A renowned Corporate Governance Expert, Professor Mervyn King has warned that companies which carry on their businesses without firm structures and systems of corporate governance would not survive the competition in the 21st century.
Speaking in an interview with the Ghana News Agency, Prof King said corporate governance was not about years of established rules for people to comply with, rather it should be seen as a way of applying the mind honestly in decision-making in the best interest of an entity be it a private establishment, a government entity or a department or a company.
“We need to change the way the world is being led and the way that companies behave, to embed sustainability issues into their strategic thinking,” he said.
Prof King was in Ghana on the invitation of the PwC Business School to facilitate sessions on Corporate Governance and Integrated Thinking and Reporting for Ghanaian business leaders.
The training forms part of the series of Corporate Governance curriculum of the PwC Business School.
He said governance is a major problem facing many institutions on the African continent and that it was high time the situation improved to deal with the challenges of development on the continent.
“Corporate governance is governance involving corporations but it is also governance involving governments as well. The principles of good quality governance are the same for everybody, for all entities,” he stressed.
On the benefits of corporate governance, Prof King said it had been empirically established that the practice of quality governance allowed companies to raise capital more cheaply as investors are able to measure risk on a more informed basis.
It is in this direction that he asked board members and business leaders to ensure that any decision made is the collective mind of the members.
To make it easier, he said, the board needs to have discussion before hand to make sure that they all understand what the purpose of the organization or company was, what the value drivers are, what they are trying to achieve.
“They must collectively apply their minds to make the best decision in the interest of the company.
“So it is a huge intellectual exercise. Thinking of the interest and expectations of the general collection of people and making a decision,” he said.
“In the best interest of the company, long-term considerations must be given in the interest of all stakeholders linked to the company,” Prof King added.
Mr Felix Addo, Country Senior Partner PwC, said one of the key principles of the business school is for PwC to transfer the knowledge acquired and experienced gathered over the years in its operations across different sectors to business leaders.
He said corporate governance is particularly relevant at this point in time because it is a key fundamental challenge for companies, especially when they try to scale up and improve upon company performance, especially small and medium sized companies.
He said big companies had disintegrated because of poor corporate governance and transparency challenges.
“Corporate Governance ensures that there are systems and structures in place which allows companies to perform sustainably overtime that is what we are doing with the seminar today,” Mr Addo said.