The establishment of effective corporate governance is vital to the growth and success of your business. It’s a means to make sure that decisions are taken in the best interest of the business and that of shareholders, and also to safeguard against fraud and mismanagement. It also enables the company to meet its financial and social objectives while remaining in line with legal requirements and environmental, social, and governance (ESG) best practices.
The board of directors (BOD) is the primary participant in corporate governance. In this sense, BOD members are responsible for dictating policies within the company, as well as making decisions about plans and objectives while management is responsible for executing those goals. While the primary obligations of the BOD are financial, current trends are driving the BOD to take on more responsibility in areas like promoting equality and fair treatment of stakeholders, including employees, shareholders, vendors, and the local communities.
Corporate governance is heavily dependent on the development and documentation of internal processes and policies. These policies should reflect the culture of the organisation, be in line with legislation/regulations and help achieve its desired goals. Making policies available to the public will also facilitate the process of making decisions and increase the risk-aversion of the business.
Another aspect of good corporate governance is the formulation of strategies to tackle the challenges and opportunities the organization may face. This includes the process of succession planning, which is essentially the management of talent. The aim is to future-proof the organisation through the creation of a well-functioning leadership pipeline.