Building an Effective Corporate Communication Strategy

Communication issues in businesses are not an uncommon problem. For US businesses alone, Inadequate communication to and between employees can cost up to $4 billion annually. The cost of poor communication may be high, but that doesn’t mean there aren’t effective strategies you can implement into your corporation to reduce its risk. By beginning each project with a clear understanding of what your Corporate Communication Strategy is, you can integrate effective time management into your businesses processes seamlessly.  

What Is A Corporate Communication Strategy? 

A Corporate Communication Strategy is the framework used by organizations to plan out communication with employees, customers, suppliers, and investors. When leveraged properly, a Corporate Communication Strategy can be the key to better understanding your company and enhancing its reputation with the people whose attitudes and actions influence your success the most.  

Building a Corporate Communication Strategy 

When it comes to constructing your own Corporate Communication Strategy, there is no in-depth one-size-fits-all solution. While you can probably find countless quick-fixes on the internet, creating an effective strategy is not a simple process. If you want your CCS to best suit your organization, and address and solve the communication issues unique to your business, you will need to invest research and time into the process. 

A Step-by-Step Guide to Developing Your Core Strategy 

Regardless of your industry, there are several aspects that remain universal in core corporate communication strategies. Generally speaking, it comes in three phases: pre-drafting information and research, formulating the strategy, and then examining examples of other communication strategies for further inspiration. This process can be broken down as follows to help you construct your core Corporate Communication Strategy: 

1. Identify and Prioritize Your Executives’ Key Goals

Aim to first understand what each of your business executives sees for the future of the company, and what areas they are truly invested in. In order to collect this information, one of the most useful methods is to conduct individual interviews with as many of your top-level management employees as possible. In the interviews, ask them to clearly outline their top priorities for the upcoming year, and ensure everyone agrees on what message they want to put out for the company. 

2. Conduct In-Depth Employee Surveys

Your employee insight doesn’t stop at high-level management. Employees are at the forefront of your business and are the both the backbone and driving forces for your organization. Understanding how your own employees perceive your company and brand is critical to understanding how others perceive it as well. This is how brand ambassadors come to be – while you construct your Corporate Communication Strategy, you need to ensure their voices are heard. How they respond will help you uncover the best way to go about communicating with your team as a whole. Leverage employee surveys to get them involved in the process and gain valuable feedback and insight into what’s working, and what isn’t. 

3. Research Your Stakeholders’ Input

Stakeholders are one of the most vital parts of your organization, so if you notice that they are communicating something that isn’t confident for the success of your business, you need to adjust your communications strategy to address and fix that perception as quickly as possible. Communicating with stakeholders, shareholders, and investors in a way that is most effective for their own interests in critical for sustaining success and alignment with long-term plans.  

4. Review Your Customers’ Comments

The insight your customers have to offer when it comes to their perception of how your organization is delivering on its promises should not be overlooked. Leverage the countless online, and often free, measurement tools to not only take advantage of social researching methods, but also to learn how to start conversations that will get consumers and potential clients talking about your brand in a positive light. 

4. Include Your Suppliers in Your Research

Suppliers and partners that work closely with your brand can also be great resources for gathering useful information about your strategic corporate communication strategy. Ideally, your suppliers and partners should firmly believe that affiliating themselves with your business is beneficial for their business as well. If this is the case, take note of what it is they say they enjoy most about working with your company. Utilize that feedback not only to add structure to your partner relationships, but also to help strengthen your corporate communication strategy. 

Best Practices for An Effective Corporate Communication Strategy 

Conducting the needed research and interviewing processes is critical to cultivating a successful and effective Corporate Communication Strategy for your business. By gaining valuable insight into how your employees, executives, suppliers, and stakeholders perceive your company, and what it is they prefer when it comes to communication, you will understand what it is your CCS needs to set out to accomplish. Once you have a clear understanding of where you should be aiming, and also how your new strategy will fit into the broader framework of your organization, you need to begin setting up an essential roadmap for its implementation. 

