The management of a company’s governance involves the rules, procedures and practices that guide a company in addition to considering the needs of employees, shareholders, customers, suppliers, lenders, government and the public. These are the essential elements for a successful and prosperous business.
The person element is vital because it ensures that all those involved in the running of a company are competent, ethical, and committed to the company’s goals. This is crucial in an era when people are sick of corruption and are demanding more transparency, accountability, and equity.
Transparent reporting systems are an essential aspect of good corporate governance. This means that boards receive thorough financial reports every month that provide visibility into how the company’s performance has been and the reasons. It is also best practice for boards to have a system of checks and balances in place to avoid mismanagement and fraud.
Guidelines and policies are an an important part of good corporate governance. They should reflect the company’s culture, align with legislation/regulations and internal policies, and be clearly available to all stakeholders.
One of the most important facets of good corporate governance is having an independent lead director, also known as a presiding director to oversee and direct the board. This is especially important if a company’s board leadership structure combines the roles of CEO and chair or when there are personal connections among top leadership. Additionally, a company should make sure that their compensation practices do not create conflicts of interest for directors.
