What is good governance?
Corporate governance is the way in which companies are directed and controlled. It provides a structure that allocates rights and responsibilities between board members, managers, shareholders and other stakeholders. Good governance helps a company perform effectively and transparently.
Good governance framework
While flexibility is one of the hallmarks of good governance, clearly defined roles and responsibilities will ensure that the company runs smoothly. An effective corporate governance framework for any organisation will include:
- Having an understanding of the relevant laws the company must adhere to such as the Bribery Act, Data Protection Act and Money Laundering regulations
- Implementing safeguards to ensure the financial integrity of the company by, for example, submitting financial statements and annual returns on time and making sure the company adheres to statutory requirements.
- Controlling business risks.
- Engaging stakeholders.
- Operating a robust performance management system
- Ensuring the board operates ethically, responsibility and with integrity.
Embedded in company culture
Good governance is different for every company but the principles remain the same. It’s about managing the often complex relationships that make up a business, so that all needs and interests are taken into account. However, good governance is not just about having policies and procedures in place. From the top, all the way to the bottom, everybody in the company must understand the aims and ambitions of the business, and strive to carry out best practice in accordance with its policies and values. Corporate governance should be embedded in the company culture and seen as everyone’s responsibility, not something ‘done for them’ by a single dedicated department.
Good corporate governance can help ensure that a company is transparent and accountable. This means taking responsibility for all outcomes – good and bad. It means showing initiative and leadership to take control to ensure the long-term viability of the company is preserved. A credible business is one that is accountable for all outcomes and doesn’t blame others for its mistakes. No organisation can grow and prosper until the leaders are willing to step up and take responsibility. As that begins to happen it opens up a world of potential for the company to grow and succeed.
If you’d like help establishing a good governance framework, call 0845 055 8260 for a no-obligation discussion.