Corporate governance best practices are not only for businesses that are legally incorporated as corporations. They’re a framework within which leaders must do more than implement effectively well-thought-out strategic plans. 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 common principles that can be applied to any organization, big or small:
Transparency is among the most important aspects to good corporate governance. Transparency is essential for board members and management to be transparent with shareholders, auditors and the general public regarding financial reporting, accounting, key decisions, and internal processes. This means that your organization should make information about its environmental and social impact easily accessible to anyone who might be interested.
The definition of clear roles and responsibilities is another aspect of corporate governance. This can be done by creating job descriptions for the board the chairperson, vice-chairperson and chairperson, committees, and their chairs or by setting up terms of reference for directors individually. This will ensure a consistent list of responsibilities, as and clear boundaries for delegation and limitations on authority. It helps to create an environment of collaboration and open communication as well as reducing mistakes and ensure compliance with laws. It could lead to greater growth opportunities as your company expands.