The establishment of effective corporate governance is vital to the success and growth of your company. It’s a method to ensure that decisions are being taken in the best interest of the company and its shareholders and to guard against mismanagement and corruption. It also assists the company to achieve its financial and social goals while staying in compliance with the legal requirements as well as environmental Governance, Social, and Governance (ESG) best practices.
The most influential stakeholder in corporate governance is the board of directors (BOD). In this sense, BOD members are responsible to set the direction of the company and setting goals and plans, whereas management is responsible for executing against those objectives. While the responsibilities of this job are typically focused on financial matters, current trends are pushing for the BOD to assume greater responsibility in areas such as the promotion of fair and equitable treatment of all stakeholders including shareholders, vendors, employees, and the local community.
Implementing and documenting internal policies is a crucial aspect of a successful corporate governance. These policies should reflect the culture of the organisation, be in line with legislation/regulations and help achieve its desired goals. The availability of policies can make it easier to make decisions and aid the company to manage its risk-aversion.
A good corporate governance also involves developing strategies to meet the challenges and opportunities the organisation could encounter. This includes a process known as succession planning, which is essentially managing talent with the goal of future-proofing the organisation by establishing a strong leadership pipeline.