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Why is corporate governance important?
Imagine a company in which everyone can do what they like… no rules, no supervision. Wouldn’t that be a chaos? Corporate governance is important because it encompasses the set of principles, the rules by which all employees should act (policies and procedures, responsibilities by each job position, etc.).
In a simple and generic way, corporate governance is the framework that helps to define in which way the company is going and how it is managed. It also helps to control risks and show transparency as well as to set the company culture. For this, the stakeholders' objectives should be met by aligning the company’s processes.
An effective corporate governance begins with a suitable board: independent members who have an honest interest in the company rather than just be there because of their reputation or name. Effective members are those that understand the company’s processes and give value added to it, trying to achieve the stakeholder’s objectives. For making an effective corporate governance, board members should be changed at least every 5 years and be supervised of what they are doing. It’s also critical that they are accessible and reachable by any person; in this way communication can flow, the example to follow is set, and transparency is shown.
Board members, also need to understand what a risk is and how the Business Risk Management (BRM) works. Otherwise, how will they know if a control is effective or not?
Corporate governance is important because it looks out for the company’s best interest, it ensures that the planned results are obtained, verifies how the resources are allocated, and helps to supervise that everything is fine. It is not another item in a checklist: it is about strategy and company’s growth.
Do you want to know more key aspects of Corporate Governance? Join us at the Corporate Governance Online Masterclass on 20th & 21st of April 2022.
Also check our In-house Training in Pharma and get better ideas in Pharmaceutical Industry.
By Mónica Ramírez Chimal - International Speaker & Trainer, Writer, Consultant-Partner at Asserto RSC