Corporate governance isn’t just for legally constituted corporations. They’re a set of guidelines that managers must not only execute effectively on well-planned 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 a few general principles that you can apply to any company, big or small:
Transparency is one of the most crucial aspects of good corporate governance. Transparency is essential for board members and management to be open with auditors, shareholders, and the general public regarding financial reporting, accounting, important decisions and internal procedures. This is also essential that your company provides information on its environmental and social impacts in ways that are easily accessible to people who may be interested.
Another aspect of corporate governance is setting clear roles and duties for your board. This can be accomplished by job descriptions for your board, its chair and vice chairs committees and chairpersons or terms of reference (TOR) for individual directors. This will ensure a consistent set of responsibilities, and clear boundaries for delegation and limitations on the power of. It will help create an environment of open communication and collaboration and reduce the chance of mistakes and ensure compliance. It can also lead to better growth opportunities when your business expands and diversifies.
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