The Organization of Effective Corporate Governance
The organization of effective corporate governance requires the establishment of guidelines, policies, rules and resolutions that promote positive corporate behavior and culture. It also safeguards organizations from business threats and crises like leadership corruption, cybersecurity threats, economic downturns, and political instabilities. It also includes contingency plans to assist businesses in coping with these business challenges and emerge on the other side stronger and more resilient.
Corporate governance structures and practices vary depending on a company’s size and industry, ownership structure and the jurisdiction. These governance structures and practices, despite their differences they should all share the same aim: creating lasting value for shareholders. They should also allow flexibility to change and adapt their governance practices as needed to achieve this objective.
The board of directors of a corporation is accountable for establishing goals for the company’s strategic direction, appointing senior management and monitoring them, and representing the interests of shareholders. Board members should be aware of their responsibilities, and work with the company’s top management to ensure that their responsibilities are fulfilled in a manner that promotes business growth and financial performance.
Stakeholders must be encouraged to engage in shareholder outreach as well as dialogue with the management and board of a company. This will enable them to make their viewpoints recognized in areas that historically, were within the remit of management and the board–such as strategic direction and decisions. In this way, it is important for management and the board to be open and honest with their stakeholders about their governance structures and practices as well as the reasons behind using them.