A clearly defined corporate governance structure promotes fairness and transparency, allowing your company to establish solid relations with its shareholders as well as the local community. It helps define the roles and responsibilities, guarantees accountability and enables compliance with laws and regulations. It also assists in implementing a business’s long-term growth strategy through aligning shareholder interests with those of the board and management.
Corporate governance is a complex concept that is dependent on the culture and goals of your business. The most important things to be aware of are:
Unitary Board Structure
In this corporate governance system, the board of director is responsible for overseeing and making decisions regarding company activities. The board comprises non-executive and executive directors. This structure is common in mid-sized and small-sized companies.
Continental Model
A two-tiered system, called the Continental model gives control to a management board as well as an oversight board. The management board consists of insiders within the company including managers and executives. The supervisory board includes outsiders like bankers, and union representatives who have stakes in the company.
Stakeholder-Oriented Governance
This type of governance structure, in contrast to traditional structures that focus on shareholder interests, will consider all stakeholders, including employees customers and vendors, as well as the community. It encourages boards to create engaging programs that are meaningful and adopt policies that reflect the larger environmental and social concerns. The board should be transparent in its decision-making process and communicate that information to all stakeholders. It is also important to ensure that there are clear lines of communication between the board, the company management and shareholders.
