Over the last decade, legal and corporate governance teams have found themselves being faced with doing the seemingly impossible: handling an increasing workload while seeing their resources reduced. And while they have done their best to square the circle, the result has been predictable: inefficiency and chaos, with either too few or too many people involved, and a mass of disparate and disorganised data, handled inconsistently.
However, companies are starting to realise that there is another way, a way based on automating recurring and repetitive tasks. This enables governance teams to handle higher volumes of work and do so more accurately. And crucially, given the trend towards being a business partner, it empowers them to spend more time on strategic initiatives, such as where to rationalise entities or enter new jurisdictions, potential mergers and acquisitions, or when to launch an initial public offering (IPO).
Of course, every organisation is different, and what works for one doesn’t necessarily work for another, so here are the four key drivers that we see as precipitating the move to increased automation at the corporations we work with…
1. Greater control of costs
To cope with an increasing workload, some of our clients have previously opted to increase headcount in their corporate governance teams. But this is a temporary solution to an ongoing issue, and it often works out cheaper to introduce automation to complete repetitive tasks. This doesn’t necessarily mean that fewer people are needed; it does mean that they will be freed up to focus on tasks that add value.
In addition to ‘expanding time’, automation also makes costs more predictable. Legal is a bit of a black hole – project costs and workloads can often turn out to be much higher than anticipated and human error can cause even more work and spiralling expenses. Judicious use of automation speeds up processes, increasing consistency and accuracy while enabling greater control of costs.
2. A clearer view of the work being done
As businesses grow, the governance and compliance workloads tend to grow proportionally. Unfortunately, the wider business doesn’t always acknowledge the impact this can have on their central legal and governance teams. Inevitably, these are spread more thinly, leaving them with insufficient capacity to do more than cover the basics and work reactively.
This lack of insight among the wider business can lead to inefficiency and, of course, stress and poor levels of engagement. This can in turn lead to a higher churn of staff in that function, which then will further dent efficiency to create a very negative cycle. Introducing automation can break this cycle or prevent it from forming.
3. Freeing up governance teams from doing reactive work
As corporations grow, business functions such as tax and finance start to depend more on the data managed by the legal governance function. Finance need director, entity name, address and banking information, and tax need information to help them assess the most appropriate transfer pricing routes. They naturally ask the governance team for this ad hoc information, so turning the latter into inbox managers. Ironically, the increased pressure can lead the legal and governance teams to withdraw into themselves and fall into the trap of working in a silo.
Integrating data systems into a central entity management platform provides a single source of truth for your entire corporate record – and an escape route for your legal team! Key stakeholders in other departments can then access the data they need on a self-service basis, with permissions appropriate to their level of authority. This frees up company secretaries and their colleagues to plan their own time and work more productively.
4. Handling a faster turnover of data
Business data today changes at an alarming rate – according to Opus it typically decays at a rate of 25% each year.
Keeping up with that rate of change is manageable when a company has a small corporate record, but as an organisation grows, it becomes harder to keep on top of the data. Good up-to-date business information is essential for accurate reporting and compliance. Here too, systems integration can play a key role in keeping data under control.
A blended approach
Today, we see approaches to entity management ranging from completely decentralised and chaotic to 100% centralised, efficient and integrated. But for many corporations working across a variety of jurisdictions, with different requirements and entitles with different setups, a blended approach makes the most sense.
What experience has taught us, however, is that the more efficient and streamlined a company can be about its day-to-day entity management, the better.