Corporate governance is the process of establishing rules, policies, controls and resolutions to promote positive corporate culture and behavior. It also helps protect organizations from crises and risks to business such as corruption in leadership and cybersecurity threats. It includes contingency plans that assist companies in dealing with these business forces and come out the other side stronger and more resilient.
Corporate governance structures and practices vary according to the size of the business and industry, ownership structure and jurisdiction. Despite their different characteristics, these governance structures and practices should all have a common goal–building long-term value for shareholders. They should also permit flexibility to adapt and modify their governance practices if needed to achieve this objective.
A company’s board of directors is charged with establishing goals for the company’s future, appointing and overseeing senior management, and representing the interests of shareholders. The board members must understand their obligations and work with the company’s top management to ensure that their responsibilities are carried out in a way that encourages growth of the business and financial performance.
Stakeholders should be urged to engage in dialogue and engagement with the board of directors and management. They will be able express their opinions in areas which were previously the management and the board the management, such as strategic direction and decision-making. It is important that the board and management are open and honest about their governance structures and practices, and the motives behind using them.