Organization of effective corporate governance includes the rules, procedures, and guidelines that direct a company, in addition to considering the needs of employees, customers, shareholders, suppliers, lenders, government, and the community. These are the essential elements for an effective and profitable business.
The people element of good governance is to ensure that the people who are involved in the operations of a company are ethical, trustworthy and dedicated to the company’s goals. This is crucial in a period when people are tired of corruption and demands more transparency, equity and accountability.
Transparent reporting systems are a crucial element of good corporate governance. This includes ensuring that the board receives complete financial reports every month which provide a clear view of how the business has performed and the reasons. It is also recommended that boards implement the system of checks and balances to avoid fraud and mismanagement.
Guidelines and policies are an additional essential element of a good corporate governance. They should reflect the company’s culture, align with legislation/regulations and internal policies, and be clearly available to all stakeholders.
A presiding director is an autonomous director who oversees and guides the board. This is an essential element of good corporate governance. This is especially crucial when a company’s leadership structure includes the roles of chair and CEO or if there are personal connections between top management. The company must also ensure that its compensation practices do not result in conflicts of interest among directors.
