Corporate governance isn’t only for legally constituted corporations. It’s a system that requires the leaders to do more than simply implement well-designed strategies. They must also be accountable and fair to all stakeholders. Regardless of whether your business has one or many stakeholders–shareholders, employees, clients, students or the community–your company’s approach to governance will change over time and depend on your unique needs and context. But there are a few general principles that can be applied to any organization, large or small:
One of the most important aspects of good corporate governance is transparency. Transparency is vital for management and board members to be open with shareholders, auditors and the public about financial reports, accounting, major decisions and internal practices. It is also essential that your company divulges information regarding its environmental and social impact in ways that can be easily accessible to those who might be interested.
Setting clear roles and responsibilities is a further aspect of corporate governance. This can be done through job descriptions for your board including its vice chair and chair committees, chairpersons of the committees, or terms of reference (TOR) for directors individually. This will ensure that there are clear boundaries and limitations to authority, as well a standardised list of the most useful checklist for board meetings the responsibilities. It can foster a culture of open communication and collaboration, and help to reduce errors and ensure compliance. It could result in more opportunities for growth as your company expands.