new blog article here boardroomdirect.blog
Corporate governance is the set of policies, structures, and processes that companies employ to manage risk and ensure accountability. Its goal is to provide a blueprint for long-term success and reduce the possibility of financial loss, waste, risks and corruption.
The core guiding principles of corporate governance are fairness, diversity and transparency. These principles stem from the belief that all stakeholders including employees and shareholders are treated fairly and equally by the management and board. This means establishing, sustaining and creating a formal, transparent process to select and oversee key board members and executives their performance. This also includes ensuring that the compensation of key executives and the board is aligned with the long-term interests of the company and providing the necessary supervision to prevent conflicts of interest.
Transparency is about being open and willing to share accurate information to all stakeholders, including shareholders. This includes the willingness of an organization to disclose both good and bad news. It also implies communicating this information on a regular basis and making it easily accessible.
Depending on the type of business the different committees and boards may play a role in corporate governance. It is generally the duty of the board to set up and supervise a formal system of governance. If the board structure combines the chair and the CEO, this includes appointing the director who is the leader or presiding. The director should be independent of the chair, and have an established term. The director who is the lead must also establish governance policies and procedures which are in line with the legal, regulatory, and organizational environment of the business.