Tips on how to implement results governance

Governance is government. Governance is related to direction, authority, accountability, transparency and participation.

Corporate Governance is frequently seen as the structure and the relationships that determine the direction and performance of the corporations.

CalPERS, the largest public fund in USA, defines corporate governance as the relationship among various participants in determining the direction and performance of corporations.

The American Managers Association defines corporate governance as how suppliers of capital get managers to return profits, make sure managers do not misuse the capital by investing in bad projects, and how shareholders and creditors monitor managers.

The objectives of monitoring, measuring, accountability, transparency, direction and performance have their odds of being met once a routine of producing and following up on results is in place. We name this routine: Results Governance.

The first step in its implementation is to define what will be measured.  A few criteria to establish what is going to be produced:

(1)    Less is More!
A lesser number of reports and metrics are always better for bringing focus and, thus, allowing analyzing the basic elements responsible for the development of the business.

(2)    Do not look for perfection
There is the risk of wanting, from the beginning, to have indisputable numbers. Accuracy is important; however, more than accuracy, it is important to begin producing the numbers (reports). Over time, with analysis and discussion accuracy will be improved.

(3)    Monitor performance
The performance of the business may be monitored via an Income Statement (or Profit & Loss Statement) along with a few performance indicators. 

The Income Statement is a report that shows if the produced income cover or not the costs and expenses of the business.

A Performance Indicator is a metric that allows the organization to compare its performance with its own targets as well as with the industry it is part of.

(4)    Measure solvability
The Balance Sheet depicts the assets and how they are financed (suppliers, government, service providers, banks and investors /shareholders ).

The assets being in excess of the liabilities the company would, theoretically, be solvent. However, there are two very important points to consider: valuation and liquidity.

The correct valuation of the assets and liabilities and their correct classification as to their degree of liquidity will affect the measurement of the company as to its solvency.

We suggest the implementation of the following routine as part of the cycle of Results Governance:

1.    Set up a Monthly Report
The existence of a monthly report requires the existence of: a set of standard reports that will serve as a reporting base together with a habitual meeting for discussing these reports, and the definition of its participants (show be those capable of influencing the numbers).

A periodic discussion of results should:

(a) Be objective and specific, seeking to explain the performance of the business and any deviation from the objectives;
(b) Comments should include actions that will be taken to remedy performance;
(c) In addition, space should be left to discuss other issues that impact the business and that are not captured by the defined reports.

2.    Set up a Weekly Report
An evolution, after the implementation of the Monthly Report, would be to establish a routine of weekly reports, aiming to provide room for more immediate corrective actions. This can be done by setting up weekly conference calls or simply via pre-formatted reports.

This report should include the following elements:

(a) Sales Performance
The objective is to monitor sales behavior, their costs, who is buying, who is not buying, which products are selling, and which ones are not. Compare this performance with the target and with the same period of the previous year would be equally recommendable.

(b) Business Development
In this block should be listed the measurable and effective actions that are ongoing and that will affect the development of sales. Other comments could be related to new product launches or new additions.

(c) General Information
Inform other topics that may be relevant such as: market news; competition, or others that may have an impact on the business.

3.    Schedule periodic field visits
An essential part of a good results governance program is field visits. By field must be understood where the businesses occur, be it store (if retailer), factory (if industry), customers and competition. Physical presence, an "owner’s look", allows one to identify inconsistencies between stories that numbers and reports tell with the reality as well as anticipate risks and identify opportunities.

4.    Value the Budget elaboration routine
The routine of building a budget is a unique opportunity to have a frank discussion about the state of the business, its real capacity to generate revenue, and also evaluate the management team as to their knowledge and their ability to identify and mitigate business risks.

Establishing a results governance routine is a first step in ensuring performance and accountability.

If you need help getting started, you can count on us. Contact us by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.   

At 2B Partners Consulting we aim to help companies to address the questions above thru the services of advisory board, interim management, managerial applications and consulting focused on financial advisory, operations improvement and organizational efficiency. Contact us to obtain more information by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.