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The modern business environment is fraught with many risks and considerations that any company cannot afford to neglect if they are to be sustainable. For instance, today’s businesses are not solely inspired by the customary need to make profit for their shareholders but companies are also obliged to consider diverse interests from other stakeholders; government, regulators, financiers, customers, employees, suppliers and communities at large. This further stresses the need for companies to have concrete policies of monitoring their compliance status with these numerous stakeholder interests in mind.

Some of these risks and ethical concerns might not be immediately visible to companies or firms’ directors might not be aware or within track of their company’s compliance status. Take for instance the recent tax evasion crack-down that has plunged some notable players in the alcohol industry in a legal and reputational crisis. It is still early days in the tax evasion allegations against these brewery players and it is surely difficult to tell how the cases against the company and its top executives will pan out, but there is no denying their disruption to the said companies operations and the reputational damage so caused.

Because of such incidents, firms’ leadership have to constantly consider real and ethical issues that motivate sustainable corporate behaviour within this context of ethics and risks. It thus remains the responsibility of the board of directors to chart a strategy that addresses or attempts to mitigate majority of these prevalent risks.

To strike a healthy balance between profitability and risks, ‘responsible’ corporations employ a system of checks and balances that aligns profitability goals with the competing stakeholder ethical concerns and risks. In this context, the inclusive approach, more often, is to execute corporate governance from a compliance viewpoint.

At a glance, corporate governance lays the framework or overall management approach that determines an organizations direction and how a company positions itself towards meeting its obligations – both internal and external. It constitutes a set of processes that control how a firm is directed, administered or controlled. Corporate compliance on the other hand, ensures that businesses operate within specific legal, regulatory, contractual, or policy requirements.

Whereas corporate governance and corporate compliance are different strategic initiatives, they are interdependent in so far as their role in protecting against certain risks or guiding the overall business direction is concerned.

Importantly, non-compliance results in poor corporate governance and this brings the question of whether there exist mechanisms of fostering risk awareness and correction of identified risks, aiding compliance and ultimately effective oversight.

Boards can remain on top of compliance requirements with the aid of board management systems that not only ease corporate governance processes but also keep your directors up-to-date with the organizations compliance status with different regulatory bodies. Through such systems that keep board directors aware of what goes on around the company at all times, hence ensuring active oversight of risks that can derail smooth business operations.

What are you waiting for? To learn more about our Board Management System (eHorizon eBoard) , visit our website at www.stl-horizon.com or call +254 709 609 000

If you look at some of the fastest growing economies in Africa, what sets them apart is not just the performance of the large and listed corporations but the robust and vibrant SME presence. SMEs form one of the most influential business sectors in African countries and remain the biggest contributor in accelerating economic growth.

In Kenya for instance, Micro, Small and Medium Enterprises (MSMEs) contribute to about 40% of the GDP. Additionally, SME’s also contribute massively to job creation – about 50% of new jobs created, according to a 2018 World Bank Report on High Growth Firms.

Another report by the Central Bank of Kenya also indicated that SME’s constitute 98% of all businesses in Kenya, further underscoring their importance.

Crucially, in spite of their vital role, 46% of SMEs shut down within a year of founding and subsequently 15% fail in their second year of operation. This high collapse rate remains a threat to the effective development and growth of SME’s and can be attributed to some of the major challenges facing SME’s including inadequate capital, lack of market access, lack of adopting new and emerging technologies, poor infrastructure, lack of skills, unfavourable regulations and lack of proper management.

These challenges notwithstanding, one critical enabling factor for enhancing the performance and sustainability of SMEs is corporate governance. Good corporate governance practices present SMEs with robust business processes and risk management strategies or mechanisms of responding to crises.  It similarly provides a clear-cut path of employing better management practices, effective oversight and control mechanisms.

Regardless of the stage of development SMEs are in, corporate governance lays the crucial framework to ensure transparency and accountability hence making them less prone to system risks and effectively making them more attractive to investors. SMEs seeking to attract investors can thus leverage on good governance track-record as a value proposition to secure funding.

1. Instituting Proper Rules, Policies and Procedures

For SMEs to run as efficiently as possible, business founders and owners of Small and Medium Enterprises need to be clear in their vision on how the business is to be run. This is crucial in defining the strategic direction, financial expectations, roles and responsibilities of management/members, as well as clear-cut systems of achieving the organization’s goals and objectives.

2. Separation between Management and Owners

Lack of competent managerial skills has been cited in many scholarly articles as one of the banes to the growth and development of SMEs. Corporate governance makes room for the introduction of external directors away from the business owner who bring with them diversity of skills hence improve best practice methods of running the business and improving profits.

3. Board of Directors

External board members not only bring diverse skills that in turn lead to better

management decisions but can also provide an important avenue of attracting funds or resources for growth. Whereas SMEs may not have the resources to acquire skilled directors, they can put in place boards through seeking volunteer directors, offering equity as director’s compensation or recruiting board consultants on need basis.

