By Alister Esam, CEO, eShare

The nature of governance in business and finance has changed drastically over the past decade or so. Previously there was an element of ‘we’ll run our business how we choose’ to board strategy, but businesses are now more accountable than ever before, with any wrong-doing highlighted to shareholders and the wider public at large.

In life generally we set far higher standards than we once did and this is reflected in the way we do business. With technology as it is, there is always an audit trail and there is no more brushing under the carpet, so organisations and the boards that run them, have to be accountable.

Getting people to behave better and increasing transparency of what goes on at board-level is in keeping with the times and is undoubtedly a force for good.But 2016 has seen some of the most chaotic times in memory. How have recent events increased the need for transparency and good governance even further?

Referendum = huge uncertainty

The recent referendum result has caused political upheaval and economic uncertainty, with the financial services sector set to be one of the most disrupted. Big US banks such as JPMorgan Chase, Goldman Sachs and Morgan Stanley have large operations in the UK. They traditionally have set up their regulated businesses in the UK and then used its right to ‘passport’ into other EU countries.

The referendum may change this, with lawyers stating that US banks could need a new legal base, so will look at moving some work to cities such as Dublin, Paris and Frankfurt. UK banks will also re-evaluate what to do with their businesses that trade EU securities. Before the vote, HSBC said that it could move 1,000 trading jobs to Paris, although will most likely delay any decision until Brexit actually comes into effect.

Away from finance, businesses such as Vodafone and EasyJet have openly discussed moving their HQ from the UK. Yet no-one knows whether all this will happen or not, and for now, most businesses are very much in ‘wait and see’ mode. But the referendum and subsequent uncertainty it has caused have only increased the need for good governance.

Big decisions need proper governance

Any organisation considering moving their HQ or some of their workforce will undoubtedly be aware that this is a major decision, not easily undone and certainly not one to be taken lightly. Not only do compliance requirements and jurisdictions vary from country to country, but such a complex process as moving location needs absolute transparency at board level. Employees, investors, shareholders and customers will all want to know why certain decisions have been made and what the rationale was behind any relocation.

Good governance means accountability and any business taking a major decision has an obligation to be able to report, explain and answer the consequences on behalf of the company it represents.

Stakeholders should be able to follow and clearly understand that decision-making process – what information, advice and consultation the board considered, which legislative requirements were met – and where relevant and appropriate have the chance to be a part of that decision making.

Boards should be driven by getting the right brains around a table and should always include people from other levels of the business, even if it’s a voice rather than physical presence. But many boards are so formal and rigidly structured, have organisations really done enough to make sure their boards are transparent and honest?

It’s a cultural issue as much as anything – how many board executives are really in touch with what is going on in their organisation? Do staff have any input into board meetings whatsoever? For a decision such as company relocation, all affected parties should have the opportunity to participate in the process. This means organisations must establish better collaborative structures for their boards, giving greater visibility across the entire business.

People increasingly expect businesses to be open and transparent in their operations and in what goes on at board level. But this is even truer in the turbulent post-referendum economic and politic climate and governance must remain a priority as difficult decisions are made.