According to J. Delayne Stroud of issixsigma com, “benchmarking is a way of discovering what is the best performance being achieved”. How does that play out in the context of board practices? In the simplest sense, it enables you to analyse the current practices of the company that has hired you as corporate governance consultants. Let us examine why this helps in effective corporate governance.
It is essential groundwork:
Before you even begin to craft suggestion and recommendations, you need to know all about the board practices that actually exist. Benchmarking therefore serves as excellent groundwork on the basis of which you can create a strategy. You should be able to analyse not just the best practices, but also those that aren’t really working too well. Once you get the whole picture, you will be better able to trim and prune practices according to industry or even global standards and craft a sound corporate governance strategy.
It establishes protocols:
Once you have determined the best practices through benchmarking, they can serve as definite protocols for future action. For example, if the board conducts annual evaluations of board members to examine their productivity and it has helped to keep productivity levels optimum, then that is a good board practice. It can then be used as an established protocol of action, not some vague practice that has been put into use year upon year. You can build on it too and establish concrete parameters to evaluate productivity, steps to take if a certain member’s productivity levels are not up to the mark, etc. It helps you to establish effective corporate governance management and maintain the reputation in business.
It provides insights:
Since examining board practices helps you to get right into the actions of the C-suite, it definitely helps you identify great insights. As a corporate governance advisory, you are the objective third party and in the beginning at least enjoy the view from outside in. As you get deeper into established or current board practices, you can learn what exactly lies at the core of the company, the values it cherishes, the ideals it upholds and can frame your strategy and recommendations accordingly.
When it comes to corporate governance, knowledge and insights can help you overcome odds and win all battles. Benchmarking board practices provides you the knowledge you need and enables you to glean the insights you require to provide excellent corporate governance advice.