5 Most Important Characteristics of Corporate Governanceby Purvi Dalvi Writer
Corporate Governance is the system of practices and codes that firm follows during the daily operations. They are conducted to balance the interest of the stakeholders of the company. These stakeholders include the shareholders, customers, suppliers, society and more.
The board of directors are the primary architect and influencers of the Corporate Governance Management. They are the representative of the shareholders of the company. They are responsible for all critical decisions taken by the firm.
A terrible move can put the company’s reputation at stake. Consequently, they will be obligated to the stakeholders who can have negative implications on the financial holding of the company in the market.
To avoid all these mishaps, here are 5 characteristics that an effective Corporate Governance Management must follow:
1. Transparency in Operations
It is an extremely vital step as it allows the independent body to analyse the economic and non-financial actions of the management. If the internal system is smooth going, the impact externally will boost as well. That, in turn, leads positive reputation of the brand. Also, the investors should take charge to have a clear picture of the organisation before taking the plunge.
The decision-making panel of the board should be an unbiased and free influence. There should be a mechanism to keep track of the conflict of interest that may exist. Some companies hire a corporate affair strategist for the same. The democratic way of decision making to avoid dominance of a particular member is what these strategists look after to avoid any internal conflict.
Those Individuals or groups who have got the authority to make decisions should be held accountable for their choices and actions. If corporate affair strategy is in place, the individuals/groups can receive fair judgement. This will enable a positive image of the organisation in the eyes of the stakeholders.
4. Social Responsibility
The firm is very likely to experience growth in sales and goodwill by staying aware of social responsibilities. It is crucial to remain non-discriminative and non-exploitative for civil rights and environmental causes. Also, one should respond to these issues on high priority to uphold the ethical standards.
Another crucial step that the top management and employees should follow is to universally accept and recognise certain norms and clauses of the company. This shows the commitment of the firm’s awareness and responsibility towards social and environmental issues. The corporate governance management team make sure that the group follows a standard code of ethics and send them out over e-mail as well.
Created on Jan 21st 2019 04:24. Viewed 376 times.