Corporate governance isn’t just for businesses legally structured as corporations. They’re a set of guidelines that managers must not only execute effectively on well-developed strategic plans, they must also be fair and responsible to all stakeholders. Regardless of whether your business has one or many stakeholders–shareholders, employees, clients, students or the community–your company’s approach to governance will change over time and depend on your unique needs and context. But there are some general principles that can be applied to any organization, large or small:
One of the most crucial aspects of a good corporate governance system is transparency. This means that your board members and management are open with shareholders, auditors as well as the public with regard to financial reporting accounting standards, major decisions, and internal practices. This means that your business should provide information on its social and environmental impact easily accessible to anyone who may be interested.
Another aspect of corporate governance is establishing clear roles and duties for your board. This can be done by drafting job descriptions for your board itself, its vice chair and chair, committees and their https://boardroomdirect.blog/what-are-the-four-types-of-corporate-governance/ chairpersons or terms of reference (TOR) for directors individually. This will ensure a consistent set of responsibilities, as in addition to clear boundaries for delegation and limitations on authority. It will help create a culture of open communication and collaboration as well as minimize errors and ensure compliance. This can lead to better growth opportunities as your company expands.