This piece is published as part of PEMANDU Associates’ thought leadership series. The views expressed are the author’s own, presented to contribute to public policy discourse, and do not constitute the institutional position of PEMANDU Associates or any of its clients.
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With the recent release of the Tabung Haji RCI report, Malaysians were once again reminded of the consequences of corporate mismanagement and governance failures. The report speaks for itself in highlighting the governance gaps, issues and lessons that organisations should reflect upon.
However, there are a few takeaways that I believe are worth sharing.
1. The system shapes the operating environment.
It is great that the report highlights the importance of having a strong regulatory and governance framework. Just as water takes the shape of the container it is placed in, organisations operate within the boundaries, incentives and constraints created by the environment around them. Strong governance starts with strong foundations.
2. The third line of defence must have the courage to challenge.
An effective system of checks and balances is only as strong as the voice willing to call out what is wrong and calling as they are. Whether it is independent assurance or oversight bodies such as Jabatan Audit Negara (JAN), the third line of defence goes beyond identifying issues. It is about providing an independent view of reality, challenging where necessary, and making sure risks are clearly heard. Non negotiables, are truly not negotiable.
3. Trust is an organisational asset that must be protected.
Given what Tabung Haji represents to the Malaysian public, it is unsurprising that the findings have attracted significant scrutiny. It serves as an important reminder that organisations must manage more than just financial and operational risks. Trust, reputation and public confidence are equally valuable assets that take years to build but can be damaged overnight. Take years to build, but a moment to destroy.
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But above all, one observation stands out.
We continue to see governance failures and corporate scandals emerge across industries and jurisdictions, globally. This is despite increasingly sophisticated governance frameworks, tighter regulations, stronger oversight mechanisms and continuous efforts by organisations and regulators alike to stay ahead of evolving risks.
The reality is that frameworks have limits.
Culture is the control behind every control.
I have sat in boardrooms where directors asked: “How can fraud still happen when there are two approval points designed as controls?” The answer is simple: because two people can collude.
Controls are necessary, but they are not sufficient. You can have the best policies, strongest governance frameworks and most sophisticated risk management processes, but if the culture allows people to bypass them, everything becomes fragile.
At the end of the day, it is about what leaders demonstrate, what behaviours organisations reward, and what people do when no one is watching. That is what makes or breaks organisations.
This is also consistent with how we think about transformation at PEMANDU Associates. While frameworks, structures and processes provide an important foundation, lasting change also depends on the behaviours and discipline that bring them to life. Ultimately, it is about creating an environment where accountability, problem-solving and continuous improvement become part of how an organisation operates every day.
The true measure of transformation is not what happens while we are there. It is what happens after we leave.
Author:
Aidil Aizzuddin
Manager
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Let’s transform together. Contact us at: https://pemandu.org/contact-us/
