Corporate misdemeanours, especially at the Board and top management level have highlighted the need for building good Corporate Governance culture and practices within a company. With each such failure, stakeholders suffer considerably, and there is severe reputational damage for the company, and sometimes for the industry/ sector in which it operates.

The Board of Directors is at the apex of a company. The Board should adopt good Corporate Governance practices for the long-term sustainability of the Company. It should ensure that there is transparency and accountability. The Board should trust management with executive action, and in turn hold the management accountable for such action. It should also establish proper policies and processes, checks and balances, and strengthen the internal control processes. Investors have increasingly started focussing on well governed companies, and are looking beyond financial numbers when they invest in any company.

Even as Directors try to put in place good practices and processes, it would be beneficial to get an external view on the processes and practices of the company. This external view will have the advantage of being unbiased and objective. Sometimes the knowledge of Directors could be limited to their own experience. An external person can give advice on the basis of good practices being followed by other companies, some of which could be industry or company neutral. The focus of such an exercise should be improvement, and not fault finding. In order to evaluate, implement, improve and monitor governance practices in a company, the Board should consider hiring Corporate Governance consultants. Such consultants are expected to be highly experienced persons, who are equipped to conduct governance reviews based on the requirements of the company. They assess and evaluate the focus areas such as identifying gaps in Board skillsets, training of Directors, getting the composition of the Board right, succession planning, Board evaluation etc. They are expected to give an independent feedback to the Board on areas which need attention, and the possible interventions that could help.

Since the role that such consultants can play is important, care should be taken to onboard a consultant who has practical boardroom experience, as against mere theoretical knowledge. One solution fits all approach cannot be followed in interventions relating to Corporate Governance. Further, the Board should insist that the solutions that are proposed to be offered should be practical and pragmatic. Such assignments cannot focus on compliance or tick-the-box approach. They have to be value adding propositions.