The effective management of corporate governance is the basis for a thriving business. It is comprised of rules and systems that ensure that shareholder interests are aligned with those of other stakeholders, including employees as well as customers and company executives. It also lays out frameworks for internal control to ensure the accuracy of financial statements, safeguard assets, and ensure compliance with laws.
It is the board’s responsibility to approve corporate strategies that are intended to create sustainable value over the long term; select a CEO and oversee management’s activities in operating the company, which includes allocating capital for growth as well as assessing and managing risks, and setting the direction at the top for ethical conduct; and keep track of the key performance indicators to find the weaknesses, gaps and opportunities. The board must also show that it is acting in the shareholders best interests by providing enough information, engagement, and accountability.
A strong board requires the support of an excellent executive team. Boards must be prepared to work with independent directors, governance experts and consultants to gain the expertise and knowledge they need to succeed. This could include attending governance conferences, networking and working with peers and industry leaders to learn from their experiences and share best practices.
As the world evolves and so do our organizational frameworks. They need to be capable of adapting to new trends and issues. A climate crisis, for example should spur companies to adopt sustainability-related frameworks, practices and policies and establish emission reduction goals and track progress. This means communicating with shareholders and stakeholders about these changes quickly and also making reports accessible and providing sufficient information to clarify any issues that might arise.