Corporate Governance
What is Corporate Governance?
Strong and effective Corporate Governance is a crucial characteristic of all successful organisations in the modern global economy and as such is something that every organisation must give high priority to – it is not a choice, it is an absolute necessity.
Corporate governance ensures that shareholders and stakeholders alike can be sure that the business of the Company is being conducted transparently, legally and with moral rigour. Indeed, those companies which seek the highest levels of corporate governance often set standards that go beyond those which are required by law or by industry ‘codes’.
Corporate governance is not something that a Company simply ‘has’. No. Every company must create a structure that has robust checks and balances which ensures that the best interests of the Company can never be usurped by a rogue employee or a self-interested group of managers or Directors. This means that effective governance has to be sponsored from the highest level and apply to every aspect of business operations.
The roles that make up strong Corporate Governance
Pivotal in the execution of good practice is the Board and their committees – the Executive Committee, the Audit Committee and the Remuneration Committee. Working together these groups set the context in which the Company can thrive and grow without fear of stepping outside of the legal and moral boundaries which must be observed.
From the Chairman and CEO right down through the organisation every employee and stakeholder should be aware of their Company’s policy or code on Corporate Governance and what to do if they think that the policy is not being adhered to and they need to take the important decision to become a whistle-blower for the greater good.
So, what is good corporate governance?
The most crucial port of call in answering this question is the Board of Directors who must display all the attributes of an effective Board. Then there is the multitude of ‘checklists’ that set out all the elements that should be enshrined in any Company’s Corporate Governance Code. However, context is vital and because Corporate Governance is not a ‘checklist’ exercise, a checklist should not be the main tool for creating effective governance. Right from the top, the context must be set and attitudes and behaviours aligned so that effective governance can cascade right through the organisation.
Finally, if you are thinking that Corporate Governance is a matter for ‘Big Business’, then think again. Sure, publicly owned companies cannot operate without effective governance but small and medium-sized businesses can build a competitive advantage if they can demonstrate good governance to all stakeholders. Employees, suppliers and clients alike all respond very positively to an environment in which they know that values, behaviour and culture are all aligned and in which good governance is embedded at every level. Any business leader of any business ignores governance at their peril. Those far-sighted and astute leaders will, instead, embrace Corporate Governance and place it at right the top of the agenda when considering how to strengthen their Company.
Do you want to learn more about this topic?
Maguire Training’s ‘Corporate Governance’ course ensures that delegates understand what is meant by good Corporate Governance and ensures that they are able to comply with modern standards such as the UK Corporate Governance Code. The course also helps delegates to understand the role of shareholders, investors and other stakeholders and how effective Corporate Governance can protect them from the worst of corporate excesses.
You can also find a useful, brief introduction to Corporate Governance with our new eLearning module. This 30-minute module introduces the what, why and how of Corporate Governance and gives you ideas on how to create a strategy that works for your business.
