Good corporate governance is evident by responsibility, accountability, consistency, fairness and transparency. No matter, whether your company is large or small, good corporate governance practices can be critical in establishing a positive organizational culture. It can financially benefit an organisation, leading to higher profit margins, generate greater dividend yields, and make possible larger stock repurchases. Setting corporate governance principles in place also enhances the organization’s reputation and builds integrity, making it attractive to customers and investors.
Corporate governance is the method or system by which companies are controlled and managed. It involves regulatory and market processes, and relationships between the company’s management, the stakeholders, and its shareholders. In short, corporate governance focuses on internal and external issues, and also monitors the actions of the management. The main idea of corporate governance is concerned with the removal of the conflict of interests between the stakeholders. One important field in corporate governance is the nature and amount of accountability of people in the business.
Given below are the principles of corporate governance:
- Accountability and transparency to all stakeholders and equal treatment for all the people.
- Each of the departments plays its own part and does not interfere in the work of other departments. Owners, directors and staff also have their own duties and responsibilities
- Shareholders have to ensure that only competent and reliable persons who can add value are elected on the board.
- It determines the company’s strategic aims and the organizational structure. Boards need to be aware of their strengths and weaknesses and encourage doing only the right and ethical things. Directors should continuously review and determine the purpose and strategic plans and shape the values of their organizations. They should also devise appropriate strategies to achieve these in order to ensure that the organizations thrive and survive.
- Owners and other stakeholders should take an interest in the organization and ensure its performance and financial results.
- There should be well defined formal channels of communication in cooperative societies and all relevant information regarding the societies should be communicated in a timely manner to all stakeholders.
- It is essential to document governance principles. When documenting a set of corporate governance principles, the roles and functions of the Board and its committees should be made very clear.
- It is mandatory to document the committee charters. All committee charters should define a committee’s authority regarding decision-making and their roles and responsibilities.
- There should be a corporate governance committee which should make recommendations to the board for new members, and monitor the performance of the board.
Good corporate governance helps enterprises tide through difficult economic times and through critical financial crises, since well-governed companies tend to deliver not only higher but also more sustainable value. Today, corporate governance has assumed worldwide importance. The organisation has a vital role to play in promoting economic development and social progress. It helps in international growth, responsible for providing employment, public and private services and good infrastructure.
Corporate governance shapes your relationships with all your stakeholders, including shareholders, co-workers, customers, suppliers and the community, and provides the framework and control systems that help us to abide by the highest ethical standards. The presence of good corporate governance practices fosters an organization that supports individual and professional integrity and will be responsible for behaviour in all levels of your business.
Good corporate governance is evident by responsibility, accountability, consistency, fairness and transparency.
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