Dynamic governance drives strategy execution

Corporate governance is the framework of rules, relationships, systems and processes within and by which authority is exercised and controlled in corporations. It influences how the objectives of the company are set and achieved, how risk is monitored and assessed, and how performance is optimised. Effective corporate governance structures encourage companies to create value, through entrepreneurialism, innovation, development and exploration and provide accountability and control systems commensurate with the risks involved.

Good governance is an objective-focused concept that enables the organisation to:

• Make timely strategic decisions, apply the same principles of setting objectives, and evaluate performance measures.
• Achieve its corporate strategy, strategic objectives, and key performance indicators.
• Manage potential risk (threats and opportunities) inherent in pursuing the corporate strategy and achieving objectives and key performance indicators.
• Optimise organisational and individual performance and value contribution or creation for the customers and stakeholders.

The effective management of risks at all levels of the organisation is therefore integral to good governance and performance and provides the best available information required for effective and timely decision-making. 

This enables the organisation to:

• Share performance and risk-based information horizontally between business units, value-chains, and support functions.
• Escalate and cascade vital performance information vertically (top-down and bottom-up), thereby providing management and employees with a clear view of performance, risks, and controls facing the organisation.

The choice of strategy may influence organisational structures, culture, and processes. They, in turn, can collectively enhance or limit organisational performance and the effectiveness and implementation of the strategy execution plan. Structures and processes may also affect the speed at which organisations can adapt to their changing environment.

Organisations should translate their corporate strategy into an appropriate organisational design and structure that effectively and logically connects the dots between goals and key performance indicators, and strengthens and improve performance, reporting relationships, information flows, decision-making rights, and social networks.

Culture, values, and beliefs elicit and reinforce employee attitudes and behaviours. This, in turn, can affect organisational performance and strategy execution. Organisations should ensure that their culture is a source of competitive advantage that enables strategy execution.