Types of Corporate Governance Best Practices

Corporate governance isn’t just for legal entities that are structured as corporations. It’s a system that requires the leaders to do more than just execute well-developed strategies. They must also be accountable and fair 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. However, there are some general ideas that can be applied to any business, large or small:

One of the most important aspects of a good corporate governance system is transparency. Transparency is important for management and board members to be Due Diligence open with shareholders, auditors and the public about financial reporting, accounting, important decisions, and internal processes. This means that the company should provide information on its social and environmental impact easily accessible to anyone who might be interested.

Setting clear roles and responsibilities is an additional aspect of corporate governance. This can be accomplished by drafting job descriptions for the board including its chairperson and vice-chairperson, committees, and their chairs or by establishing terms of reference for directors in their individual roles. This will ensure that there are clear boundaries and limits to authority, as well as an established list of responsibilities. It can help to foster an environment of collaboration and open communications while helping to reduce errors and ensure compliance with laws. It could result in more opportunities for growth as your company expands.