Question

We’ve all heard the term ‘governance’.   What is corporate governance? What role does it play? How are decisions made by governing bodies managed?

Answer 1

Corporate governance- it is a combination of rules, processes, or laws by businesses are operated, regulated and controlled. A company’s board of directors is the main force that influence corporate governance. It is a way through which corporation is governed. It is a technique by which companies are directed and managed. It clearly distinguishes between the owners and the managers. It ensures transparency which helps in strong and balanced economic development.

Role of corporate governance-

1. Resolve any conflicts of interest or conflicting desires among stakeholders.

2. Keep the company’s business on track

3. Ensure that business decisions are made ethically and as per regulations and laws.

4. Create a company culture where employees make good and ethical choices.

5. It balances the power between the groups at top

6. Ensure that board of directors can operate as an independent body

7. To provide entrepreneurial leadership

8. To set and implement strategy within a framework of effective internal controls.                                                                                                          

A common decision making procedure used in meetings is majority rule. After decision has been made, it is the job of the management to implement it. The process includes feedback on the decision to community members sand key stakeholders. As a governing body, it is critical to manage the implemented decision. It can be managed by regular monitoring and by receiving regular action updates at every meeting from CEO and staff.