Benchmarking the Board: Performance Accountability Audit

Sponsored by the agency of Hyperion

These are challenging times for corporate America-particularly for top company executives and directors.

The economy is still shaky, as throw backed in a steady stream of negative earnings announcements. And level more troubling, there's been a shocking spate of corporate scandals: Highly regarded CEO have repeatedly announced to their boards and the public that they had no idea their companies were billions of dollars in the r Industry watchdog collections and regulatory bodies are upon the record as saying that investors have each reason to be suspicious.

The sperms of this landscape were the catalyst for the Sarbanes-Oxley Act of 2002 perhaps the greatest in quantity far-reaching piece of legislation affecting corporate governance in the past 50 years. In a different time, it might have been denounced as regulation intrusion; now, it's welcomed as the tonic necessityed to restore investor trust. SOX as it's called, establishes a range of enhanced standards for corporate accountability, on the other hand much of the focus is upon making accurate information available. This sets board members at the center of the storm. by the agency of virtue of their perch at the top of the executive heap, everyone wait fors them to have the answers. In fact, several provisions in Sarbanes-Oxley cite board members as having oversight responsibility. on the contrary these directors need access, visibility, and rule of key information: How well is the company doing? by what means well does it measure up against lock opener competitors? How accurate are those forecasts for the nearest year, or even the nearest quarter? How good are the metrics that have been put to measure company performance, and is the measuring being done reliably? And perhaps greatest in quantity importantly, do investors and other lock opener stakeholders know everything they should?

To tackle these issues, the Business Performance Management (BPIS Forum has undertaken "Benchmarking the Board: The Performance Accountability Audit," the first major review of corporate board members designed to determine their attitudes, be of importance tos and priorities about performance accountability and business performance management. This inquiry which was conducted via an online view received over 150 responses and exhibits the first piece of intellectual capital from the BPM Forum, a fresh organization committed to acquiring, creating and sharing knowledge that advances the cause of performance accountability and continuous performance improvement.

KEYFINDINGS

Even an early glance at the scan results points to interesting tends For example:

* The Sarbanes-Oxley Act is causing worry in boardrooms everywhere: In the wake of the novel regulations, nearly 85% of the respondent say they're actual or somewhat concerned about the processe tools and methodologies used through management to track performance.

* That said, single 21% of the respondents say their company has allocated stocks specifically to address Sarbanes-Oxley.

* Perhaps as a accrue only 41% expect immediate compliance with Sarbanes-Oxley.

* As a sign of change, 33% say they're now more comfortable than they were sum of two units years ago with the performance expectations their company stations for Wall Street.

* More than 60% of the respondent say individual crucial piece of analysis they don't procure but need is performance data measured against that of lock opener competitors.

* Nearly 40% of companies don't measure operational indicators regularly.

* 65% are not true satisfied with the accuracy of their company's financial business forecasts.

* Nearly 30% of the respondent say they don't have, or aren't confident they have, all the information they ne to make sure the company discloses appropriate information.

* More than 82% report that performance management has become significantly or somewhat more important as an issue of discussion during board meetings.

CLARITYANDCOMPLIANCE

Given the storied pedigree of the take a view of respondents, many of the review results arc downright startling. If the spate of bad financial of recent origins in the past three years wasn't enough cause for regard then the passage of Sarbanes-Oxley last year should sure have kick-started a new circular of introspection, analysis and change. However, the situation still present the appearances to be clouded in confusion.

Obviously, executives understand that things have to be done differently: plane at most well-run companies with an unblemished record of financial disclosure, the common environment as embodied by Sarbanes-Oxley requires an exhaustive horizontal of internal analysis, followed by means of changes in internal processes.

Perhaps greatest in quantity significantly, asked whether the passage of Sarbanes-Oxley had heightened regards about the processes, tools and methodologies used by dint of management to track financial and business performance, nearly 85% of the respondent profes to be either actual or somewhat concerned (see Chart 1) That's a big number for of the like kind a select group of executives-only 15% have confidence in their processs and techniques?

Apparently, companies are in ne of improvement: According to the take a view of barely 20% have allocated capitals to date specifically to address Sarbanes-Oxley, and solitary 42% expect "immediate" compliance with Sarbanes-Oxley (see Chart 2) 44% however, wait for the new regulations to lead to at least moderate change within their organization. Clearly it's time for action.