Corporate governance is the combination of process codes, laws and rules that businesses follow to ensure that their activities are regulations-compliant. It is a process framework designed to ensure safeguarding of the best interests of the business and its immediate stakeholders and end consumers as well.
Having corporate governance means various things as regards to smooth functioning of the company. The presence of this code of conduct at work implies:
- Well-designed processes with results in focus
Every business day is important. It should be yielding or at least contributing to achieving of results aimed by the company. Such way of working requires discipline and pledge of adherence to the commitments. With the help of guidelines laid in the corporate governance draft, a business is able to move steadily in the direction of achieving results.
- Better relationships with vendors and stakeholders
A business having code of governance in place is easy to win the trust of vendors and stakeholders. Since the business and entities are able to interact with each other within an organized framework of rules, it gives definite direction to the relationships. There is a rule for communication, another for transaction and response generation system that tells people what they are ought to do under any given situation. This makes the relationships arising out of interactions between vendors or stakeholders and businesses quite streamlined.
- To have sense of ownership of the place as well as work undertaken
Having corporate governance means to have an ownership of the place meant for business and also of the work done. The workers give their best to small things like maintaining place of work as per cleanliness and order norms to big things such as application and presentation of the job done, when they are made to work under a definite structure of processes and flow of commands.
Corporate governance plays very important role in the way any organization works. It is a code of work ethics and principles. This code is designed to perform some crucial roles that can be pertinent to reliable brand reputation. Some of the important roles are:
- Transparency in functioning
All stakeholders need a transparent system of working to move together towards the achievement of goals. The transparency in communication, in goal setting, allocations and related assessments help keeping all related entities on the same page. It is crucial for winning the faith of the internal as well as external stakeholders, but while maintaining the secrecy of critical business information.
- Accountability of actions
With the help of corporate governance, the roles and actionables in complete alignment with the industrial regulations are determined. Thus, the people responsible for any particular process can be identified and accounted for. It helps keeping accountability of entities involved in important steps such as order acquiring, procurement of people and goods process, order processing and delivery and manage consumer response.
- Clarity of response chain
An organization works efficiently when the chain of command is clearly defined. This clarity is possible to achieve when all people know other people comprising the chain. While receiving responses from external entities too, the corporate governance helps in creating direct touch points, escalation points for unresolved matter and so on. With this clarity, the organization becomes more responsive and is capable of creating good end user and stakeholder experience.
- Adherence to safety regulations and sensible working
Anything that goes beyond the limits can make a business stick out like a sore thumb to people affected directly or indirectly from it. Corporate governance helps determine important work structure aspects such as:
- Resources comprising of materials, place and people required for the job and ensuring that these are optimally utilized leading to zero wastage and maximum results
- Safety of the place of work and people working there by determining size of place and number of people that should be working at a time there
- Rules regarding process completion to ensure that waste generated is disposed of to keep the livability of surroundings in mind
All these benefits work in favor of the business and of those that interact with it in some or the other way. These benefits help create trustworthy image for the business and also that of a reliable solution provider. It, ultimately, helps win competition in the market and enables creating benchmarks of quality, quick and sustainable service.
A good corporate governance is the one that when followed can add marvelously to the reputation of a brand or business. People do not look only at the quality of the product produced, they also take into consideration the source, the process and the stakeholders involved before buying or using any product.
Corporate governance, therefore, is working on the four core principles:
- Fairness: It implies fairness in treatment. A directive that guides how business entities should behave with external entities, surrounding people and stakeholders is designed only to ensure that every interaction is fair and reasonable. The people tend to stick to together and to the brand when there is an element of fairness to savor in the interactions. It induces sense of security too.
- Responsibility: Responsibility and accountability go hand in hand. The company appoints directors to act on its behalf. It, thus, becomes the responsibility of the directors and managers to ensure that correct message and actions are taken in fair interest of everybody involved with the company. The corporate governance brings element of responsibility in the way companies act and respond to situations.
- Transparency: It is the need of every company’s functioning. Workers can do better when they get the message as it is. The vendors are able to process fast when there is transparency in the terms of delivery and payment.
- Accountability: Corporate governance built on the principle of accountability can have all the three virtues mentioned above. It is the crux of the good governance and helps achieve all the objectives for which the code is formed.
To sum up, corporate governance acts as a guiding light that helps companies doing right thing, at right time in right manner, eventually helping these to grow into a positive driver of economy.
Jul 30, 2020