What is Corporate Governance?
Corporate governance is the set of rules and ways through which a particular company or an organization is controlled and directed towards achieving its goals.
It also includes a framework of rules that are used by the board of directors of a company in order to ensure a just and fair environment within the company and the organization.
Every company needs to ensure that corporate governance is maintained within every organization and company. It promotes healthy competition within the company that is conducive to growth and helps management ethics to prevail in the company.
Major Characteristics of Corporate Governance that needs to be implemented
However, every company should ensure that the characteristics of corporate governance prevail in the company at all costs. The fundamental characteristics of corporate governance are mentioned below:
Corporate governance highlights the strategy that needs to be implemented within the organization. It helps the corporation to identify its target market and to come up with measures that can help attract the market towards buying your products or using the services provided by your company.
Strategy helps the team of the company to remain focused on the goals that still need to be achieved in that way the company gets closer to the market it is trying to address.
A major component of effective corporate governance is to ensure effective risk management so that in case the policies that you have implemented are not working or if there is an unexpected disaster the effective risk management strategies would help you overcome all the problems.
Effective corporate governance reflects the idea of having a discipline within the company. The discipline helps in implementing new policies and to come up with new resolutions. It also helps in the mobilization of the workforce to implement the designed strategy in order to achieve desired goals.
Good corporate governance promotes the idea of fairness, as fairness is what ensures that the system is orderly and just. The company should exercise fairness not only within its organization but also when the company is dealing with its customers.
If the customers were not treated fairly it would have a long-term impact on the reputation of the company, which might turn out as an advantage for its competitors.
Well-managed corporate governance promotes transparency within the company and the organization. Transparency helps in the unification of the organization.
The employees of every company need to understand their role within the organization so that they can work effectively in order to promote the company they work in. Transparency is also essential when it comes to dealing with your customers.
Corporate governance should also include the element of social responsibility, as customers tend to trust organizations or companies that treat their customers and the community members in the best way possible.
A company that wants to promote itself within the community should invest in the local community as that is where the majority of the customers come in to purchase your product or use your services. If the local community is properly targeted, your product or company would be automatically promoted.
Corporate governance can only be ensured through self-evaluation. Every company should learn from its mistakes and should be able to analyze its performance over the years.
Employee or different customers surveys can be done that will help the companies identify their position in the market. Self-evaluation can help the companies to come up with ways through which they can improve the efficiency, service delivery and overall performance of the company.
All the above characteristics reflect effective corporate governance. They are vital to the growth and success of any business in the market.