However, before you can begin assessing the key diagnosis and guiding policies for your Corporate Communication Strategy, you first need to understand how it is your company will arrive at those ideal concepts. Consider the following tips while drafting your strategy: 

Look at other corporate communication strategies from successful businesses.

Especially if you are new to the field of communications strategies, taking examples from successful businesses can be extremely beneficial. By looking at communication strategies that have worked extremely well for others, you can get inspired yourself, or even use their strategy as a starting template or jumping off point for your own planning. It is important to keep in mind that communication issues, and hence the strategies put in place to address those issues, will be unique to specific companies. Using a carbon copy of another company’s successful strategy will not necessarily work for your own, and additional research will need to be done to ensure its success for your business.  

Identify your key metrics so you can track the best outcome for your strategy.

Your Corporate Communication Strategy will need to be analyzed for success throughout its use, so it is important to first father the basic key metrics that will be able to show you if it is working the way it should. In addition, statistics gathered from your corporate communications can also show you if your employees are actually using the communication tools being provided. If they are, you will be able to identify how they are using the tools, meaning you can pick apart your strategy and identify the aspects and areas that may need more strategic attention.  

Set intuitive and realistic goals and timelines.

By setting goals for your company that make sense for your objectives and are also realistic in scope and expectation, you will be able to properly estimate the level of difficulty and projected time investment that will be required to integrate and establish your new Corporate Communication Strategy. With a clear picture of what will be required, you can plot out more efficient and worthwhile steps towards updating your strategy, leaning on the metrics you have gathered to identify the areas that will make the quickest impact through strategic change. 

Keep in mind that any and all timelines set should be effective. A good way to accomplish this is to ask yourself questions that allow you to identify the information or data that is too excessive or unnecessary for business. Some examples of questions are:

• What do I want our Corporate Communication Strategy to do for business? 
• Which areas are working efficiently and why, and what areas need immediate improvement? 
• How quickly do I want to be able to reach my business goals for the company? 
• Which communication tools, platforms, and existing strategies are available, given the organization’s size, needs, and goals for what employees should be accomplishing? 

Regardless of your answers to these questions, they should aim to provide clarity into what your Corporate Communication Strategy is setting out to accomplish for your business.  

Use collaboration tools.

Juggling several projects within a team can become complicated way too quickly. Often, organizations find strictly email communications between a large amount of team members to be ineffective in project completion. This is why it can be extremely beneficial to introduce collaboration tools that are useful and effective for project and team management. SpriggHR’s SpriggBoard is a great example of a streamlined collaboration tool you can implement into your strategy. While primarily utilized by Boards, it centralizes and manages all team tasks in one location, safely and securely organizing documents that need to be circulated throughout the team. Meeting agendas can be prepared and distributed, and Critical Paths and Action Plans for events can be shared instantly. By integrating real-time communication, it also eliminates the need for repetitive external email communications between your team members, reducing the time lost to sifting through email threads and allowing your team to focus on project development. 

Actively participate in your teams.

While this practice is easier for smaller organizations where all team members know one another personally, larger companies can stand to benefit from this strategy as well. Part of your Corporate Communication Strategy should include your responsibility to communicate effectively with everyone in your company, and the best way to achieve the success rates you are aiming for is to be a part of the team yourself. Employees are much less likely to follow a leader locked away in an ivory tower, and by avoiding your employees and not engaging in rapport with them, your chances of effective communication dwindle rapidly. Aim to understand how your colleagues communicate with one another and make attempts to adapt to that preferred style of communication so you can reach them better. It is possible to maintain your authority amongst your employees and still communicate with your company at the same time.  

Align your Corporate Communication Strategy to company goals and metrics.

