
Far from being a trend, the processes help companies establish themselves in an increasingly competitive market. Warren Buffett of Berkshire Hathaway, Mary Barra of General Motors, Lowell McAdam of Verizon, Larry Fink of BlackRock and other CEOs of large North American companies signed a document in 2016 (read here) that lists ways to improve corporate governance in the United States.
The idea behind this signature was to make companies in the country adopt more transparent and effective policies, promoting public credibility. And without governance, there is no way to establish a positive scenario inside – and outside – an organization.
The term “governance” came into fashion with the Bretton Woods agreements in 1944, along with the institutions created from the conference, and emerged to map the “set of processes, customs, policies, laws, regulations and institutions that regulate the way a company is directed, managed or controlled”. However, it was not until 2002 that governance became an urgent issue, after the introduction, in the same year, of the Sarbanes-Oxley Act, announced to restore public confidence in companies and markets after the accounting fraud that bankrupted high-performance companies such as Enron and WorldCom.
Fifteen years later, the signing of this manifesto by major business leaders reminds us that companies have no choice but to leverage past successes and mitigate past failures, as well as make careful assessments of future risks if they want to survive in today's world.
Ethics, risk management, sustainability and compliance
We have already seen that a company's governance directly affects its reliability. Evidence that validates this perception is found daily on the front pages of newspapers. These are corporate scandals and failures in the risk management system of varying magnitudes. This is why ethics, risk management, sustainability and compliance, topics of good governance, should be part of any company's agenda.
According to a survey by OCEG GRC (2014), a non-profit think tank that focuses on organizational performance, 80% of respondents said their organizations used independent governance, risk and compliance solutions for each department – with little or no information exchange between them. This leads to gaps in risk coverage and overall inefficiencies, as work is often duplicated.
But what is more interesting is the change in the interviewees, presented in the same survey in 2016. The survey indicated a greater interest in operational and corporate risk management technologies, in addition to management solutions, including geopolitical risk, third-party risk, information risk management, EH&S (environment, occupational health and safety) and even Business Continuity Planning (BCP). This leads us to believe that the speed at which the behavior of those involved changes generally responds to the trend that indicates technology as the best solution for unifying and managing processes.
Corporate governance in purchasing decisions
Corporate governance is, above all, synonymous with decision-making. In other words, it means putting the house in order, without hiding the dirt under the carpet. But how do you start using an effective management practice in business?
A good start to taking control of the company and overcoming setbacks is to exercise full control of the purchasing department, a strategic area of the company, since its negotiating power directly affects the final price of products and, therefore, competitiveness. After all, every R$1 saved on purchases is R$1 more in the company's profit.
Motivated by the 2008 crisis, the evolution of this sector ended up being driven by a new cost-saving policy to improve efficiency and savings (reduction in the cost of acquiring products and services). It was then that the role of buyer emerged. From then on, salaries increased and the profession reached the so-called C-Level, in the form of the CPO (Chief Procurement Officer).
The arrival of technology in this sector has accelerated the transformation even further. And with systems for standardizing databases and automating the process of analyzing all purchasing information, steps are being taken towards governance in this area.
Among the practices that can be facilitated with the use of mechanisms that have been proven to record and organize everything are price quotes, order management, reverse and direct auctions, material standardization, approval of suppliers, catalog management, among others. Even outsourcing can now be managed. With the automation of third-party management, the risks of subsidiary and joint liability are reduced and there is total control over payment information, collection of charges, and the safety and occupational health of employees with allocated labor.
In other words, once organizations decide to invest in governance, they gain a wide variety of approaches at their disposal and, as a result, a competitive advantage, becoming better regarded in the market.