Despite being of utmost importance to any corporate or business house the ‘Corporate Governance Practices’ do not have a well-defined universal definition. The basic cause may be that there are no one-size-fits-all rules of corporate governance practices. The term is roughly used to describe the practices, processes, rules, and structure through which the corporation manages its businesses.
No doubt, every company cannot have the same set of corporate governance practices. But good corporate governance practices do have some characteristics that apply to all sizes of organizations.
Clear Strategies – The good governance at any corporation starts with the ability of management to make clear strategies. And, making a clear strategy is not required only at the planning stage but at each and every step of operation of the organization. The clearly defined strategy of the management helps the team to work efficiently. If the strategy is not clear at every step the workforce will get confused. When the working team is not focused on a well-defined goal then surely they will keep beating around the bushes.
Discipline – Corporate strategies or policies are just the theoretical portions; they cannot help attaining goals if they are not executed well. And, discipline is the most important thing for turning plans into action. It is the duty of the governing bodies of an organization to maintain discipline and induce the workforce in following it. When an organization is disciplined in working they easily attain their goals.
Transparency – The management needs to be transparent to earn the trust of the employees. If the management works too secretively they will not only lose the trust of the employees but also confuse them leading to chaos in the organization. The management cannot straight-forward tell the employees to do a certain task without telling any background information or the strategy to reach a certain goal. Obviously, no employees need to know each and every detail of management decisions but a sizable amount of transparency is a must for good governance.
Empathy – Governance can never be good without the essence of empathy. The management should have an empathetic relationship with their workforce; it should never be forgotten that employees are humans with emotions rather than machines. It is healthy for a company to push employees to give their best performance but this does not mean that the management should overload the employees with expectations. This may bring some short-term benefits but if the employees are not treated empathetically the organization will not have a good future in long-run.
Self-Evaluation – Almost every organization has one or the other way to keep evaluating the working staff but the organizations with good governance also undergo self-evaluation periodically. Taking feedback from customers and employees can give an idea about the organization’s pros and cons. But for getting the true picture the employees should be given the environment to talk freely. The best way, however, is to hire an outsider who can evaluate the work culture and governance of the organization without a bias. The experts at e-sandhurst.com have been efficiently helping corporate in maintain good governance practices for a long time.
Risk Management – Despite working with full efficiency any organization may run into one or the other problem because not everything in the business environment can be controlled by the management of the organization. There are many outside forces that can create trouble for the company. So, the organization should always stay ready with their strategic risk-management tools. If due to market change the company runs into a loss the employees should have trust in the management and work efficiently to help out the company from trouble. And, this the duty of the governing body to instill that trusts in the workforce.
Social Responsibility – Any corporation cannot leave isolated; they too are part of the society. The customers, the competitors, the shareholders and the employees all are part of this common society. And the society has some expectations with any organization working within its boundary. No corporation should forget their social responsibilities like taking care of the eco-system, paying something back to the society etc. By showing your dedication towards society you not only make your customers happy but also give your employees the message that you care for them not only within the organization but also outside it.
Any organization with these characteristics in their governance practices can stay assured that they are heading in the right direction. These small things are ignored by most of the organization while there are a few who abide by these rules. And, that ignorance or acceptance creates the dividing line between losers and winners in the long term. Which side of the dividing line do you find your organization standing now?