Question

how can we imlement ab effective governance system within a company ?

when corporations st strategic goals with regard to health and safety in the workplace how should they set priorities between company needs and community standards, customers and traditions ?

asap please

Answer 1

1: How can we implement ab effective governance system within a company ?

This belief that corporate governance “doesn’t apply” comes from a view that it’s only theoretical and doesn’t impact the bottom line or performance, is costly to implement, is “bureaucratic” (and slows decision-making), it can’t be tailored to a company’s size and stage of development – or all of these. But in reality, all companies compete in an environment where good governance is a business imperative in relation to things like:

raising capital;

securing debt;

attracting and maintaining talented, qualified directors;

meeting the demands and expectations of sophisticated shareholders; and

preparing for potential acquisition / exit or next phase of growth.

One can draw some conclusions and formulate a short set of rules regarding best corporate governance practice.

ethical approach – culture, society; organisational paradigm

balanced objectives – congruence of goals of all interested parties

each party plays his part – roles of key players: owners/directors/staff

decision-making process in place – reflecting the first three principles and giving due weight to all stakeholders

equal concern for all stakeholders – albeit some have greater weight than others

accountability and transparency – to all stakeholders

BASIC VIEW OF CORPORATE GOVERNANCE

“Corporate governance” doesn’t have a single accepted definition. Broadly, the term describes the processes, practices and structures through which a company manages its business and affairs and works to meet its financial, operational and strategic objectives and achieve long-term sustainability.

Law and Regulatory. Corporate governance is generally a matter of law based on corporate legislation, securities laws and policies, and decisions of the courts and securities regulators. Generally, directors owe a duty of loyalty to the companies they serve, and have a fiduciary duty to act honestly, in good faith and in the company’s best interests. Corporate governance is also shaped by other sources, like stock exchanges, the media, shareholders and interest groups. Corporate governance practices help directors meet their duties and the expectations of them.

Relevant Factors. The objective of corporate governance is to promote strong, viable competitive corporations accountable to stakeholders.

These may include, but are not limited to, several factors, including:

the nature of the business;

the company’s size and stage of development;

availability of resources;

shareholder expectations; and

legal and regulatory requirements.

Benefits. Proponents of corporate governance say there’s a direct correlation between good corporate governance practices and long-term shareholder value. Some of the key benefits are:

high performance Boards of Directors;

accountable management and strong internal controls;

increased shareholder engagement;

better managed risk; and

effectively monitored and measured performance.

TOP 5 CORPORATE GOVERNANCE BEST PRACTICES

Right-sized governance practices will positively impact long-term corporate performance – but companies must design and implement those that both comply with legal requirements and meet their particular needs. Here are the top 5 corporate governance best practices that every Board of Directors can engage – and that will benefit every company.

Build a strong, qualified board of directors and evaluate performance. Boards should be comprised of directors who are knowledgeable and have expertise relevant to the business and are qualified and competent, and have strong ethics and integrity, diverse backgrounds and skill sets, and sufficient time to commit to their duties. How do you build – and keep – such a Board?

Identify gaps in the current director complement and the ideal qualities and characteristics, and keep an “ever-green” list of suitable candidates to fill Board vacancies.

The majority of directors should be independent: not a member of management and without any direct or indirect material relationship that could interfere with their judgment.

Develop an engaged Board where directors ask questions and challenge management and don’t just “rubber-stamp” management’s recommendations.

Educate them. Give new directors an orientation to familiarize them with the business, their duties and the Board’s expectations; reserve time in Board meetings for on-going education about the business and governance matters.

Regularly review Board mandates to assess whether Directors are fulfilling their duties, and undertake meaningful evaluations of their performance.

Define roles and responsibilities. Establish clear lines of accountability among the Board, Chair, CEO, Executive Officers and management:

Create written mandates for the Board and each committee setting out their duties and accountabilities.

Delegate certain responsibilities to a sub-group of directors. Typical committees include: audit, nominating, compensation and corporate governance committees and “special committees” formed to evaluate proposed transactions or opportunities.

Develop written position descriptions for the Board Chair, Board committees, the CEO and executive officers.

Separate the roles of the Board Chair and the CEO: the Chair leads the Board and ensures it’s acting in the company’s long-term best interests; the CEO leads management, develops and implements business strategy and reports to the Board.
  

Emphasize integrity and ethical dealing. Not only must directors declare conflicts of interest and refrain from voting on matters in which they have an interest, but a general culture of integrity in business dealing and of respect and compliance with laws and policies without fear of recrimination is critical. To create and cultivate this culture:

Adopt a conflict of interest policy, a code of business conduct setting out the company’s requirements and process to report and deal with non-compliance, and a Whistleblower policy.

Make someone responsible for oversight and management of these policies and procedures.
  

Evaluate performance and make principled compensation decisions. The Board should:

Set directors’ fees that will attract suitable candidates, but won’t create an appearance of conflict in a director’s independence or discharge of her duties.

Establish measurable performance targets for executive officers (including the CEO), regularly assess and evaluate their performance against them and tie compensation to performance.

Establish a Compensation Committee comprised of independent directors to develop and oversee executive compensation plans (including equity-based ones like stock option plans).
  

Engage in effective risk management. Companies should regularly identify and assess the risks they face, including financial, operational, reputational, environmental, industry-related, and legal risks:

The Board is responsible for strategic leadership in establishing the company’s risk tolerance and developing a framework and clear accountabilities for managing risk. It should regularly review the adequacy of the systems and controls management puts in place to identify, assess, mitigate and monitor risk and the sufficiency of its reporting.

Directors are responsible to understand the current and emerging short and long-term risks the company faces and the performance implications. They should challenge management’s assumptions and the adequacy of the company’s risk management processes and procedures

2. When corporations strategic goals with regard to health and safety in the workplace how should they set priorities between company needs and community standards, customers and traditions

With due respect to Milton Friedman who is quoted as believing that the social responsibility of business begins and ends with increasing profit, we contend that running the business successfully is not simply about market domination and shareholder value.

This goes back to the Tension between Profit Goals and Community Goals as mentioned above but CEOs must pout a dollar value on Reputational Risk that is derived from good governance.

The Lower the reputational risk, the greater the brand value and shareholder returns

Best corporate governance practice is not simply about a battle between distant, disloyal institutional shareholders and greedy directors but about the ethos of the organisation and fulfilling its clearly agreed goals.

The public image of a corporation will quite accurately reflect the culture of that body.

It follows, then, that good corporate governance has to be in the bones and bloodstream of the organisation since this in turn will be reflected in the culture.

To carry the analogy further, in the same way that healthy blood and bones are reflected in the naturally healthy look of a person, so an organisation whose internal functions are healthy will naturally look so from an external community perspective.