Sustainable Enterprise Performance

A Comprehensive Evaluation Method

Jean-Louis Leignel, Emmanuel Menager, Serge Yablonski

• Publisher: Wiley-ISTE
• Year: 2019
• Print ISBN: 9781786303714
• eBook ISBN: 9781119618270
• Edition: 1
• Topic: Business
• Subtopic: Entrepreneurship
• Index: Business

Sustainable Enterprise Performance details a method for evaluating an enterprise's readiness and progress toward sustainable performance through a comprehensive set of qualitative and quantitative indicators.

These indicators cover enterprise strategy for meeting both the impact of the enterprise within the framework of corporate social responsibility and the expectations of stakeholders, evolving and monitoring the product and service offerings and business processes.

The second half of the book focuses more closely on fundamental determinants of performance, such as digital transformation and artificial intelligence, corporate culture, ethics and compliance, branding and e-reputation and best-practice Lean management, and provides practical measures against which companies may assess the maturity of their sustainable performance.

Part 1
A Global Framework for the Governance Process and Indicators of Sustainable Performance

1
The Governance Process

1.1. Enterprise governance

Many principles of good governance and codes of good behavior have been suggested over nearly 15 years; the most recent ones place more emphasis on the function of Boards of Directors and the notion of internal audit. Today, we observe a certain maturity among enterprises with regard to carrying out these good practices: reporting the chapter relative to corporate governance in the annual report establishing responsible internal control or even a governance board in certain businesses, etc.

This aspect of corporate governance is oversimplified however, as it does not address matters of value creation, which is central for assuring a business’ continuity as well as its performance.

The model suggested by the Chartered Institute of Management Accountants (CIMA) and the International Federation of Accountants (IFAC) has the merit of introducing the “value creation” section, complementing the “risk management” section (see Figure 1.1).

The analysis of existing models in the light of affairs revealed to the public highlights the fact that the human aspect has so far been neglected. It appears that leaders have lost interest in their human resources for a long time (“the only wealth is man”, said J. Bodin on the subject). Therefore, it seems necessary today to rebuild momentum in corporate governance by taking people (decision-makers) into account more, beyond the implemented systems and organizations.

Figure 1.1. Enterprise governance

Finally, in order to think about the many diverse aspects that governance covers, nothing is better suited than the following image of navigation (Figure 1.2). It shows that we must simultaneously:

• – know where to go and plan the route to get there (value creation);
• – avoid obstacles (risk management);
• – make the best of winds and currents (optimization of resources);
• – not forget teamwork: “we’re all in the same boat” (people).

Figure 1.2. Illustration of governance principles by navigation. For a color version of this figure, see www.iste.co.uk/leignel/enterprise.zip

It also shows that we cannot neglect any of the aspects and that we must approach all of them in a balanced manner.

Governance must not appear as an obligation; if it is imposed from outside like international accounting standards or regulations on internal control, it will be nothing more than one virtuous component integrated into the corporate culture. However, the essential preoccupation of governance and its administrators must be to assure the business’ continuity through a periodically renewed project with a unique vision that is economically responsible and sustainable by taking human aspects into account, without which a project has no true meaning.

Enterprise governance provides guidance for conditioning operational systems, their coordination and their control in order to meet the objectives that it put forth. It ensures coordination between various processes, which can conflict with each other.

Hence, the idea of highlighting a governance process that is in charge of orchestrating the decision-making process of all the managers of the company.

Indeed, corporate governance is characterized by the decisions made by the management at all levels throughout the life of the company with the goal of sustainably creating value:

1. 1) Ensuring short- and medium-term business development thanks to the pertinence of the established strategy and the optimization of available resources.
2. 2) While simultaneously guaranteeing that risks capable of threatening the corporation are assessed and managed.

The decision-makers’ responsibilities are exercised within the framework of a decision-making process that we chose to represent in the diagram in Figure 1.3 in order to give the management a global vision of enterprise governance that emphasizes the key areas where these responsibilities must be exercised.

Figure 1.3. The process of enterprise governance

The strategy is defined here based on the expectations of all the stakeholders. From this strategy, the objectives are defined in order to improve the business processes to achieve the strategic goals. Projects mobilizing the resources of the processes are launched in order to realize these adaptations. Monitoring, a major component of the governance concept, covers the measurement of:

• – meeting strategic objectives;
• – performance;
• – risks;
• – maturity in terms of governance.

However, the diagram of this model of governance is only effective when the human aspect is taken into account, defining the role of the actors in charge of making it work, evaluating the competencies and convictions that the employees have or should have. It needs also to take into account the economic, social, ecological, political, geopolitical, judicial, competitive, media and financial (analyst, rating agencies) environments.

The increasing influence of financial markets leads to certain difficulties in terms of governance. Actors are above all concerned with profit in the short term rather than constructing a sustainable future. As a result, it is necessary to ask oneself what are the values that have to be capitalized on and how it could be possible to make them sustainable. This sustainability depends on invention, innovation and technological capabilities.

In the same perspective, governance faces the issue of externalization and relocation. This phenomenon therefore requires opening up the previous model to the future of the extended enterprise. Thus, an important factor must be considered: networks – their quality, the enterprise’s place in these networks, the ability and prerequisites to access these networks and the partnerships.

The governance process therefore consists of two complementary and inseparable components that will be elaborated in the following:

• – the chain of decisions that must be made on various points, all contributing to the objectives of governance to a various degree. The chain is only as strong as its “weakest link” – no one point can be neglected, as it could destabilize the whole;
• – the role of managers in charge of making decisions throughout the chain, decisions that must respect good practices so that the decision chain s...

Table of contents

• Cover
• Table of Contents
• Foreword
• Acknowledgements
• Introduction
• Part 1: A Global Framework for the Governance Process and Indicators of Sustainable Performance
• Part 2: Focus on Medium- to Long-term Performance Levers
• Appendix
• Glossary
• References
• Index
• End User License Agreement