“To be effective, your company’s leaders must take responsibility for their decisions and the performance of the organization as a whole. For example, the leaders of a company should design and adhere to a code of ethics that helps management promote each of the important characteristics of good corporate governance.

Good corporate governance starts with a clear strategy for the organization. For example, a furniture company’s management team might research the market to identify a profitable niche, create a product line to meet the needs of that target market and then advertise its wares with a marketing campaign that reaches those consumers directly. At each stage, knowing the overall strategy helps the company’s workforce stay focused on the organizational mission: meeting the needs of the consumers in that target market.

Effective Risk Management

 Even if your company implements smart policies, competitors might steal your customers, unexpected disasters might cripple your operations and economy fluctuations might erode the buying capabilities of your target market. You can’t avoid risk, so it’s vital to implement effective strategic risk management. For example, a company’s management might decide to diversify operations so the business can count on revenue from several different markets, rather than depend on just one.

Discipline and Commitment

Corporate policies are only as effective as their implementation. A company’s management can spend years developing a strategy to push into new markets, but if it can’t mobilize its workforce to implement the strategy, the initiative will fail. Good corporate governance requires having the discipline and commitment to implement policies, resolutions and strategies.

Fairness to Employees and Customers

 

Fairness must always be a high priority for management. For example, managers must push their employees to be their best, but they should also recognize that a heavy workload can have negative long-term effects, such as low morale and high turnover. Companies also must be fair to their customers, both for ethical and public-relations reasons. Treating customers unfairly, whatever the short-term benefits, always hurts a company’s long-term prospects…”

 

Original Source:  https://smallbusiness.chron.com/seven-characteristics-good-corporate-governance-57207.html

 

Contributors: Open Source
Categories: SIG U Resource, Tool
SRC Type: Governance, Sourcing Management