2017 Good Governance Report – the great governance debate continues!

John Gollifer discusses the purpose of the Good Governance Report published this week by the Institute of Directors.

This week the Institute of Directors (IoD) launched its third Good Governance Report.

Well done to all of you who are in the list of 100 or so companies based on the FTSE100. For all of you, including those who don’t feature in the list, it may well be useful to understand the purpose of the Report and what is behind it. In the words of Ken Olisa, Chairman of the Advisory Panel and Deputy Chair of the IoD, ‘Although, as with all league tables, it is tempting to draw comparisons between the highest and lowest entries, this is to miss the power of our approach. From any Board’s perspective, the Good Governance Index’s power comes not from any intra-league comparisons, but by a thoughtful analysis of the 47 instrumental factors and their relevance to their own competitive position’.

The Good Governance Index is calculated by looking at how companies score across 47 governance indicators. These indicators are grouped into five broad categories of corporate governance: Board effectiveness; Audit and Risk/External Accountability; Remuneration and Reward; Shareholder Relations; and Stakeholder Relations.

To their credit, since starting the Index, the IoD have increased the number of governance indicators to try and reflect the rather broad scope of corporate behaviour, not an easy task given every company is different!

Importantly, one conclusion the IoD make is that there is no particular correlation between the Index score and company size. Like IR, it is really down to you, the companies, to find the best way to continue to build your own capacity in response to the competitive environment that you operate in and to manage expectations and indeed, the perceptions of your target audiences. If nothing else, join the debate and let the IoD know what you think.

Published 11 October, 2017

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