Corporate governance is essential to the growth and prosperity of your business. It’s a method of making sure that decisions are taken in the best interest of the company and that of shareholders’ and also to safeguard against fraud and mismanagement. It also assists the company to achieve its financial and social objectives while remaining in line with legal requirements and environmental social, governance, and (ESG) best practices.
The board of directors (BOD) is the primary stakeholder in corporate governance. As such, BOD members are responsible for dictating policies within the company, while also setting goals and plans, whereas management is responsible for implementing those goals. While the responsibilities of this position are usually financial, current trends are pushing the BOD to take on more responsibility for areas like promoting fair and equitable treatment of all stakeholders including shareholders, vendors employees, shareholders, and the local community.
Policy development
Corporate governance is 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 decision-making and the risk appetite of the organization.
Another aspect of a good corporate governance is the creation of strategies for addressing the future challenges and opportunities the company may have to face. This is a process referred to as succession planning, which is basically managing talent with the goal of ensuring the future security of the company by establishing a solid leadership pipeline.
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