Corporate governance is the establishing of policies, rules and procedures that govern an organization. It also takes into account the interests of shareholders, customers and employees as well as government, lenders and the community. These aspects are crucial to a flourishing, strong business.

The person element is vital because it ensures that all employees involved in the operations of the business are ethical, knowledgeable and committed to the goals of the company. This is especially crucial during an era where people are sick of corruption and are demanding greater transparency, accountability, and equity.

A transparent reporting system is an essential component of good corporate governance. This includes ensuring that the board receives accurate financial reports every month that provide visibility into how the company’s performance, and why. It is also best practice for boards to have a system of checks and balances to guard against fraud and mismanagement.

Guidelines and policies are also an important part of good corporate governance. They should reflect the company’s culture, align with legislation/regulations and internal policies, and be clearly available to all stakeholders.

One of the most important facets of good corporate governance is having an independent director who is also known as a presiding director, to oversee and lead the board. This is crucial when the board leadership structure of one company is based on dual roles such as CEO and chair, or if there are personal connections among the top leadership. A company should also ensure that its compensation practices do not result in conflicts https://scoreboardroom.com/nonprofit-board-pay-equity of interest among directors.