Effective company governance requires committed focus by board people, management and shareholders to their particular roles as well as the shared aim of building long lasting value. In addition, it requires a approach to checks and balances that minimizes the potential for conflicts of interest and ensures that all stakeholders are viewed fairly.
An integral principle can be transparency, the openness and willingness to share accurate, distinct and easy-to-understand information using stakeholders, including shareholders. This includes credit reporting on equally good and bad news. It also means organisations need to be willing to own up when they have made problems instead of covering them. Aiming to hide errors only to always be exposed afterwards is much more damaging to a company’s popularity than becoming open and honest in the first place.
Another main principle can be accountability, which means all stakeholders are kept accountable towards the highest expectations of behaviour, their board room especially in the event of a crisis or controversy. It also involves ensuring that companies are governed in accordance with laws, polices and honest business practices.
Stakeholders usually are not simply shareholders but also staff, customers, vendors, communities and environments in which they conduct, as well as government. This means that businesses have a responsibility to consider the needs of all stakeholders when making decisions.
A diverse panel that can discuss complex issues in a constructive method is essential. Aboard members really should have a wide range of skills and experiences from different critical, industries, cultures and regions. Boards should also include directors who are women and hispanics, and have various tenures to provide fresh points of views.