The organization of effective corporate governance requires the establishment of guidelines, policies, rules and resolutions that encourage positive corporate behaviour and work culture. It also shields companies from risk to their business and also crises like corruption of leadership and cybersecurity threats. It also includes contingency planning that assists companies to deal with the challenges of business and become stronger and more resilient.
Corporate governance structures and practices differ depending on a company’s size and industry, its ownership structure and the jurisdiction. These governance structures and practices, despite their differences, should all have the same goal: building long-term value to shareholders. They must also be flexible enough to adjust their governance practices to meet this goal.
The board of directors for a company is accountable for establishing goals for the company’s strategic direction, appointing senior management and monitoring them, as well as representing the shareholders’ interests. Board members must understand their responsibilities and work with senior management to carry out their duties in a manner that is supportive of the expansion of the business and financial performance.
Stakeholders need to be encouraged to engage in dialogue and outreach with the board of directors and management. This will allow them to make their views known in areas that, traditionally, have fallen within the purview of the board and management–such as strategic direction and decisions. It is crucial that management and the board are honest and transparent about their governance practices and structures and the motives behind using them.