A clearly defined corporate governance framework ensures transparency and fairness as well as helping your business develop a a strong relationship with its shareholders and the community. It helps define roles, ensures accountability, and permits compliance with laws and regulations. It also aids in the company’s long-term growth plan by aligning the interests of shareholders with the interests of the board and management.
There are many kinds of corporate governance, however the one that is most effective for you is based on your company’s goals and the culture of your company. Keep in mind the following fundamental concepts:
Unitary Board Structure
In this model of corporate governance, the board of directors is responsible for making decisions and directing company activities. The board includes both non-executive and executive directors. This is the most common structure in small and mid-sized companies.
Continental Model
Continental’s two-tiered model is a two-tiered structure that gives control to both a managerial board, and an oversight panel. The management board is comprised of insiders within the company such as executives and managers. The supervisory board consists of outsiders such as bankers and union representatives with stakes in the company.
Governance that is stakeholder-oriented
This type of governance structure, which is different from traditional structures, which place emphasis on shareholder interests, takes into account all stakeholders including employees, vendors and customers and the community. It encourages boards to create relevant engagement programs and implement policies that reflect broader environmental and social concerns. The board should be transparent and open about its decision-making processes and make this information available to all stakeholders. It should also ensure that there are clear lines of communication between the board, company management and shareholders.