In a tough market, corporate governance in companies has increasingly more importance and influence on its success rates and longevity.
For a business to actually have a good relationship with customers and investors, it is essential that it makes use of good management practices. This attitude, in itself, significantly improves its image, a benefit that may pave the way for funding through credit and contributions.
Another important point is that, since this credibility is directly linked to the degree of reliability of a company, their inclusion tends to make customers more comfortable, which makes the environment more conducive to business.
These good management practices, capable of creating such benefits, are directly linked to corporate governance in companies. Keep reading and find out it is and how to adopt it.
Concept of corporate governance
Corporate governance is understood as the set of policies, culture and internal regulations that guide the management of a company, with the purpose of making it more transparent and efficient.
Basically, the goal of corporate governance in companies is to optimize their management and grant more transparency to the decisions made by the management team. This enables the business’ employees, customers, investors, and financial institutions to understand them more easily.
Fundamental principles of corporate governance
The clarity in the decision-making process and the increased reliability of the company are based on some fundamental principles. Keep reading and get to know each one of them.
The first and probably most important principle is transparency. This is because, if it is not adopted correctly, other attitudes will hardly achieve the planned success.
Basically, it is important that companies that are interested in adopting corporate governance create channels to impart information about their decisions, activities and results, whether successful or not.
By having this attitude, the company is able to keep its employees informed, which increases the feeling of engagement.
Another promising result of transparency is that, since clients and investors may easily get information about a company, they feel more secure in doing business with it, or making contributions.
When we speak of good management practices, we refer to operational strategies that benefit, equally, all partners and investors of the company. For this reason, one of the fundamental principles of corporate governance is equity among shareholders.
If it is not properly performed, the business’ image may be tarnished, which jeopardizes its relationship with partners, investors, financial Institutions, and even with customers. In addition, bad practices in this area can lead to lawsuits, which would further undermine the company’s reputation.
Because of this, it is critical that the decisions made by the business management benefit its members as a whole.
There are a growing number of managers who understand the importance of their company regarding social issues and are adopting policies aligned with them. It is important to emphasize that this process should begin internally, creating an environment that is appropriate for the company’s employees to perform their duties.
By taking on their role as a socially responsible company, the companies in question, in addition to improving the society in which they are included, benefit from their improved image, which reflects positively in their relationship with customers.
Although all the principles cited so far are very important, their effects will be limited if the information concerning them is not properly disclosed. In this context, accountability, the last principle to be mentioned, shows its importance.
Directly related to transparency, accountability is nothing more than the process of disclosure of all practices and results, referring to aforementioned principles, by the company’s channels.
Lastly, it is important to emphasize that, in order to maintain the principle of transparency; the disclosed information must be completely true, regardless of whether it is positive or negative.
Implementing corporate governance in companies
The implementation of corporate governance in companies is a process that tends to create profound changes in the way their operations are usually carried out. For it to be successful, some actions must be taken. Keep reading and learn more about them.
In order for an organization to be able to operate in an organized way, making decisions quickly and adapting more easily to market changes, it needs competent leadership. If the company does not count on this leadership, it will hardly be able to grow.
Therefore, the first step in the implementation of corporate governance is to elect the team of controllers responsible for managing the business. It is up to this team to establish the tasks of employees, the direction of the company, and the priorities in its operational strategy.
The hierarchy established in the company must be respected, but it does not have absolute powers. It should be accompanied by a board made up of company partners, investors, and experienced and trained professionals.
Its purpose is to monitor the operation of the management team and assist in its decisions.
The deliberation between the company’s management and the advisory board should occur in meetings. In order for the performance of managers and the strategies adopted by them to be monitored more closely, it is important that such events take place frequently.
Among people with skills and experience, this is the time to exchange information, discuss the company’s future based on reliable reports, and make decisions that will define the operation of the business.
Respecting the principle of equity, the voice of all partners, or investors, should be heard in meetings. Finally, it is worth mentioning that all matters discussed during the event must be duly recorded in minutes.
Although the implementation of corporate governance in companies is a complex process, the results obtained by it tend to compensate the hard work, with the optimization in the business management.
This is a situation that enables a significant increase in the performance, which presents obvious results in profitability.
In addition to corporate governance in companies, other attitudes can be taken to improve the performance of a business. Among these we can mention data governance. Find out how it works!