When approaching your Corporate Communication Strategy, you need to ensure its implementation aligns well with your existing business goals. Target your communications to foundational employees, leveraging target audiences, managers, and key communicators. This will allow you to facilitate more thorough and engaging employee communications within your company. Similarly, implementing metrics and analytics into your corporate communication strategy that align with your organizational foundations is critical to evaluating the success of your strategy altogether. Methods such as employee surveys are useful, and should be included somewhere in your strategy, but your research should not rely only on them. 

Aim for a company culture of communication.

If you want to improve corporate communications within your business, you first need to set out to create a culture of communication throughout the entirety of your company. This involves committing to transparency at the Executive level and introduce systems and practices that will support continuous and open dialogue between employees and their management teams. Consistent dialogue and conversation can be transformative for your company culture and can produce tremendous financial results for business. When a workforce communicates effectively with one another, they produce better output, and improve the company overall. 

In Summary 

Constructing a Corporate Communication Strategy that is right for your business does not have to be an impossible process. While it does require an investment of research, time, and thorough planning, once you have a complete understanding of where you strategy sits now, you can focus on how to scale your new strategy in the right ways to yield to greatest benefits from your communication efforts.  

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10 Must-Have Traits of a Corporate Secretary

The Corporate Secretary has one of the most integral roles in keeping a corporation running and successful, largely due to how their job influences every moving part of the company as a whole. Ultimately, they are responsible for ensuring the organization stays in compliance with regulatory and statutory requirements, and also executes all the decisions, changes, and resolutions put forward by the Board of Directors. Essentially, they are the glue that holds the corporation together. 

What is a Corporate Secretary? 

Regional laws often require every registered corporation to designate a corporate secretary. Corporate-specific laws also allow for the outlining of the powers and duties of the Corporate Secretary to be determined by the demands and needs of the business. However, while corporations have some say in the customization of their Corporate Secretary’s job description, there still remain industry guidelines that dictate the overarching responsibilities of a Corporate Secretary. 

In general, Corporate Secretaries are the officers of corporations. They are charged with ensuring that all Board members have the proper advice and resources necessary for discharging their fiduciary duties to company shareholders, in accordance with regional or contractual laws and obligations. Corporate Secretaries are required to attend all Board of Director meetings, recording minutes of the meeting’s actions and documenting all proceedings properly.  

Corporate Governance: The Secretary’s Role 

Over time, and with the emergence of corporate governance the standard for Corporate Secretary duties have evolved to gear more towards governance objectives. This means that while corporate governance reframes the strategic choices of the corporation’s Board, the Corporate Secretary should serve as a confidante and resource to both the board and senior management. They play a leading role in governance, inhabiting the previously mentioned ‘officer’ role by providing advice and counsel on board responsibilities and logistics. 

The Responsibilities of a Corporate Secretary 

Board Meetings 

One of the main responsibilities of the Corporate Secretary is planning, preparing, and executing all Board of Director meetings and committee meetings. This usually involves the following responsibilities: 

1. Scheduling 

The Corporate Secretary should know and comply with the corporation’s meeting notice requirements and establish a schedule that accommodates all Directors. When appropriate and necessary, the Corporate Secretary is also responsible for coordinating meeting logistics, e.g., issuing online meeting details or if scheduled on-site, all associated travel, accommodations, etc. They are responsible for scheduling an adequate number of meetings and providing ample time for the meetings to be conducted effectively.  

2. Agendas 

Part of the major responsibilities of a Corporate Secretary is ensuring a corporation acts in compliance with regional, federal, listing, contractual, and other requirements and regulations, as well as the company’s articles of incorporation and bylaws. In order to accomplish this, the Corporate Secretary usually establishes a basic agenda that extends for a full business year. 

Throughout the year, the agenda is revised and updated according to changing business needs and demands. When setting this comprehensive corporate agenda, the Secretary must communicate regularly with the CEO, Human Resources, investors, accounting, legal, compliance, the Board chairman, and any other important agents that is directly affected by what goes into the agenda. 

