Chief governance officer
Encyclopedia
The Chief Governance Officer (CGO
) is a senior executive reporting to the CEO
who is tasked with directing the people, business processes and systems needed to enable good governance from inside the corporation in support of the board of directors
. In some geographies the role is assumed by the chief counsel
, in others by a corporate or company secretary
.
The role is likely to grow in prominence as corporate governance
requirements - in voluntary codes or law - grow and mature. The heads of several governance-related functions may report to the CGO, including community relations / public affairs, corporate strategy, business continuity management, business performance management
, compliance management / internal controls, corporate communication, corporate philanthropy, enterprise risk management, ethics management, internal audit
, investor relations
, legal services, stakeholder management
and sustainability management
. Also, the appointment of a CGO with clout is both a signal to the market that the company takes corporate governance seriously and a way to increase the market value of a firm if, as research by McKinsey shows, investors will pay a premium for the stock of well-governed companies.
As corporations add the necessary functions, several issues arise. First is the risk that the functions overlap, evolve into silos, create misunderstanding internally and externally and act at cross purposes. Second is the opportunity for enhanced impact through synergy between these functions. Risk managers, compliance officers and business performance managers often need to manage change in order to achieve their objectives. Without a sponsor at top management level their efforts may fail when the magnitude of resistance to change overwhelms their limited powers of influence. Third, the serial introduction of new processes may simply require more attention, time and enthusiasm than line managers can realistically offer. A single phased plan for enabling good governance could mitigate the risks and preeempt any wasteful expenditure. Last, the complexity of the interactions between the different functions compounded by the infancy of the new disciplines may require continuous conceptual interpretation for top management and the board.
Companies that have appointed CGO's include Allianz
, Kodak, Krispy Kreme
, Prudential
, Telkom, Vodacom
.
CGO
CGO may refer to:*Ceria gadolinium oxide CGO may refer to:*Ceria gadolinium oxide CGO may refer to:*Ceria gadolinium oxide (used in Solid Oxide Fuel cells (SOFC)*Central Gilts Office*Chief governance officer*Chief governing officer*Zhengzhou Xinzheng International Airport (IATA: CGO)...
) is a senior executive reporting to the CEO
Chief executive officer
A chief executive officer , managing director , Executive Director for non-profit organizations, or chief executive is the highest-ranking corporate officer or administrator in charge of total management of an organization...
who is tasked with directing the people, business processes and systems needed to enable good governance from inside the corporation in support of the board of directors
Board of directors
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
. In some geographies the role is assumed by the chief counsel
General Counsel
A general counsel is the chief lawyer of a legal department, usually in a corporation or government department. The term is most used in the United States...
, in others by a corporate or company secretary
Company secretary
A company secretary is a senior position in a private company or public organisation, normally in the form of a managerial position or above. In the United States it is known as a corporate secretary....
.
The role is likely to grow in prominence as corporate governance
Corporate governance
Corporate governance is a number of processes, customs, policies, laws, and institutions which have impact on the way a company is controlled...
requirements - in voluntary codes or law - grow and mature. The heads of several governance-related functions may report to the CGO, including community relations / public affairs, corporate strategy, business continuity management, business performance management
Business performance management
Business performance management is a set of management and analytic processes that enable the management of an organization's performance to achieve one or more pre-selected goals...
, compliance management / internal controls, corporate communication, corporate philanthropy, enterprise risk management, ethics management, internal audit
Internal audit
Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk...
, investor relations
Investor relations
Investor Relations is a strategic management responsibility that integrates finance, communication, marketing and securities law compliance to enable the most effective two-way communication between a company, the financial community, and other constituencies, which ultimately contributes to a...
, legal services, stakeholder management
Stakeholder management
The importance of stakeholder management is to support an organization in achieving its strategic objectives by interpreting and influencing both the external and internal environments and by creating positive relationships with stakeholders through the appropriate management of their expectations...
and sustainability management
Corporate sustainability
Corporate sustainability is a business approach that creates long-term consumer and employee value by not only creating a "green" strategy aimed towards the natural environment, but taking into consideration every dimension of how a business operates in the social, cultural, and economic environment...
. Also, the appointment of a CGO with clout is both a signal to the market that the company takes corporate governance seriously and a way to increase the market value of a firm if, as research by McKinsey shows, investors will pay a premium for the stock of well-governed companies.
As corporations add the necessary functions, several issues arise. First is the risk that the functions overlap, evolve into silos, create misunderstanding internally and externally and act at cross purposes. Second is the opportunity for enhanced impact through synergy between these functions. Risk managers, compliance officers and business performance managers often need to manage change in order to achieve their objectives. Without a sponsor at top management level their efforts may fail when the magnitude of resistance to change overwhelms their limited powers of influence. Third, the serial introduction of new processes may simply require more attention, time and enthusiasm than line managers can realistically offer. A single phased plan for enabling good governance could mitigate the risks and preeempt any wasteful expenditure. Last, the complexity of the interactions between the different functions compounded by the infancy of the new disciplines may require continuous conceptual interpretation for top management and the board.
Companies that have appointed CGO's include Allianz
Allianz
SE is a global financial services company headquartered in Munich, Germany. Its core business and focus is insurance. As of 2010, it was the world's 12th-largest financial services group and 23rd-largest company according to a composite measure by Forbes magazine.Its Allianz Global Investors...
, Kodak, Krispy Kreme
Krispy Kreme
Krispy Kreme is the name of an international chain of doughnut stores that was founded by Vernon Rudolph in 1937 in Winston-Salem, North Carolina. The parent company of Krispy Kreme is Krispy Kreme Doughnuts, Inc...
, Prudential
Prudential
-Companies:* Prudential plc, a United Kingdom-based financial services company* Prudential Financial, a United States-based financial products and services company** Prudential Securities, financial services arm of Prudential Financial-Buildings:...
, Telkom, Vodacom
Vodacom
Vodacom is a pan-African mobile telecommunications company, and was the 1st cellular network in South Africa. It provides GSM service to more than 35 million customers in South Africa, Tanzania, Lesotho, Mozambique and the Democratic Republic of the Congo. Revenue for the year ended 31 March 2008...
.