Define corporate governance in a word or sentence. Is it a corporate rule book for maintaining corporate regulations? Or, is it an ideal approach to improving business performance? In this article at Future of CIO, you will learn about the correlation between corporate governance and business performance. Governance does not affect business performance directly but through corporate behaviors.
Key to Progress
Governance is quintessential to sustaining the business performance of an organization without breaching regulations. It helps enterprises make the right decision and maintain compliance and control while operating in the market. It has a direct connection with the businesses and processes. Corporate governance aims to guide, value, and observe the rules of commercial transactions. It has the power to influence your corporate performance through good governance behavior.
Distribution of Rights
A corporate governance structure defines the roles, rights, and responsibilities of the board of directors, managers, shareholders, creditors, auditors, and regulators. In a venture, the upper management plays a significant role in maintaining business affairs. Organizations known for excellent business performance have followed an ideal governance performance. Let’s take a look at how they did it:
- Corporate governance is an instrument to enhance the quality of business performance. It can guide public and private organizations by observing their activities, strategies, and choices. There is a strong correlation between business operations and governance that helps in upgrading the quality of performance.
- Organizations must follow corporate governance rules and principles to influence business performance. You must observe compliance and regulatory norms to lift the standards of transparency within an organization. It is the business strategy and implementation by C-suite executives that ensure successful execution of governance.
- Upper management and business managers must learn and maintain the governance processes and adjust to them wherever required. It will help the organization function better and deliver desired outcomes.
- Most governance models involve structural aspects of regulation. So, make a checklist to identify and bridge the gaps in the processes by initiating improvement initiatives. Aim to strike a balance between the shareholders and investors.
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