3. Materials and Presentations 

When preparing a meeting agenda, as well as any other reports, handouts, or materials that will be used in the meeting, the Corporate Secretary has to consider delivery, security, and retention. 

The chair of the Board can only conduct an efficient meeting when all board members have the necessary materials far enough in advance for them to adequately review them. This allows for adequate time to correct past minutes and revise the agenda prior to the beginning of the meeting. It also gives Board members time to prepare comments and questions applicable to the meeting’s agenda. The Secretary should distribute these materials prior to the meeting, unless past practices or corporate by-laws indicate otherwise.  

4. Executive Liaisons 

For larger boards, there are often smaller committees that meet outside of the standard board meetings. In these cases, the board assigns an executive point person to each committee to act as the chair during those meetings. Some common assignments include: CEO for the Board; CFO for the Audit Committee; Chief Human Resources Officer for the Compensation Committee; Corporate Secretary for the Nominating and Governance Committee. 

If the Corporate Secretary is appointed as the executive to a committee meeting (usually the nominating and governance committee), they are bestowed a new set of duties to comply with on top of their standard Corporate Secretary responsibilities. This can include: 

• Adding written governance updates in each board mailing 
• Arranging education or workshop programs 
• Preparing background materials for the annual board/committee evaluation sessions 
• Acting as the liaison for director search firms 
• Preparing draft director skill criterions 
• Reviewing board independence 
• Evaluating potential board conflicts of interest 
• Conducting committee charter compliance audits 

5. Documenting the Meeting 

The primary responsibility that Corporate Secretaries have during board meetings is to take the minutes of the meetings. This ensures greater accountability and disclosure for the proceedings of the board, without placing legal liability upon the corporation as a whole. In order to do this, the Secretary should have a thorough understanding of which items they need to record, and how much detail should be included in those recordings. They should also remain sensitive to special items or circumstances when documenting minutes. 

Record Keeping 

While taking and recording minutes and executing board meetings is the largest responsibility for Corporate Secretaries, they are also responsible for the substance and dissemination of those minutes. Meeting minutes should always accurate describe, and effectively communicate, all final decisions reached by the Board of Directors. Rather than a scribe for legal documentation, minutes act as the basis upon which the Corporate Secretary implements the board’s pronouncements. 

In addition to meeting minutes, the Corporate Secretary retains and organizes all of the corporation’s significant records. This can include: 

• The company’s Certificate of Good Standing 
• Business licenses 
• SEC compliance paperwork 
• Stock transfers 
• Proxy statements 
• Shareholder correspondence 
• Stakeholders liaison information 
• Significant contracts 
• The company’s Capitalization Table 

Advisor and Trainer 

The Corporate Secretary should always be willing and able to adequately advise the Board of Directors on its duties and objectives, as well as the members’ individual roles. Additionally, when new board members are appointed to the corporation’s Board of Directors, the Corporate Secretary is the one tasked with overseeing their orientation, training, and briefings. Essentially, they keep all individual members of the Board focused on their principle goals, and ensures all proceedings, actions, and decisions remain in line with legal requirements. 

What Makes a Good Corporate Secretary? 

The responsibilities of a Corporate Secretary are both specific and varied. Because of this, it can be challenging to narrow down which qualities to look for in potential candidates. Some essential traits to look for would be: 

1. Strong organization and detail-oriented skills 
2. An efficient and patient communicator 
3. Effective multitasking skills 
4. An excellent and resourceful problem solver 
5. Experience in managing larger departments and individual employees  
6. Sufficient organizational knowledge and familiarity with business laws and regulations 
7. Sound judgment and discreetness where appropriate 
8. Acquainted with and comfortable with bureaucratic limitations and guidelines 
9. Ability to perform well under pressure 
10. A calm and rational mediator and liaison between executives 

In general, the Corporate Secretary of an organization should always have an in-depth, thorough understanding of the total governance process and legal principles that exist in the company. They should then be able to use that information effectively when communicating with Board Members. When a Corporate Secretary is efficient, conscientious, and strong, they have the potential to provide vital benefits to the governing board and the organization as a whole. 

