ten years, plant trees; if in terms of 100 years, teach the people”, still ring true today.
For example, there are a variety of courses offered by education institutions, industry groups, and government-supported initiatives, that can help businesses build resilience. For example, Singapore Government’s MySkillsFuture portal supports career development and lifelong learning on risk management across multiple sectors.
Industry peers are also good resources for best practices. For example, the banking sector has had over a decade of managing severe risks, while operating within stringent regulations. Such practices are not only relevant for large and mid-sized companies but can also be adopted by small and medium-sized enterprises.
Public-private alliances and initiatives like SGTraDex, a platform designed to digitalise and improve cross-border trade through secure data sharing, and Climate Impact X, a global exchange for quality carbon credits, bring together all ecosystem actors. Both involve the sharing of insights and best practices, and are good examples of governance partnership models in line with Singapore’s Stronger Together agenda to build national resilience and capture future opportunities.
Creating exceptional human and digital experiences
At the heart of good governance and resiliency is the ability to meet people’s expectations – both customer demands and employee needs. Increasingly, people are basing their buying and career decisions on company values.
Digitalisation is also proving a game changer. Today, apps and the internet are principal touchpoints for most customers and employees. This can present an acute dilemma for companies. On one hand, businesses must meet heightened expectations for super-fast digital services, with zero outages and swift response times. On the other hand, human interaction is still required, especially where complex issues need to be resolved.
When working within a single unit that’s part of a multinational company operating across continents, employees may find it challenging to navigate multiple stakeholders and chart their career path, especially in a hybrid workplace. In such instances, frequent and open engagement at a more personal level is key to ensuring that staff are motivated and supported.
Businesses that find the right balance between digitalisation and human interaction, while instilling the right governance framework, will be rewarded with customer and employee loyalty. All of which will help companies better navigate today’s risks – and reap the many rewards of tomorrow.