The Purpose and Need For Shareholder Value Assurance

When a product is truly a solution to a critical problem, truly an opportunity to achieve the extraordinary, there should be clear, compelling, and independent evidence supporting these assertions. The following excerpt from Sir Adrian Cadbury’s book, The Company Chairman, clearly and powerfully describes the purpose and need for the Shareholder Value Assurance methodology and software.

“Corporate Governance is the way in which the organization is directed and controlled by the board. Strategy is a classic board responsibility, and it is therefore in the Chairman’s field. Equally, the Chairman is responsible for seeing that the company has an identifiable sense of purpose, and that this purpose is regularly reviewed. In addition, the Chairman is likely to have the task of putting across the company’s aim to outside audiences. For all these reasons, the chairman needs to be involved in the development of the enterprise strategy.

Chief executives in their turn will be responsible for preparing the strategic options and for putting them to the board. Since chief executives will be in charge of carrying out the agreed strategy, it has to be one in which, in its final shape, they are committed personally and absolutely. Hammering out a strategy is an iterative process in which ideas and plans move backwards and forwards between the board and the various levels of management. It is a process which has to be approached from the bottom up as well as from the top down.

The board sets the boundaries within which operating units draw up their individual forward plans. In doing so, the operating units can be expected to put forward proposals which build on their existing activities. It is for the board, however, to take an overall view of the future shape of the company and to decide which of the existing activities should be developed and which should not. It is the synthesis of these two views of the company that the chief executive will put to the board – a synthesis which may only be arrived at after considerable internal discussion.

The strategic proposals which come to the board will represent the considered judgment of those within the company as to the direction which the business should be taking. These proposals then have to be reviewed by the board as a whole, where the outside directors will see them through different eyes, since they are outside the company looking in. In practice, it is FAR FROM EASY to involve all board members usefully in a discussion of strategy. It requires IMAGINATIVE EFFORT by both the Chairman and Chief Executive to present strategic issues to board members early enough in the process for them to have real influence over the outcome, and in a form which encourages them to contribute positively to the development of the final strategy.”

Recently, The National Association of Corporate Directors urged boards to “assess whether they are effectively taking advantage of technological advances which provide opportunities to share information and enable informal commentary between meetings.” Our product, Shareholder Value Assurance, is the most effective technological advance for this purpose that is the result of an “imaginative effort” to create a reliable, valid, and systematic way to practice this “far from easy” strategic approach to corporate governance.

Mark W. Sickles, LLC
www.markwsickles.com
mark@nacdnj.org
201-315-3653