62% of Legal Entities Struggle to Track Governance, Says EY | MinuteBox Cloud Entity Management

62% of Legal Entities Struggle to Track Governance, Says EY

A growing body of legal entities are using purpose-built legal entity management systems, according to Ernst & Young.

According to their report entitled The General Counsel Imperative,” 65% of all companies use a purpose-built legal entity management system. Additionally, 85% of businesses with annual revenues that exceed $20 billion use these systems to report corporate governance obligations.

However, a significant percentage of those companies report technology challenges. Specifically, 62% cite challenges in tracking and reporting governance activities within their legal entity management platforms.

How corporate governance works

Corporate governance embodies all the rules, bylaws, policies, and procedures that ensure businesses remain accountable to their stakeholders. Effective corporate governance mitigates risk, provides transparency, and establishes structured workflows that allow corporate entities to fulfill their mandates and achieve their visions.

There are four ways that organizations implement and evaluate the effectiveness of corporate governance policies.

Interconnected relationships between people and stakeholders

Any business entity’s primary objective is to fulfill its vision and turn a profit while doing so. Corporate governance policies influence relationships between the people who determine an organization’s profitability. It includes how founders and board members set internal policies through the consumers and influencers who purchase the company’s products.

Align all stakeholders around a common purpose

Internal and external relationships allow corporate entities to grow their businesses. To ensure satisfactory relationships, the organization must establish a core purpose. Corporate governance policies align all stakeholders around that purpose so that they make decisions to achieve that common goal.

Establish processes that guide organizations to their goals

Businesses must have the tools to analyze and evaluate performance to achieve their purposes. Corporate governance establishes structured processes to track the business’ performance. You can amend your workflows over time, but your processes create a baseline for how to report productivity.

Determine the success of organizational performance

Business entities use corporate governance policies to measure the effectiveness of their performance. Evaluate the success of your corporate governance workflows. Did you achieve your goals, or did the workflows cause more setbacks than achievements? Accurately reporting on corporate governance performance helps the business set more realistic goals.

Challenges of reporting corporate governance performance

Corporate governance helps organizations make more strategic decisions to improve performance. Therefore, accurate reports on corporate governance are necessary to iterate and enhance performance.

So what happens if 62% of business entities have challenges tracking and reporting on corporate governance using legal entity management systems? There are many reasons why those organizations experience reporting challenges with their chosen platforms. These are a handful of the most common struggles.

Difficulty maintaining up-to-date entity management systems

The legal industry is noteworthy for its slow adoption of modern technology. In-house legal departments in large enterprise companies are more accepting of entity management technology, but there are still gaps in how businesses use those systems.

When legal departments are too reliant on older systems, there’s a risk that reporting data will be compromised. Older systems like binders of minute book records or countless files of Excel spreadsheets are less effective than more intuitive entity management platforms.

Uploading all reporting data into an entity management platform like MinuteBox eliminates errors with reporting data. The platform uses helpful wizards to guide general counsellors and their subordinates as they build diligent corporate governance records. The platform also warns the team if data is missing in the modules, ensuring corporate governance risk management.

Passive approaches to entity management that compromise data integrity

According to the EY report, corporate governance reporting challenges are at their highest within organizations where only legal departments use entity management systems. Companies often view the purpose of entity management systems as tools to house legal entity data.

Businesses with effective corporate governance reporting and performance evaluations recognize entity management software as a forward-thinking resource. These entities use their systems to evaluate organizational risk — internal and external — so that they can pivot accordingly.

Entities with global reach and numerous subsidiaries use entity management software for more real-time reporting. They use entity management software as a single source of truth by hosting, reporting, and evaluating data from all subsidiaries in one centralized platform. As a result, they make regular updates to corporate governance workflows.

Tedious and repetitive workflows impede corporate governance

Finally, many corporate entities rely on inefficient operating workflows. Businesses that use spreadsheets, physical minute books, or non-intuitive entity management systems subject their workers to tedious and repetitive corporate governance reporting tasks. As a result, workers struggle to complete governance reporting tasks by designated filing deadlines.

Modern entity management systems like MinuteBox automate most clerical, administrative, and data-entry tasks. The platform’s intuitive nature creates structured cloud-based minute book documents with modules highlighting what reporting data to insert throughout the system.

Automated workflows make corporate governance reporting more efficient and more effective. Detailed performance reports help stakeholders evaluate the effectiveness of their corporate governance programs.

If the program is successful, it can continue with only minor changes. If the data indicates anything less than success, stakeholders can review the evaluations and change their corporate governance processes.

Use MinuteBox to build effective corporate governance programs

Ensure your organization remains on the right side of corporate governance reporting. Join the MinuteBox revolution to build more structured corporate governance processes in an intuitive platform and streamline how you evaluate governance performance.