Moving beyond compliance to governance for performance

From an administrative “box-ticking” exercise to a leadership imperative that is capable of enabling and empowering business performance.

Towards dynamic governance 2014: European corporate governance report
Heidrick & Struggles, February 2014

We are seeing a shift in thinking about corporate governance – from an administrative “box-ticking” exercise to a leadership imperative that is capable of enabling and empowering business performance.

Heidrick & Struggles’ report, “Towards dynamic governance 2014”, provides a perspective on the practice of corporate governance in Europe. The first section of the report looks at the evolving role of boards in providing leadership and driving business performance.

The report acknowledges that effective boards need to move beyond mere compliance to create flexible and dynamic governance. The demand for “dynamic governance” is based on two main realisations: that leadership starts at the board level and sets the standard for any organisation, and that governance is a means of enabling and driving business performance.

Six characteristics that boards need to develop and foster

The report outlines six characteristics that boards need to develop and foster if they are to achieve excellence in corporate governance: (i) deep business knowledge; (ii) diversity of thought; (iii) engaged leadership (particularly the chairman); (iv) strategic alignment and conversion of strategy to execution; (v) capacity to adapt and change direction; and (vi) talent identification and development.

The growing realisation that good governance can be a means of improving organisational performance is encouraging. We expect that future research will focus increasingly on the relationship between good governance and organisational performance.