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Implementing an Effective Governance Model

Corporate governance is a system with a basic structure that acts as a foundation for all its distinct parts. This is where the idea of a strong governance model comes into play. 

What is a Governance Model? 

The recent increase in focus on corporate governance and its best practices has drawn many business owners to start re-evaluating their governance policies, establishing board-level risk committees and clarifying the goals of all their committees. 

For many companies, this means reworking the entire way they go about approaching corporate governance itself. A governance model serves as a representation of the many possible ways that a governance system could work if you were to change one or more of its parts. 

The Importance of Governance Models 

Because of the unique set of attributes that apply to every single organization, the complex concept of governance is never a one-size-fits-all application. Governance systems are complex and multi-faceted, with individual components being unique to individual businesses. 

Similarly, every component tends to be interconnected, which means that when any part of a governance system is changed according to the uniqueness of a company, it has a resulting effect on many other parts of the structure. This includes the individuals and groups that make up the system.  

The main function of a governance model is to organize the operational, financial, risk management, and reporting processes that exist in a company, so that the board receives all the information it needs to put good governance into practice. It also serves to help business units within a company conduct their work in compliance with regulations and strategic goals. So, it is ultimately this adaptability and interconnectedness of a governance system that benefits the company. A governance operating model defines the mechanisms and interactions through which governance is put into action, which is an extremely important tool if boards want to enhance their oversight capabilities, while also enabling management to implement governance initiatives themselves.  

Models exist to provide a structure that can be mirrored, modified, or changed, according to the needs of the user. They provide a starting point, which can then be used by organization to identify which areas they need to focus on improving. A governance model also demonstrates the consequences that can be expected, and the risks that can be associated with, the model. 

Establishing an Effective Governance Model 

From Governance Framework to Operating Model 

For many organizations, a great starting point is to evaluate the governance framework and rework it to better suit the organization’s goals, according to the criteria mentioned earlier. A governance framework articulates the elements of a particular governance program (i.e. the roles of the board and management, the relationship between governance, risk management, and organization culture), which are encircled by the corporate governance infrastructure. This is the company’s collection of all the governance operating models – people, processes, and systems – that govern the day-to-day organizational activities.  

The Components of a Governance Model 

Every organization has unique circumstances and needs, which are in turn reflected in the uniqueness of their governance model. There are, however, four general components that exist in every governance model, each with its own set of important and critical subcomponents: 

1. Structure – the subcomponents of structure are organizational design and reporting structure, and the structure of the committees and charters. 

2. Oversight Responsibilities – the key subcomponents under this are board oversight and responsibilities, management accountability and authority, as well as the authority and responsibilities of all committees.  

3. Talent and Culture – the subcomponents under this component are performance management and incentives, business and operating principles, and leadership development and talent programs. 

4. Infrastructure – the key components under this section are policies and procedures, reporting and communication, and finally, technology. 

The Three-Part Approach to Establishing a Governance Model 

When establishing a new governance model, or even enhancing an existing one, it is important to keep in mind that the board should not take full responsibility for setting up every single part of the governance model. Rather, while boards are uniquely positioned to form the governance model, they also have the ability to effectively delegate duties to appropriate parties to carry out its execution.  

In general, when establishing or enhancing a governance model, it can be useful to follow the three-step approach: 

1. Define the operating requirements for your organization’s governance model. 

This means researching frameworks that will best suit your organization, or even designing your own. It is here that you want to factor in any applicable regulatory, governance, or legal requirements that you should be meeting. Carefully assess the actual scope of your operations, and how governance will factor into all aspects of it. Understand what the current state of your governance is like, and identify its existing strengths and weaknesses. 

2. Design the governance operating model and its components. 

It is in this step that you should define the key accountabilities that will exist in your governance model, as well as any decision rights, and the path for escalating matters up to the relevant levels of authority. 

