According to J. Delayne Stroud of issixsigma com, “benchmarking is a way of finding out what the best performance is that is being achieved.” How does that play out in the context of board practices? In the simplest sense, it allows you to analyze the current practices of the company that has hired you as a corporate governance consultant. Let’s examine why this aids in effective corporate governance.
It is essential groundwork:
Before you even start crafting tips and recommendations, you should know all about board practices that actually exist. Therefore, benchmarking serves as an excellent foundation from which to build a strategy. You should be able to analyze not only the best practices, but also those that don’t really work too well. Once you get the full picture, you can trim and prune practices according to industry or even global standards and craft a strong corporate governance strategy.
Establish protocols:
Once you’ve determined best practices through benchmarking, they can serve as definitive protocols for future action. For example, if the board conducts annual evaluations of board members to examine their productivity and has helped maintain optimal levels of productivity, then that is good board practice. Then it can be used as an established protocol of action, not as a vague practice that has been put into use year after year. You can also develop it and set concrete parameters to evaluate productivity, the steps to take if the productivity levels of a certain member are not up to par, etc. Helps you establish effective corporate governance management and maintain business reputation.
Provides information:
Since examining board practices helps you understand the actions of the C-suite, it definitely helps you identify great ideas. As a corporate governance adviser, you are the objective third party and, at first, you at least enjoy the outside-in view. As you delve into established or current board practices, you can learn what exactly constitutes the company’s core, the values it holds dear, the ideals it espouses, and can frame your strategy and recommendations accordingly.
When it comes to corporate governance, knowledge and insights can help you overcome adversity and win every battle. Benchmarking board practices gives you the knowledge you need and enables you to gain the insights you need to provide excellent corporate governance advice.