The emissions scandal in the automotive industry, with accruals of up to US $ 18 billion, is another example of a lack of transparency in corporate decision-making structures. Gaining back the trust of investors, employees and customers requires a structured program, especially in the context of establishing governance structures.
In the past, the topic of corporate governance was understood and implemented differently. Intransparent structures, caused by internal decision-making chains, which, on the one hand, are geared towards company-specific requirements and, further, have to meet the purely legal requirements. Particularly for internationally operating companies, singular structures were driven out of the line functions. When making decisions, the operating result was often pragmatically reported from bottom to top. Historically, subsequent project results or organizational situations were quantified and the management was informed after the fact. A reactive process with tunnel vision for one's own cause often led to subsequent corrective measures. In extreme cases, it led to compensation for damages, as decisions were made that were incomprehensible or contrary to guidelines.
Confusing corporate structures lead to poor transparency and ambivalent overlapping of responsibilities. Decisions are not distributed over the right shoulders or too many shoulders. The results of these processes driven by the situation lead to a loss of reputation of internationally based companies and cause them financial damage. Current examples within the banking industry have accrued billions of dollars to accommodate current and future legal disputes. Clarifying internal analyzes for the processing of past decisions often do not provide the necessary transparency as a result.
An approach that pays off: Establishing top-down decision-making structures to manage proactive and tool-based decisions
Fines due to a lack of transparency and violations of local and international laws force a strategic rethink. Companies decide on corporate governance structures out of staff functions, in cooperation and with the understanding of the various departments. These are now set top-down. The holistic approach made possible by this supports cross-departmental decision-making structures with clear communication chains. Control elements integrated in advance, taking into account various risk factors, reduce potential risks and costs and create an overview of responsibilities. An increased networking of responsibilities leads to the desired transparency, which among other things has positive effects on “Business as Usual” and project timelines.
This result cannot be guaranteed without the timely integration of the IT functions. As a cross-departmental function, IT is the "means to an end" and must therefore be included in the development process.
Conclusion
The fact that decisions are made in the interests of the owners and in accordance with the law remains a challenge, but one that can be controlled with appropriate processes and IT.
Establishing processes properly in advance saves damage compensation. This should lead to the desired cost savings through tool support and risk reduction. A top-down solution approach requires the strategic alignment of all processes and their IT-supported implementation. Accruals for damage can be controlled by setting up reporting and decision-making structures. The demand for transparency, clear reporting and independent decision-makers as well as the introduction of professional documentation with the support of innovative technical solutions is an answer to this problem.
