The Organization of Effective Corporate Governance

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Corporate governance is the process of making rules, policies, controls and resolutions to encourage positive corporate culture and behavior. It also shields companies from business risks and crises such as cyber-security threats, corruption in leadership economic downturns, political instabilities. It also includes contingency plans that helps companies cope with these business forces and become stronger and more resilient.

Corporate governance procedures and structures differ based on a company’s sector of operation, ownership structure and jurisdiction. Despite their different characteristics, these governance structures and practices should share a common goal–building long-term value for shareholders. They must also be able to adapt their governance practices to achieve this aim.

The board of directors of a corporation is responsible for establishing strategic goals, appointing senior management and evaluating them, and 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 growth 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 opinions recognized in areas that traditionally, fall within the control of management and the board–such as strategic direction and decisionmaking. In doing this it is essential for management and the board to be transparent and open with the stakeholders regarding their governance structures and practices as well as the reasons behind them.