3. Implement the governance model. 

When it is completed, the governance model should define how the company’s boards will measure their success using defined standards and metrics. It should tie governance requirements, organizational functions, and business requirements together, and allocate necessary resources accordingly. 

Part of implementing a governance model includes setting up a schedule for regular reviews of the model by the board and may even suggest third parties that can participate in reviewing the plan. This review process should include examining the components and how they are working for the organization in action, as well as the plan, and determining any further implementation efforts that could be beneficial. 

Modern Governance Models Require Modern Governance Tools 

Today’s business world is highly complex, and components of corporate governance are as interconnected as they are integral to the success of an organization’s governance system itself. This makes the concept of governance models, and the effectiveness of the governance model that exists in your company, even more important. 

With so much at stake and so much to oversee, boards need the assistance of strong, regularly reviewed governance model management systems that can help them address the issue of improving their governance practices on a regular basis. This task can be made easier through the use of electronic tools that streamline this management process. 

SpriggBoard and its integrated suite of software tools can help organizations that are trying to improve their governance models.  

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5 Essential Chairperson Responsibilities

The Chairperson of a Board plays a key role in keeping the Board of Directors effective, and a company on track towards success. Because of the integral part they play in keeping these components moving steadily forward, there are essential Chairperson responsibilities that any Chairperson should ensure are executed upon. 

The Role of the Chairperson 

The primary role of a Chairperson is to ensure that the board of directors is effective in its principle goal, which is to set and implement the company’s direction and strategy. Usually, the Chairperson is appointed by the board itself, and can either be a full-time or part-time role, depending on the board’s demands. Sometimes, usually in smaller companies, the role of the Chairperson is combined with a managing director or chief executive. Joint roles such as those are not recommended for public companies that are listed on the Stock Exchange.  

Essential Chairperson Responsibilities 

While specific Chairperson responsibilities may hinge upon the unique plans and structure of an organization’s board, there are overarching features of the role that exist for every company: 

• While Chairperson, they are expected to act as the organization’s leading representative. This involves the presentation of the company’s aims and policies to potential clients or partners, and to the outside world. 
• They are expected to take the chair at both general meetings and board meetings. For board meetings, this involves determining the order of the agenda; ensuring the board receives accurate, timely, and clear information; keeping track of the contributions of individual directors, ensuring they are all equally involved in decision-making. Regardless of the meeting type, the Chairperson should be directing discussions towards consensus views and agreements and should be summing up discussions so that everyone understands what has been agreed upon. 
• They are expected to take a leading role in determining the composition and structure of the board. This means regularly reviewing the overall size of the board, the balance between executive and non-executive directors, as well as the balance of age, gender, experience, and personality. 
• Finally, they are expected to ensure effective and constructive communication with shareholders and stakeholders. 

The Key Qualities of an Effective Chairperson 

What ultimately defines whether a Chairperson is strong is their ability to manage an effective board, as well as their management of the board’s relationship with shareholders and stakeholders. Some defining qualities of a good Chairperson include: 

1. Ability to Chair Meetings

Meetings for Boards of Directors are infrequent, but the decisions made during those meetings have long-lasting effects on the organization’s future success. Because of that, managing those meetings effectively is critical. A good Chairperson must ensure that all business discussions fall in line with the meeting’s agenda, that every member’s voice is heard and discussed, that clear decisions are reached and unanimously accepted, and that they follow up on those agreements to make sure actions are carried out in line with the board’s decisions. 

2. Understanding the Business

Any good Chairperson should have an exceptional understanding of the business, its culture both on a wide and small scale, and thoroughly know the people and processes that make up the organization. They should also understand the wider industry and be able to prepare the company and board for all eventualities. When a Chairperson is experienced, they can quickly identify opportunities and potential risks that face the organization and can engage with their boards early on to discuss potential courses of action and solutions should those situations arise.  

