Corporate governance practitioners unsure if current system is working

 

 

Our poll out today in conjunction with the ICSA: The Governance Institute, finds that a significant proportion of corporate governance practitioners are unsure whether the UK’s system of corporate governance is fit for purpose. When asked if the current system is working 45% are on the fence with a ‘maybe’ response, 16% feel that the system is not working and 39% feel that it is.

 

Of the respondents who answered ‘maybe’, some feel that there are too many conflicting pressures and influences on boards for the system to work fully, as well as unrealistic expectations as to what boards can achieve with very limited time. Others expressed the view that the system seems to be in constant change with little time to evaluate the impact of change prior to the next move.

  

The top three topics that respondents felt required more attention were remuneration, simplification and enhancing governance in private companies. Respondents were split on remuneration with some considering it to be too high and others suggesting that too much focus was placed on the subject: ‘Too much attention [on] remuneration matters which usually impact on a very small [number] of people’. Respondents were more united on the need for simplification, with calls to reduce red tape and for a period of calm to ‘let things settle so that effectiveness can be evaluated rather than constant change’. On the subject of governance in private companies, there were calls for alignment of governance between that of listed companies and private companies because ‘the impact if governance fails can be devastating for individuals’.

 

According to Peter Swabey, Policy and Research Director at ICSA: The Governance Institute, ‘There is always room for improvement and regular reviews should take place. There will always be some who bring governance into disrepute. To put things into context, however, and as one of the poll’s respondents so rightly says, we hear a great deal about corporate failings and scandals but nothing about the overwhelming majority of companies that get it right most of the time and that is a shame.’

31 January 2017

 

 

written by Jon Moores
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