Effective corporate governance is the rules, practices http://scoreboardroom.com/steps-to-create-a-nonprofit-social-media-policy/ and procedures that direct a company, while also taking into account the interests of shareholders, customers, employees and suppliers, lenders, government and the community. These elements are crucial for an effective and profitable business.
The human element of good governance ensures that the people involved in the operations of a company are ethical, knowledgeable and committed to the goals of the company. This is particularly crucial in a time when the public is tired of corruption and is demanding more transparency, equity, and accountability.
Transparent reporting systems are a crucial aspect of good corporate governance. This includes ensuring that boards receive thorough financial reports on a monthly basis that provide visibility into how the company’s performance, and why. It is also recommended that boards implement the system of checks and balances to prevent fraud and inefficiency.
Guidelines and policies are also an essential to good corporate governance. They should reflect the company’s culture, align with legislation/regulations and internal policies, and be clearly available to all stakeholders.
One of the most important facets of good corporate governance is having an independent director who is also known as a presiding director to oversee and direct the board. This is crucial when the structure of a board’s leadership an organization combines the roles as chair and CEO or if there is close personal ties between top management. A company must also ensure that its compensation practices don’t cause conflicts of interests among directors.