We have seen all about the principles of corporate governance as well as the various models available. The core principles guide us in creating a proper framework of corporate governance for our corporations and the models help us carry the framework out in a way that is most suited to the organization. Now, we know what we need to do, but how do we know that we are doing it correctly? More importantly, how do we differentiate good governance from the bad kind?
This can be done by identifying the various characteristics of your corporate governance framework. These characteristics help you decide whether your governance strategy is good and here to say, or it adds nothing to the overall development of the company and hence needs to be done away with.
Majorly, good corporate governance concentrates upon being transparent and providing disclosure on certain matters such that the stakeholders and the shareholders aren’t blindsided. The company must present to the point, verified information regarding the way the company works, its finances, etc.
Let us look at some of the characteristics of good governance-
Transparency: As has been iterated a couple of times, transparency is key to a company’s success and its need could not be more stressed upon. It is important to ensure that all the potentially affected members of the team are well informed about the decisions being made at the higher level, even if they aren’t privy to every small detail. Managers and people at high positions, must try, as far as possible to not hide or filter certain information which they might deem to not be suitable for the public.
Discipline: this entails proper implementation. The journey merely beings when a corporation zeroes in on the best suited strategy for corporate governance: the more important thing is it make sure that the strategy is implemented properly and subsequently its effects need to be monitored. Therefore, the discipline to diligently try and implement these strategies real time, is much required and sought after.
Ethical approach: Towards the culture and the societal environment. This strategy for good governance should not ruffle any unnecessary feathers and and must keep in mind the various factors that influence the public’s thinking.
Fairness: This means that there should be the presence of equal concern for all stakeholders, even though they might differ on the basis of the stake/share held. No matter how big or small the stakeholder is, it is important to take their rights, views and opinions into account and give them gravity.
Social responsibility: Apart from having to keep it going in the corporate forum, consumers expect corporations to be good community members and give something back to the soil they live and grow in. Companies are increasingly taking a stand on social and environmental issues that plague the earth.
Balanced objectives: The goals of all interested parties should be amalgamated and should match another and be in sync. No two (or more) processes or objectives should be counter productive to another.
Well defined roles: Everyone has a role to play in a corporation, big or small. It needs to be made sure that suitable people are given selected roles to play, such as manager, staff, etc. Since every individual person plays his or her path, there is little or no scope for ambiguities.
Self evaluation: Problems and speed bump are natural in anyone’s path to growth or success. However, it is important to identify these problems and shortcomings such that can be rectified and bettered. At least once you know where you are going wrong, there is scope for improvement. Self-evaluation is the best kind of evaluation.
Risk management: Risks are inevitable and will undoubtedly manage to creep into your corporation in some way. Which is why effective risk management practices help protect us against potential damage from the risks being generated.
Therefore, these characteristics make sure that your governance is good governance. Tools like VComply simplify governance for you and the more simple it is, the better the principles can be utilized for carrying out good governance.Add to favorites