Corporate governance is the organization of rules, practices and procedures that govern a business. It also considers the interests of the shareholders, customers and employees, as well as the lenders, government and the community. These are essential elements for an effective, profitable business.
The person element is vital because it ensures that all employees who are involved in the operation of the business are ethical, skilled and committed to the goals of the company. This is especially important in a period when the public is sick of corruption and is demanding more transparency, equity and accountability.
Having transparent reporting systems is a key element of good corporate governance. This includes ensuring a board receives financial reports that are thorough every month that give visibility into the company’s performance and why. It is also recommended for boards to establish a system of checks-and-balances to prevent fraud and improper management.
Guidelines and policies i was reading this are another essential element 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 crucial aspects of a good corporate governance is having an independent director who is also known as a presiding director to oversee and lead the board. This is particularly important when a company’s leadership structure is a combination of CEO and chair or when there are personal relationships between top leadership. Additionally, a company must ensure that their compensation practices do not create conflicts of interest for directors.