Regulations, business trends, and socioeconomic factors can all impact the way corporations are run. As those factors change, so too will corporate governance best practices. In 2020, some of the major trends that corporations will need to account for are:
- Increased digitization
- Shifts in workplace culture
- Corporate purpose
- Sustainability
- Regulatory compliance
We’ll go into each of these in more detail below.
Going Digital
Technology is transforming the way business processes are managed, from AI-based supply chain management and predictive maintenance to online customer interactions and services. Modern technology helps to facilitate management processes while increasing transparency.
Given the proven impact that modern technology provides to companies, evolving with new technologies is key to remaining competitive in today’s market.
Workplace Culture
A company’s workplace culture has become a major sticking point in recent years for a number of reasons. Recent shifts in particular seem to be focused on achieving a more diverse working environment and facilitating the development of everyone within the company.
Investors have placed greater emphasis on diversity, which includes making sure more women and ethnic groups are represented on boards and in other leadership positions.
In addition, the modern workforce—particularly millennials—favors companies that provide opportunities for development. Companies whose culture facilitates growth will find numerous advantages, including a more loyal workforce and easier succession planning.
Corporate Purpose
Boards have historically placed great emphasis on making sure the company satisfies the needs of their shareholders, but in this decade, that focus will likely need to shift somewhat. In addition to their shareholders, corporations will also need to keep in mind how they will provide value to customers, communities, suppliers, employees, and so forth.
Ultimately, that means a shift in how corporations are viewed. More people are viewing businesses as members of a global community with responsibilities to match. As such, it’s no longer about turning profits, but also about fulfilling those responsibilities to the world.
Environmental Sustainability
One of those responsibilities is environmental sustainability. Corporations face greater pressure than ever before to be good custodians of natural resources and the environment as a whole. That pressure is likely to come from activists, shareholders, and their own customers.
People are becoming more and more aware of how their purchasing decisions are likely to impact the world as a whole, which means they will likely be a bit more choosy about where they take their business. As such, businesses will need to keep environmental sustainability in mind in order to maintain profitability.
Regulatory Compliance
The evolution of technology, greater demands for environmental sustainability, and increasing awareness of business practices, in general, all feed into increased demands from legislators and government organizations, both on local and state levels as well as from federal bodies.
Regulations are likely to keep evolving and becoming more complex, which means corporate governance practices need to evolve and become ever more tightly managed. That can include everything from OSHA compliance to the way customer data is handled.
As such, companies in general—and especially those who have high levels of liability in terms of their business operations—will want legal guidance on meeting those standards. A corporate attorney will likely be a must for many businesses in 2020.