Types of Corporate Governance Best Practices

Corporate governance best practices are not just for corporations that are legally incorporated as corporations. They’re a framework within which leaders are required to do more than follow through on well-planned strategic plans. They also have to be fair and responsible to all stakeholders. Regardless of whether your business has one or many stakeholders–shareholders, employees, clients, students or the community–your company’s approach to governance will change over time and depend on your unique needs and context. However, there are some common concepts that you can apply to any business, large or small:

One of the most important aspects of a good corporate governance system is transparency. This means that you must ensure that your management and board members are transparent with shareholders, auditors and the general public in relation to financial reporting accounting standards, major decisions and internal procedures. This means that the company should provide information on its environmental and social impacts easily accessible to anyone who may be interested.

Establishing clear roles and responsibilities is an additional aspect of corporate governance. This can be done by creating job descriptions for the board including its chairperson and vice-chairperson committees, their chairs or by setting up terms of reference for directors in their individual roles. This ensures a uniform set of responsibilities, as also clear guidelines for delegation and limits on the power of. It will help create an environment of open communication and collaboration and reduce the chance of mistakes and ensure compliance. It could also lead to more opportunities for growth when your business expands and diversifies.


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