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Summary Enterprise governance is an emerging concept which emphasizes the importance of balancing the corporate governance and performance management aspects of the organization. In the light of recent corporate scandals, there has been considerable pressure worldwide to improve standards of corporate governance through new codes of best practice and legislation. While necessary, there is a danger that with so much attention on control issues, the need for companies to create long-term wealth and to pursue the right strategies to achieve this is overlooked. Research has shown that a particular challenge for boards is to maintain effective oversight of the company's strategic position and progress. In response to this "gap" in oversight, The Chartered Institute of Management Accountants has developed a strategic scorecard. The scorecard is currently under development but is introduced here as a potentially valuable strategic management framework.
Keywords Corporate governance, Performance management, Risk management
Introduction
Recent high-profile cases of corporate failure such as Enron, WorldCom, Vivendi, Royal Ahold and, most recently, Parmalat, have brought corporate governance issues to the top of the business and political agenda. As a consequence, many countries, including the UK, have instigated reviews of their corporate governance arrangements. Following the Higgs review of the role of non-executive directors and the Smith review of audit committees, for example, a revised UK Combined Code on Corporate Governance was issued in 2003 and became effective for all reporting years beginning on or after 1 November 2003.
There is no doubt that such efforts to improve standards of corporate governance have been necessary. However, there is a danger that, with so much attention on control issues, the need for companies to create long-term wealth and to pursue the right strategies to achieve this is overlooked. Good corporate governance is a necessary, but not sufficient, foundation for longterm sustainable success.
This has led to the emergence of the concept of enterprise governance, which emphasizes the importance of balancing corporate governance issues with strategic performance. During work on a project led by the International Federation of Accountants (IFAC) to explore enterprise governance in more detail, it became apparent that the ability to exercise effective strategic oversight by company boards was a key issue. While there are well -established oversight mechanisms for boards to oversee...