Corporate governance best practices are not only for businesses which are legally formed as corporations. It’s a system that requires leaders to go beyond just execute well-developed 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. There are a few general principles that you can apply to any organization of any size:
Transparency is one of the most crucial elements of good corporate governance. This means that you must ensure that your board members and management are transparent with auditors, shareholders as well as the public in relation to financial reporting, accounting standards, major decisions, and internal procedures. This means that your organization should make information about its environmental and social impact easily accessible to anyone who might be interested.
Another aspect of corporate governance is setting clear roles and duties for your board. This can be done through job descriptions for your board, its vice chairs and chair, committees and their chairpersons or terms of reference (TOR) for individual directors. This will ensure that there are clear boundaries and limitations to authority, as well an established set of the responsibilities. It can create a culture of open communication and collaboration, as well as minimize errors and ensure compliance. It can lead to better growth opportunities as your company expands.
