The Benefits of Corporate Governance


Corporate Governance is one of the best kept business success secrets around. When you ask business people, “what is corporate governance,” you often get vague answers about policies, procedures and systems being put in place by businesses.

That is selling corporate governance short. Any business looking to achieve its growth objectives in this challenging business environment should seriously consider introducing good corporate governance into their operation.

Why?

Because corporate governance allows the Directors to deliver a transparent strategic direction across the whole organisation. This means all stakeholders, both internal and external, know their ‘role’ in the business’ continued growth. So your staff, senior management team, Directors, shareholders, suppliers, banks and customers are all aligned. They know how they fit into your plan for success, which is likely to accelerate your business wins.

Corporate governance supports this high level clarity with those very policies and procedures we mentioned earlier. These are vital as they provide the framework for everyone to work efficiently towards the agreed strategic direction.

Advantages of corporate governance

Here are a few of the advantages of corporate governance. They make for compelling reading.

  • Owner/manager clarity. Governance allows owner/managers to clearly separate their roles as business managers versus shareholders. This makes decision making quicker and more effective because owner/managers choose which ‘hat’ to wear depending on the issue in question.
  • Focused strategic direction. Corporate Governance relies on having a tightly defined strategic direction. This discipline helps focus resources on the top opportunities that will help to achieve business objectives and avoids wasting resources on less relevant activities.
  • Staff retention. When staff are part of an organisation that has a clearly defined purpose or strategic direction and they feel they are contributing effectively to its achievement, this strengthens staff retention. Given talent can be hard to find in NZ, this can be particularly important as a way to help retain more senior staff members.
  • Better banking relationships. Corporate governance facilitates effective and regular financial and management reporting. This systematic information provision will build confidence for your bank and investors and hence can foster greater access to capital to invest in the business.
  • Improved profitability. Governance provides for a management framework with regular reporting, which supports better informed decisions to grow revenue, increase margins and reduce costs.

If you’re looking to improve your organisation’s performance, but are unsure of the best way to get there, talk to us today. Arrange your interview to discover how corporate governance can improve the way your company does business.

Disclaimer: The information in this article is for general interest only and should not be relied upon or treated as business or professional advice. For specific professional advice please contact us.

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