Simply put, corporate governance is the framework under which an organization operates — in essence, it is a toolkit that enables management and the board to deal more effectively with the challenges of running a company. Corporate governance, among other things, ensures that businesses meet legal and regulatory requirements, ethical standards and social responsibility considerations, and have the appropriate decision-making processes and controls in place so that the interests of all stakeholders (shareholders, employees, suppliers, customers, and the community) are balanced.
All companies — big and small, private and public, early stage or established — benefit from corporate governance. Whether raising capital, securing a loan, attracting top talent or positioning for growth, effective governance matters. Of course, there is no one-size-fits-all – your practices will depend on the nature of the business, the company’s size and stage of development, resources (financial and human); shareholder expectations; and legal and regulatory requirements.
Seven Elements of Effective Governance for Small to Medium Businesses
- Defined corporate structure. Who will run the company and who are the key decision-makers? What is the succession plan?
- Legal and regulatory compliance. Text needs to be entered.
- Actionable code of conduct and ethics. Text needs to be entered.
- Qualified board of directors and/or advisory board. Text needs to be entered.
- Sustainable risk management program. Text needs to be entered here.
- Social responsibility. Text needs to be entered.
- Regular audits. Text needs to be entered.