In my experience working with private businesses, governance is becoming increasingly important. Not only does it provide an organisational framework but also it helps protect a company’s reputation. Successful businesses today are very aware that society demands socially responsible companies where trust, transparency and accountability are part of every action and behaviour.
Whatever generation of ownership a private business is at, the importance of promoting and preserving the values and behaviours of the founders and being a ‘responsible business’ can be felt throughout and generally is a key driver in the decision making of the board. This is the foundation of ‘good governance’ as it sets the tone at the top. Many already recognise the importance of communicating this culture with their key stakeholders, who are not institutional shareholders, but employees, suppliers, customers and even the local community.
The impending adoption of new corporate governance reporting regulations extending sustainable and responsible governance practices to U.K. private limited companies, requires businesses to quickly assess their corporate governance framework and for their reporting to be compliant from 1 January 2019 [read more about what is required here.
The ‘Reporting in Private Business’ award at our upcoming Building Public Trust Awards reviews the publically available reporting of the largest privately owned companies in the U.K. This year we have shortlisted companies that voluntarily apply a corporate governance code, demonstrating in their reporting more than just applying the requirements, but that governance is at the heart of their business, setting a great example for when the future regulations come into force. In particular, all three provided transparency by giving details of the focus, activities and topics discussed by the board.
The companies that stood out to us didn’t tie governance to just the activities of the board. Although it is the board that sets the tone at the top and therefore ultimately has responsibility for the culture of the business, activities to bring it to life will be led throughout the organisation. This is similar to other recent reporting regulations which have come into force (supplier payment practices, gender pay, modern slavery) which although ultimately the responsibility of the board, are being complied with at an operational level.