Characteristics Of Good Corporate Governance

.IN WHAT WAY GOOD CORPORATE GOVERNANCE PRACTICES HELP A COMPANY?

1. IMPORTANCE OF GOOD CORPORATE GOVERNANCE

Corporate governance is a way of life for corporations. It is a method of governing a company like a sovereign state by appointing its own customs, laws and policies to its employees and owners at all levels of the organization.

The intention of corporate governance is to increase the accountability and avoid massive disasters before they occur. Corporate Governance always follows the policy of – “Prevention is better than cure”.

An example of a failed company due to ineffective corporate governance is the energy giant Enron and its bankrupt employees and shareholders highlighting the importance of corporate governance

A solid corporate

Clear Strategy

A clear strategy for the organization should be the starting point for every organization. A company’s management team would research the market to identify profitable and viable niche, establish a product line to meet the needs of its target market and then advertise and promote its products with a solid marketing campaign that reaches and appeals to the consumers directly. At every stage to know the overall strategy helps a company’s and its workforce to stay focused on the organizational objectives i.e. meeting the needs of the consumers in the established target market.

b. Effective Risk Management

Even if your company implements smart policies, competitors might steal your customers, unexpected disasters might cripple your operations and economy fluctuations might erode the buying capabilities of your target market. You can’t avoid risk, so it’s vital to implement effective strategic risk management. For example, a company’s management might decide to diversify operations so the business can count on revenue from several different markets, rather than depend on just one.

c.

Transparency

Managers sometimes keep their own counsel, limiting the information that filters down to employees. But corporate transparency helps unify an organization: When employees understand management’s strategies and are allowed to monitor the company’s financial performance, they understand their roles within the company. Transparency is also important to the public, who tend not to trust secretive corporations.

f. Social Responsibility

Social responsibility at the corporate level is increasingly a topic of concern. Consumers expect companies to be good community members, for example, by initiating recycling efforts and reducing waste and pollution. Good corporate governance identifies ways to improve company practices and also promotes social good by reinvesting in the local community.

g. Self-Evaluation

Mistakes will be made, no matter how well you manage your company. The key is to perform regular self-evaluations to identify and mitigate brewing problems. Employee and customer surveys, for example, can supply vital feedback about the effectiveness of your current policies. Hiring outside consultants to analyze your operations also can help identify ways to improve your company’s efficiency and