Incorporating Information Governance (IG) best practices into corporate governance structures is more than just a strategic move—it's essential for enhancing board effectiveness and complying with the universe of laws, rules, regulations, and standards that apply to large organizations, worldwide. As businesses increasingly rely on accurate, reliable data for decision-making, the role of IG in corporate governance becomes ever more critical. And not having a solid IG strategy is simply untenable -- just ask the victims (and participants) in the deluge of high-profile corporate scandals in the early 2000s and the 2008 financial crisis!
The foundation of strong corporate governance lies in its core pillars: accountability, efficiency, fairness, responsibility, transparency, and independence. Adhering to these principles helps to guide corporate boards in making informed, ethical decisions. And, Information Governance plays a crucial role here by ensuring that the data underpinning these decisions is managed, protected, and leveraged effectively throughout its lifecycle—from creation to disposal.
This post discusses the link between IG and corporate governance. And without further ado...
First, effective Information Governance strategies directly support board accountability and transparency by improving data quality and availability and democratizing the flow of data throughout the organization. For example, according to one McKinsey report, organizations that implement strong data governance frameworks report a 30% improvement in data quality and availability. These kinds of improvements enable corporate boards to make decisions based on accurate, up-to-date information, ensuring that their actions are transparent and aligned with ethical and legal standards and critical business goals.
Moreover, transparency is not just a regulatory requirement; it's a trust-building measure. Highlighting this reality, a PwC 84% of directors believe that greater transparency leads to improved stakeholder trust and engagement, which is crucial for long-term business success, and continued stakeholder engagement.
Another core benefit of having a strong IG stance is data retrievability. Boards tasked with overseeing complex organizations need access to timely, accurate information to make effective and often “bet-the-house” decisions. IG practices such as metadata classification, reducing the flow of redundant, obsolete, and trivial data, and instituting training and version control mechanisms throughout the organization, streamline data management processes, reducing the time and resources needed to access critical information.
These structures, which should be bolstered by automated systems such as data classification software, archival platforms, and ESG reporting platforms and systems help corporate boards to quickly and effectively collect, synthesize, and analyze accurate data from various sources and to make effective data-driven decisions. This efficiency translates into more strategic oversight, enabling boards to focus on long-term goals rather than getting bogged down in operational details. AIIM, for example, reports that organizations using automated IG systems can reduce time spent on data management tasks by 50%, allowing boards to allocate more time to strategic oversight.
IG best practices also help to lower corporate risk. Corporate boards continually need to identify and quantify important risks, and Information Governance tools such as regular audits, data quality controls, and adherence to compliance standards help boards identify potential risks and ensure that the information they rely on is both reliable and secure.
Highlighting this point, an Iron Mountain study found that companies with robust IG frameworks are 40% less likely to face legal penalties due to non-compliance, which is crucial for maintaining both financial stability and corporate reputation and that well-implemented data governance programs can potentially reduce the cost of data breaches by 35%, underscoring the financial and reputational benefits of strong IG practices.
Finally, IG best practices can help corporate boards dramatically improve their independence and objectivity by providing unbiased, data-driven insights. IG strategies that center around version control and accuracy, help to ensure that all board members have equal access to accurate information, which facilitates fair and informed decision-making. By eliminating data silos and ensuring that information is consistently managed and distributed, IG helps boards maintain their objectivity and make decisions that are in the best interests of the organization.
Integrating Information Governance best practices into corporate governance structures is not just about compliance; it’s about building a framework that enhances board effectiveness, fosters trust, and drives sustainable business success.
With tangible benefits such as a demonstrated and quantifiable improvement in data quality and significant reductions in the costs associated with data breaches, IG best practices have become increasingly critical to develop and marshal. And, as organizations continue to navigate the complexities of the modern business environment, IG will remain a critical component of effective corporate governance, ensuring that boards are equipped to lead with integrity, transparency, and accountability.