A clearly defined corporate governance structure encourages transparency and fairness, helping your company build strong relations with its shareholders as well as the local community. It defines roles, provides accountability, and permits compliance with laws and regulation. It also aids in the long-term growth of an organization by aligning shareholder and management interests.
Corporate governance is a complex concept that is based on the culture and goals of your company. A few key concepts to keep in mind are:
Unitary Board Structure
In this system of corporate governance, the board of director is responsible for taking decisions and overseeing company activities. The board is comprised of executive and nonexecutive directors. This kind of structure is prevalent in mid-sized and small companies.
Continental Model
Continental’s two-tiered model is a two-tiered structure that grants control to both a managerial board and an oversight panel. The management board is made up of employees from the company like managers and executives. The supervisory board consists of outsiders, such as bankers and union representatives with stakes in a company.
Governance that is based on stakeholder involvement
In contrast to traditional structures that place emphasis on shareholder interests, this kind of governance structure considers the requirements of all stakeholders including customers, employees vendors, and the community. It encourages boards to develop meaningful engagement programs and adopt policies that reflect larger social and environmental concerns. The board should be transparent in its decision-making process and make it available to all stakeholders. It is also important to ensure that there are clear lines of communication between the board, company management and shareholders.
