What is Corporate Governance?
Corporate governance is a system that enforces practices, rules, and processes throughout an organization. It ensures that all stakeholders in the establishment follow the rules and that each decision is made with the organization’s well-being in mind. Good corporate governance protects employees through honest actions.
We asked business experts for their definitions of good corporate governance, and why it’s important for every organization to nail down their business ethics. Their responses can help you determine what steps you need to take to enhance the integrity of your organization.
Why is Corporate Governance Important?
Transparency Within the Company
Failure to be transparent and keeping secrets in a company can create a toxic work culture. Michelle Devani, Founder of Love Devani, reveals why it’s important to maintain open communication with her team:
“Good corporate governance is important to my business and I think to all businesses to avoid mismanagement. As the founder of my website, I would say that this serves as my business’ foundation to operate efficiently and transparently. The principles of good corporate governance are accountability, fairness, transparency, and responsibility. But among all, transparency is the one that worked for me. This is because it provides me with accurate information, whether it’s related to financial or other matters, that gives me confidence in decision making and managing my business.”
Good corporate governance can also be achieved by identifying important issues. Chris Muktar, Founder of WikiJob, reveals that being transparent helps to avoid playing the blame game:
“As a business owner, I believe that good corporate governance is beneficial because it reflects the company's positive image. It encourages the practice of integrity that allows the company to operate effectively.
“In transparency, blame games will be avoided. Also, if stakeholders are continuously updated on what is happening in the company, they can identify issues that might cause significant future problems. They will even profoundly understand how the company works and will be able to create strategies that will help the company grow and succeed.”
Maintain Fairness in All Aspects
When it comes to fairness, Lewis Keegan, Founder of SkillScouter, believes that all employees should be treated equally:
“Contrary to popular belief, just because a company makes a profit doesn’t mean that they exhibit good corporate governance. It is a combination of many factors that are all holistically considered and implemented in the workplace. Good corporate governance means that not only the greater good of the company and the higher-ups are satisfied, but also those who work underneath them. This is characterized by fairness of treatment to employees and executives, socially responsible leadership, commitment, discipline, and adherence to long-term sustainable goals.”
Keep Integrity at the Forefront of Your Business
Jake Smith, Managing Director of Absolute Reg, explains why integrity is key in any company:
“Integrity is one of the fundamental principles of good corporate governance. This means that the leaders and the management should commit to the company’s core values and mission instead of their own personal interests. Integrity is the consistency and transparency of each leader’s deeds and actions. Leaders should act their words. It also means taking appropriate action and accountability to do what is right for the company’s reputation, needs, and, interests.”
Paul A. Dillon of Dillon Consulting Services LLC, explains how military practices can be beneficial for corporate organizations:
“Ensure the integrity and welfare of your troops. You can't get distracted by small things along the way. You need a vision—yes, the “vision thing”—of what your battle plan is going to accomplish, and then execute that plan flawlessly. “
Don't just settle for knowing what good corporate governance is - take the next step and equip yourself with the necessary tools to make it a reality.
If you’re looking to enhance the integrity of your organization and foster an increasingly positive work culture, contact our team today! We offer a range of services from anonymous ethics hotlines to governance, risk management and compliance solutions.
