What is corporate Governance ?
Every organisation, business or company has a group of leaders at the top. They are the executive directors. As a group of leaders, the board of directors has the responsibility to make decisions on how a small business or an organisation must be organised and managed. The board uses corporate governance principles, ideas, institutions and actions in their instructions to the executive managers of the business on how their management process should proceed. Corporate governance affects the way a company or organisation is directed, administered or controlled. The directors create policies for the effective running of the business. Policies are statements of intent based on rules, principles and commitments which guide managers how to decide and to act in a certain way. ...view middle of the document...
A business institution is concerned with making and enforcing rules which govern cooperative human behavior in order to achieve all of the above business goals. The above objectives imply that a healthy relationship exists between all the role players in the organisation, the business and its peers. There are many role players or stakeholders in an organisation or a business. These can be divided into external and internal stakeholder individuals or groups with a direct interest in the business and its operations. |
Internal Stakeholders: | Board of Directors | Executives | Shareholders | Debt holders |
Managers | Employees | Creditors | Suppliers |
External Stakeholders: | Customers | Communities |
Business effectiveness is the ultimate aim of implementing appropriate corporate governance. There are many mechanisms to be implemented in the undertaking of corporate governance. There is a definite structure and processes for accountability throughout the business or organisation. Individuals and departments are held to account on a number of levels as we shall see in chapters further into this learning material.With its * transparency in reporting, * oversight in business procedures and * financial control …… good corporate governance leads to sustainable business practices especially impacting on the well-being of shareholders’ interests. |