A clear corporate governance structure helps to ensure fairness and transparency which helps your company build solid relationships with shareholders and other members of the community. It helps establish roles and responsibilities, ensuring accountability and helps ensure compliance with the law and regulations. It also helps to ensure the long-term growth of a business by ensuring that shareholders and management have the same interests.
Corporate governance is a complicated concept that is dependent on the goals and culture of your company. Keep in mind the following key concepts:
Unitary Board Structure
In this corporate governance system the board of directors is accountable for overseeing and making decisions regarding the company’s activities. The board is comprised of executive and non-executive directors. This is a common structure in small to mid-sized businesses.
Continental Model
Continental’s two-tiered structure is a structure that gives control to a supervisory board, and an oversight panel. The management board is comprised of insiders from the company such as executives and managers. The supervisory board comprises outsiders such as bankers and union representatives who have stakes in a company.
Governance that is stakeholder-oriented
In contrast to traditional structures which focus on shareholder interests, this type of governance structure is designed to consider the needs of all stakeholders including customers, employees, vendors and the community. It encourages boards to create meaningful engagement programs and adopt policies that reflect the larger social and environmental concerns. The board must be open about its decision-making process and make it available to all stakeholders. It must also ensure that there is a clear line of communication between the management, board members and shareholders.
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