3. Ability to Influence Without Dominating

One of the most important Chairperson responsibilities is ensuring that all board members are utilizing their own unique skills for the good of the organization. This means ensuring all members contribute to discussions and the decision-making processes, and allowing each member to express their views, even when they conflict with the Chairperson’s view. Establishing effective communication within the Board and between the Chairperson and the rest of the board’s members is critical. A strong and effective Chairperson is careful not to allow their own ambitions and beliefs dominate the discussion and are always willing to be challenged and enjoy open debate. 

4. Having an Assertive Personality

While avoiding dominating discussions is essential, no strong Chairperson should fade into the background, especially when their role entails providing guidance to the rest of the board. Ultimately, the Chairperson is held responsible for the performance of the board. An effective Chairperson gives strength and support to others, and opens the floor to them, while also being resilient and outspoken themselves. This type of balance requires a strong personality. Even the most experienced boards can face challenges, and the Chairperson’s ability to deal with these challenges and guide the board towards recovering from them is critical to the organization. 

5. Good Communication

Perhaps one of the most integral Chairperson responsibilities that exists is maintaining effective communication with all shareholders and stakeholders. Through effective communication, the Chairperson gains the confidence of the rest of the board and can provide clarity in the boardroom. 

The ability of the Chairperson to effectively communicate company strategy to stakeholders, and resultingly provide stakeholders with confidence in the company’s future direction, helps to keep external pressures at bay. If necessary, an effective Chairperson that has a strong communicative relationship with stakeholders will also be able to stand up to shareholder pressure. Ultimately, they do not lose sight of the company’s main priority of improving the long-term performance of the board and the business. 

In Summary 

The essential Chairperson responsibilities can be boiled down to the following: 

• Providing leadership to the board 
• Taking responsibility for the board’s composition and development 
• Ensuring proper information for the board 
• Planning and conducting board meetings effectively 
• Engaging all directors in the board’s work 
• Ensuring the board remains focused on its key tasks and responsibilities 
• Getting all directors on board in the process of assessing and improving the board’s performance 
• Overseeing the induction and development of new directors 

When inadequate leadership and governance is so closely linked to underperformance and even failure of boards and companies alike, the role of the Chairperson is critical.  

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The Importance of Corporate Governance

Corporate governance is the framework that defines the business relationships that exist between company shareholders, management teams, the Board of directors, and all other key stakeholders. The importance of corporate governance cannot be understated, and the development of associated policies that are enforceable and applied consistently is also critical. 

What is Corporate Governance? 

Corporate governance covers both the social and institutional aspects of a business. Simply put, it is the system by which organizations are directed and managed. Corporate governance influences how the objectives of a business are set and achieved, how risks are monitored and assessed, and how internal performance is optimized. 

Because of its broad scope, the general directives of corporate governance can be outlined as such: 

• To act as a system of principles, policies, procedures, defined responsibilities, and accountabilities used by stakeholders to work through the inherent conflicts of interest that exist in the corporate form. 

• To control the interaction between various participants in shaping a corporation’s performance and the direction in which it is proceeding. These participants are usually a Shareholder, a Board of Directors, and Company Management. Corporate governance aims to determine the ways to reach the most effective strategic decisions. 
• To ensure transparency, which in turn ensures a strong and balanced economic development for the organization. Transparency also helps to keep the interest of all shareholders safeguarded. 

The Corporate Governance Framework 

The areas which corporate governance aims to encompass are: 

1. The explicit and implicit contracts between an organization and the stakeholders, for the distribution of responsibilities, rights, and rewards. 
2. The procedures for reconciling the occasional conflicting interests of stakeholders, in accordance with their duties, privileges, and roles. 
3. The procedures for proper supervision, control, and information-flows to serve as a system of checks-and-balances. 

The Importance of Corporate Governance 

Strong and effective corporate governance helps to cultivate a company culture of integrity, leading to positive performance and a sustainable business overall. Essentially, it exists to increase the accountability of all individuals and teams within your company, working to avoid mistakes before they can even occur. 

