IT Best PracticesIT Governance

Is COVID-19 Reforming Corporate Governance Rules?

Due to 2020 business disruptions, the scope and power of corporate governance have changed. A corporate board faces a series of problems, including dividend returns, keeping up with the stakeholder’s expectations, etc. Usually, they apply a registered dividend policy and use the past routine to fulfill shareholder expectations. However, 2021 made it difficult to follow past practices. In this article at Harvard Business Review, Lynn S. Paine explains that the corporate board is experiencing countless difficulties. Their main concerns include investment return to shareholders, employee layoffs, and future growth prospects.

Major Uncertainties

The process of achieving early success is not easy. The emerging set of pressures from stakeholders’ expectations and radical ambiguities have complicated the board’s decision. An investor-friendly governance model is now more crucial than in the past decades.

Agency Theory

A governance model receptive to shareholder needs shapes the resilience of an organization. Your corporate board must focus on investor returns and other significant factors to improve brand reputation. Ironically, the coronavirus pandemic is a turning point for corporate governance. It has questioned the core competencies of the governance model. Here are five ways the board members can prepare for the post-pandemic phase:

  • Stay updated on the real-time growth prospects of each stakeholder. The board and business leaders must focus on preserving employees’ well-being and safety. Also, customers should remain their top priority in this difficult time.
  • Board and shareholders are interdependent. The crisis has proven that investors’ influence cannot be stable. However, employee engagement comes first, and so should consumer preferences.

The pandemic lessons indicate a proactive involvement of the corporate board to monitor stakeholders, investors, and employee relationships. Periodic reviews of each shareholder group’s status will allow your board to maintain the company’s growth performance. The board must not lose vision of its core operations as a governing body of the enterprise. Click on the following link to read the original article: https://hbr.org/2020/10/covid-19-is-rewriting-the-rules-of-corporate-governance

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