4. Transparency and Accountability

SMEs need to establish clear communication channels and ensure timely and accurate sharing of information about their activities. Information disclosure with internal and external stakeholders creates a consistent track record infuses confidence of possible investors paving the way for attracting funding from financial institutions. Additionally, this also helps in safeguarding from internal fraud and issues pertaining to ethical liability.

5. Succession Planning

This is crucial in minimizing “key-person “risk especially in the start-up stage where the business is largely dependent on the founder in the day-to-day running of the business.

6. Proper Financial Reporting

Majority of SMEs do not do proper accounting nor have implemented international financial reporting standards.  Financial reporting provides a comprehensive and accurate picture of organization operations. Timely financial statements are important for effective business management be it a large or small enterprise.

Want to learn more about our eHorizon Suite of Solutions? Call us at +254 709 609000 or email sales@stl-horizon.com

ESG is a core strategic mandate and principle of the WFE and this year’s survey mapped exchange activities to the WFE’s Sustainability Principles for the first time. These principles, published in October 2018, state that exchanges will: work to educate participants in the exchange ecosystem about the importance of sustainability issues; promote the enhanced availability of investor relevant, decision-useful ESG information; actively engage with stakeholders to advance the sustainable finance agenda; provide markets and products that support the scaling-up of sustainable finance and reorientation of financial flows; and establish effective internal governance and operational processes and policies to support their sustainability efforts.

Successful integration and effective management of sustainability at a company requires having committed leadership, clear direction, and strategic influence—and none of this will happen without a robust governance structure. Sustainability governance helps a company implement sustainability strategy across the business, manage goal-setting and reporting processes, strengthen relations with external stakeholders, and ensure overall accountability.

The WFE sustainability survey captures the nature and extent of member engagement with Environment, Social and Governance (ESG) issues in both developed and emerging markets. By carrying out this survey on an annual basis, the WFE is also able to track the evolution of members’ engagement with ESG issues.

Four Considerations to Keep in Mind when Building Effective Governance Structures:

  • Commitment begins at the top. Reporting to the CEO or other key C-suite leadership can help demonstrate that a company is serious about sustainability.
  • Accountability must be established and communicated clearly. Accountability helps ensure that sustainability is integrated with other business goals. Including sustainability performance into the company’s annual goals and employee performance review and compensation processes may be helpful mechanisms.
  • Alignment between the structure and the business is imperative. Sustainability governance structures that align with and complement the existing business model and organizational structures can be more successful than creating redundant or competing structures.
  • Flexibility to adapt and build up on the sustainability program across business units and regions can advance the sustainability agenda. Allowing for some adaptation can help ensure the sustainability program’s relevance to a business unit’s own strategies or region’s local conditions. It also can generate employee engagement.

Is your business as efficient as you’d like it to be? No, take your time, really think about it… Are all the processes as streamlined as you would like them to be? If not, how can you be better?

Business Process Automation (BPA) is simply a defined way to eliminate manual, time consuming and costly tasks within an organization and replace them with automated processes that work faster while reducing redundancy in tasks and overall operating costs. They’re designed to provide companies with a competitive advantage, whether it’s finding ways to provide customers with services more efficiently, reducing order errors, or fixing billing and payment issues, among dozens of other examples.

Why is Business Process Automation great?

  • It allows companies to orchestrate, integrate, and automatically execute.
  • It centralizes your processes for the greatest amount of transparency, as it keeps the computing architecture intact. It coalesces the business functions that should logically be more integrated and spreads them out across the company.
  • It addresses your human-centric tasks and minimizes the need for personal interaction.

“To be strategic is to concentrate on what is important, on those few objectives that can give us a comparative advantage, on what is important to us rather than others, and to plan and execute the resulting plan with determination and steadfastness.”

Richard Koch

How do you go about it?

  • Examine your business strategy and look at the key areas that may need automation
  • Are the key aspects of your business all working in sync? If not, why?
  • Do a customer/product journey map and highlight the areas that may need improvement based on efficiency, speed, effectiveness and environmental consideration i.e how much paper is used?

Software Technologies Limited (STL) was founded in 1991, and has since grown to deliver Software Solutions and Services around Africa and the Middle East. STL develops its own software and focuses on solutions that address the management of people, processes and governance. Our cloud-based solutions have enabled companies of all sizes to access simple and effective systems that allow them to focus on their core business. Call us today at +254 709 609000 / +254 722 207450

Many directors are feeling outmatched by the ferocity of changing technology, emerging risks, and new competitors. Here are four ways to get boards in the game.

Today’s boards are getting the message. They have seen how leading digital players are threatening incumbents, and among the directors we work with, roughly one in three say that their business model will be disrupted in the next five years.

In a 2015 McKinsey survey, though, only 17 percent of directors said their boards were sponsoring digital initiatives, and in earlier McKinsey research, just 16 percent said they fully understood how the industry dynamics of their companies were changing.1 In our experience, common responses from boards to the shifting environment include hiring a digital director or chief digital officer, making pilgrimages to Silicon Valley, and launching subcommittees on digital.

