Best practices for corporate governance aren’t just for companies that are legally organized as corporations. They’re a framework within which leaders must do more than execute effectively on well-planned strategic plans, they must also be fair and responsible to all stakeholders. Regardless of whether your business has one or many stakeholders–shareholders, employees, clients, students or the community–your company’s approach to governance will change over time and depend on your unique needs and context. There are some general concepts that you can apply to any organization of any size:
Transparency is among the most crucial elements of good corporate governance. Transparency is essential for management and board members to be open with shareholders, auditors and the public about financial reporting, accounting, key decisions and internal procedures. This is also important that your business provides information on its environmental and social impacts in ways that are easily accessible to anyone who might be interested.
Another aspect of corporate governance is to establish clear roles and the responsibilities of your board. This can be done by drafting job descriptions for your board as well as its vice chairs and chair as well as committees and their chairpersons or terms of reference (TOR) for directors individually. This will ensure that there are clear boundaries and limitations to authority, as well as an agreed-upon list of the responsibilities. It will help create a strong culture of open communication and collaboration as well as reducing errors and ensure compliance with the law. It could lead to greater growth opportunities as your company expands.
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