The implementation of a sound corporate governance is essential to the growth and success of your business. It is a way to ensure that decisions are made in the best interests of the shareholders and the company as well as to protect against mismanagement and corruption. It also helps the business to achieve its financial and social goals while staying in compliance with the legal requirements as well as environmental social, governance, and (ESG) best practices.
The most influential stakeholder in corporate governance is the board of directors (BOD). In this sense, BOD members are responsible for dictating the policies of the company and setting the goals and plans, whereas management is responsible for implementing those goals. While the primary obligations of the BOD are financial, current trends are forcing the BOD to assume more responsibility in areas like encouraging fair and equal treatment of stakeholders, including employees, shareholders, vendors, and the local communities.
Corporate governance is dependent on the creation and documentation of internal procedures and policies. These policies should reflect the culture of the organisation, be in line with legislation/regulations and help achieve its desired goals. The existence of policies can make it easier to make decisions and aid the organisation to manage its risk-aversion.
A good corporate governance involves developing strategies to meet the future opportunities and challenges the company could be faced with. This can be done through a process known as succession planning, which effectively management of talent with the intention of ensuring the future security of the company by creating a strong leadership pipeline.