The Organization of Effective Corporate Governance
Corporate governance is the management of rules, practices and procedures that guide a company. It also considers the interests of the employees, customers, and shareholders, as well as the government, lenders, and community. These elements are crucial for an efficient and successful business.
The people element of good governance is to ensure that those who participate in the company’s activities are competent, ethical and dedicated to the company’s goals. This is particularly crucial in a time when the public is tired of corruption and is demanding more transparency, equity and accountability.
Having transparent reporting systems is an essential element of good corporate governance. This includes ensuring a board receives detailed financial reports every month that provide a clear view into the company’s performance and why. It is also recommended for boards to have an established system of checks and balances in place to guard against fraud and mismanagement.
Guidelines and policies are also an important to 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 aspects of a good corporate governance is having an independent director who is referred to as a presiding director to oversee and direct the board. This is especially important if the structure of the board leadership structure of companies combines roles as CEO and chair, or if there are personal ties among top leadership. Additionally, a company should ensure that their compensation practices aren’t creating conflicts of interest for directors.