Corporate governance is a means to create transparency, provide guidance for management and align the interests of the company and its shareholders. It establishes trust with investors and the community, and can help reduce the cost to raise capital.
To implement good corporate governance, you need a solid team of employees and a board of directors. The most effective teams and boards comprise of individuals with diverse backgrounds, abilities and knowledge. This diversity helps to come up with innovative solutions and is the basis of a successful decision-making process. In addition, it’s important to have transparency in the business process and transactions, as well as an ethical code that encourages ethical business practices.
Despite its importance, implementing good corporate governance has proven difficult to attain. A myriad of regulations and laws have hindered the development of a thoughtful discussion. Shrill voices, apparent insurmountable divisions between shareholders activists and management, conflicts, and a prior staking out of positions have all stopped it. It is time for to take a different approach.
To ensure good corporate governance, it is essential that everyone on your board are aware of their responsibilities and roles. This requires comprehensive job descriptions and organizational charts, and clearly written governance guidelines. You need a system for regularly evaluating and reviewing the performance of your board.
A well-functioning corporate governance system should include three policies that support ethics, integrity and ethical behavior. These include a conflict-of interest policy and whistleblower codes of conduct and a code for directors. The majority of governance experts agree that your board should consist of both insiders (major investors and founders) as well as independent members. Independents help to dilute the power of the board and offer www.boardroomfirst.com/data-room-software-for-companies-future an outside view to your board.