Corporate governance is the establishing of rules, practices and procedures that govern a business. It also considers the interests of the employees, customers, and shareholders as well as government, lenders, and community. These aspects are crucial to an effective and profitable business.
The human element is crucial because it ensures that all those who are involved in the operation of a company are competent, ethical and committed to the company’s goals. This is especially important in a period when the public is sick of corruption and demands more transparency, equity and accountability.
Transparent reporting systems are an essential aspect of good corporate governance. This includes ensuring that the board receives financial reports that are thorough every month that give visibility into the company’s performance and what it is doing to improve. It is also a good idea for boards to implement a system of checks-and-balances to stop fraud and inefficiency.
Policies and guidelines are an important element of a good corporate governance. They should reflect the company’s culture, align with legislation/regulations and internal policies, and be clearly available to all stakeholders.
A presiding director is an independent director who manages and supervises the board. This is a key aspect of good corporate governance. This is especially critical in the event that a company’s board of directors structure includes the roles of chair and CEO, or if there are personal connections among top leadership. A company must also ensure that its compensation policies don’t create conflicts of interest among directors.