When a company has solid corporate governance, it signals to the market that the organization is well managed and that the interests of management are aligned with external stakeholders. As a result, it can provide your company with a strong competitive advantage.  

The Benefits of Good Corporate Governance 

Corporate governance refers to all laws, regulations, codes, and practices that define how a company is administrated. It determines the rights and responsibilities of all active agents within an organization, attracting talent and financial capital, boosting internal efficiency, and providing economic value to stakeholders long-term. 

The importance of corporate governance is made apparent by the positive impacts that occur when risks are controlled, and organizational procedures are streamlined and consistent. Organizations can see many direct benefits with good corporate governance, including: 

• Efficient Processes – due to the repeatability and consistency of tasks performed. 
• Visibility of Errors – this repeatability and consistently helps to quickly identify the nonconformities in processes. 
• Reduced Costs – when tasks are streamlined, companies can eliminate the waste from scrap, rework, and any other costly inefficiencies. 
• Smoother–Running Operations – regular disruptions from inconsistent processes are eliminated, as operation specifics become either ‘conform’ or ‘non-conform’. 
• Compliance – a culture that supports corporate governance allows for its product to reach the market while meeting its intended specifications and working correctly. 

The 10 Steps to Good Corporate Governance 

Implementing effective corporate governance can be challenging to accomplish in its totality right away, but there are ten specific aspects you can look to for guidance when implementing corporate governance in your organization: 

1. Ensure a Suitable Board.

The Board should be balanced, competent, and diverse if you are hoping to achieve success through corporate governance. Aim to have directors who are qualified, and who understand the business thoroughly but can also offer a fresh perspective.  

2. Review the Board Regularly

The composition of the Board of Directors is critical and can make or break the success of your organization’s corporate governance. Regularly reviewing your Board can help to identify any possible shortcomings quickly, which then allows you to make timely improvements and keep things on track. 

3. Build Solid Foundations for Oversight

Overseeing the work of both the Board and management is critical. Develop a systematic foundation you can use to establish, monitor, and regularly evaluate their roles and responsibilities. The Board needs to have visibility of management actions and be available during all key decision making. 

4. Aim for Long Term Value Creation

Gearing key performance indicators towards long-term value production, as opposed to short-term, will ensure sustainable success for your company. 

5. Prioritize Risk Management

Establish a risk management process and internal control framework that is both effective and conducive to your business needs and aim to review its effectiveness periodically. Disaster recovery plans are critical to any business endeavor, so regularly keeping yours up to date is never a bad idea. 

Take the infographic to go!

6. Ensure Reporting Integrity

Corporate reporting is critical, but so too is the insurance of its overall integrity. Aim to set up safeguards throughout the reporting processes, such as conducting external audits of the company. 

7. Provide Timely and Balanced Information

Transparency with key stakeholders is essential, and this can only be accomplished when you aim to provide information regularly, both in the good and bad times. This promotes stakeholders’ confidence in the business and eliminates the risk of them distrusting your proceedings and pulling out. 

8. Emphasize Integrity as a Whole

Practices of integrity do not stop at reporting. Be consistent in your promotion of ethical behaviors and consult shareholders on their interests and concerns when it comes to the integrity of your company. 

9. Treat Stakeholders Equitably

Respect the rights of your shareholders and be open to changing your plans to suit them if needed and appropriate. 

10. Ensure Adequate Disclosures

This refers to the disclosure of all related parties’ transactions, and the other interests of all director’s involved. If a director has external financial interests outside of the company, it could influence their decision-making.  

In Summary 

Corporate governance is a system that aims to instill policies and rules that helps maintain the cohesiveness of an organization. It exists to help hold a company accountable, while helping them steer clear of financial, legal, and ethical pitfalls. The importance of corporate governance is made abundantly clear by the direct benefits seen when a good corporate governance framework is in place.  

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