Valuable as such moves can be, they often are insufficient to bridge the literacy gap facing boards—which has real consequences. There’s a new class of problems, where seasoned directors’ experiences managing and monetizing traditional assets just doesn’t translate. It is a daunting task to keep up with the growth of new competitors (who are as likely to come from adjacent sectors as they are from one’s own industry), rapid-fire funding cycles in Silicon Valley and other technology hotbeds, the fluidity of technology, the digital experiences customers demand, and the rise of nontraditional risks. Many boards are left feeling outmatched and overwhelmed.

To serve as effective thought partners, boards must move beyond an arms-length relationship with digital issues (exhibit). Board members need better knowledge about the technology environment, its potential impact on different parts of the company and its value chain, and thus about how digital can undermine existing strategies and stimulate the need for new ones. They also need faster, more effective ways to engage the organization and operate as a governing body and, critically, new means of attracting digital talent. Indeed, some CEOs and board members we know argue that the far-reaching nature of today’s digital disruptions—which can necessitate long-term business-model changes with large, short-term costs—means boards must view themselves as the ultimate catalysts for digital transformation efforts. Otherwise, CEOs may be tempted to pass on to their successors the tackling of digital challenges.

At the very least, top-management teams need their boards to serve as strong digital sparring partners when they consider difficult questions such as investments in experimental initiatives that could reshape markets, or even whether the company is in the right business for the digital age. Here are four guiding principles for boosting the odds that boards will provide the digital engagement companies so badly need.

Close the insights gap

Few boards have enough combined digital expertise to have meaningful digital conversations with senior management. Only 116 directors on the boards of the Global 300 are “digital directors.”2 The solution isn’t simply to recruit one or two directors from an influential technology company. For one thing, there aren’t enough of them to go around. More to the point, digital is so far-reaching—think e-commerce, mobile, security, the Internet of Things (IoT), and big data—that the knowledge and experience needed goes beyond one or two tech-savvy people.

To address these challenges, the nominating committee of one board created a matrix of the customer, market, and digital skills it felt it required to guide its key businesses over the next five to ten years. Doing so prompted the committee to look beyond well-fished pools of talent like Internet pure plays and known digital leaders and instead to consider adjacent sectors and businesses that had undergone significant digital transformation. The identification of strong new board members was one result. What’s more, the process of reflecting quite specifically on the digital skills that were most relevant to individual business lines helped the board engage at a deeper level, raising its collective understanding of technology and generating more productive conversations with management.

Understand how digital can upend business models

Many boards are ill equipped to fully understand the sources of upheaval pressuring their business models. Consider, for example, the design of satisfying, human-centered experiences: it’s fundamental to digital competition. Yet few board members spend enough time exploring how their companies are reshaping and monitoring those experiences, or reviewing management plans to improve them.

Board members also should push executives to explore and describe the organization’s stock of digital assets—data that are accumulating across businesses, the level of data-analytics prowess, and how managers are using both to glean insights. Most companies underappreciate the potential of pattern analysis, machine learning, and sophisticated analytics that can churn through terabytes of text, sound, images, and other data to produce well-targeted insights on everything from disease diagnoses to how prolonged drought conditions might affect an investment portfolio. Companies that best capture, process, and apply those insights stand to gain an edge.

Engage more frequently and deeply on strategy and risk

Today’s strategic discussions with executives require a different rhythm, one that matches the quickening pace of disruption. A major cyberattack can erase a third of a company’s share value in a day, and a digital foe can pull the rug out from a thriving product category in six months. In this environment, meeting once or twice a year to review strategy no longer works. Regular check-ins are necessary to help senior company leaders negotiate the tension between short-term pressures from the financial markets and the longer-term imperative to launch sometimes costly digital initiatives.

Boardroom dialogue shifts considerably when corporate boards start asking management questions such as, “What are the handful of signals that tell you that an innovation is catching on with customers? And how will you ramp up customer adoption and decrease the cost of customer acquisition when that happens?” By encouraging such discussions, boards clarify their expectations about what kind of cultural change is required and reduce the hand-wringing that often stalls digital transformation in established businesses. Such dialogue also can instill a sense of urgency as managers seek to answer tough questions through rapid idea iteration and input gathering from customers, which board members with diverse experiences can help interpret. At a consumer-products company, one director engages with sales and marketing executives monthly to check their progress against detailed key performance indicators (KPIs) that measure how fast a key customer’s segments are shifting to the company’s digital channels.

Fine-tune the onboarding and fit of digital directors

In their push to enrich their ranks with tech talent, boards inevitably find that many digital directors are younger, have grown up in quite different organizational cultures, and may not have had much or even any board experience prior to their appointment. To ensure a good fit, searches must go beyond background and skills to encompass candidates’ temperament and ability to commit time. The latter is critical when board members are increasingly devoting two to three days a month of work, plus extra hours for conference calls, retreats, and other check-ins. Board members need to increase their digital quotient if they hope to govern in a way that gets executives thinking beyond today’s boundaries. Following the approaches we have outlined will no doubt put some new burdens on already stretched directors. However, the speed of digital progress confronting companies shows no sign of slowing, and the best boards will learn to engage executives more frequently, knowledgeably, and persuasively on the issues that matter most.

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