Implementing Corporate Governance Systems

Governance is a relatively new force for South Africa business in response to a wave of corporate scandals. The new laws, developed to encourage companies to do the right thing, are complex and could have a substantial impact on SHEQ programmes

SHEQ issues significantly affect a company's financial performance, For example, companies that have failed to manage their SHEQ issues have incurred multi-million rand liabilities, faced significant reputation erosion or gone bankrupt.

Four specific drivers have focused increased attention on corporate governance.

Corporate accountability laws focus new attention on the internal controls companies have in place to ensure sound fiscal management and accurate financial reporting.

Trade globalisation means that regulatory requirements are a greater concern to companies.

Reputation risk is also taken more seriously. Over half of the respondents in a survey of World Economic Forum members estimated that corporate brand or reputation represented more than 40% of a company's markets capitalization. Given the public interest in environmental issues in particular, negative environmental publicity is a significant corporate concern.

Expanding potential liability is the final driver, laws and standards are increasingly shifting from "buyer beware" to a focus on minimizing a product potentially harmful quality, environmental and safety imparts throughout all aspects of its lifecycle. This has led to an increased focus on those entries along the product distribution chain that can prevent potential harmful influences. In a global marketplace, ignoring quality, safety and environmental concerns can create serious worldwide liability.

KEY REQUIREMENTS FOR EFFECTIVE SHEQ GOVERNANCE

Studies of SHEQ programmes unanimously conclude that effective SHEQ performance "starts at the top" Informed, involved and committed top management is critical. Furthermore, SHEQ programmes are only effective when there is ownership, which only happens when the roles and responsibilities for SHEQ performance are clearly defined individual performance reviews should include an evaluation of how effectively these responsibilities have been met.

It is impossible to proactively manage processes if you don’t know the current status and where it's going. The development and ongoing monitoring of clear, concise and relevant performance metrics is critical to successful SHEQ performance. These metrics provide consistent data reporting to support sound decision-making in organisations with multiple business units.

Human nature being what it is, it difficult for those involved in implementing and maintain systems to provide an impartial evaluation of the systems performance. Besides, system audits require competent auditors.

Management requires timely and effective communication responsibilities will not be met if they are not communicated, metrics are meaningless unless they are available when decisions need to be made, and evaluation is purposeless unless it drives system improvements.

Good intentions aside, quality and safety initiatives and environmental protection require resources.

CONSIDERING SUSTAINABILITY AND SOCIAL RESPONSIBILITY

In the global marketplace country-specific laws and regulations can no longer be the exclusive focus of SHEQ programmes. Laws will never address all aspects of what is fair, ethical and consistent with company values. Rather than ignoring questions of ethics and values. Companies increasingly need to confront these questions directly and proactively.

Steve Simmonds is the executive head of quality at Metrix Software Solutions. He has been involved in the field of quality management for 28 years, and is a part president and senior member of South African Society for Quality.

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