There is a significant disconnect between assessments of governance and true governance effectiveness. It’s time to assess why governance evaluations are often wrong and to what can be done to fix the problem. However, most companies still don’t measure their overall system of corporate governance because it is difficult to measure. It encompasses all of the systems by which organizations are directed and controlled, and some of those systems are difficult to quantify. Governance is more than policies and procedures. It’s about how we make decisions, establish objectives, and monitor their achievement.
Publicly available governance scores are determined primarily by comparing governance disclosures to a well-known code of governance. The good news is that a new scorecard is now available that makes governance evaluation easier for U.S. public companies. The American Corporate Governance Index goes beyond publicly observable measures of corporate governance such as the number of board meetings or executive compensation disclosures.
Download your free copy of Tone at the Top to learn how what's measured improves, and how meaningful improvement requires measuring the right things systematically, thoroughly, and most importantly, using appropriate measurement criteria.