By Rusen Kumar
For the business, the essence of Corporate Governance lies in promoting and maintaining integrity, transparency and accountability in the management’s higher echelons. Corporate Governance standards must be globally benchmarked.
In India, Corporate Governance encompasses a set of systems and practices to ensure that the Company’s affairs are being managed in a manner which ensures accountability, transparency and fairness in all transactions in the widest sense.
The key objective of Corporate Governance is to a have balance between stakeholders’ aspirations and societal expectations. For businesses, Corporate Governance is all about maintaining a valuable relationship and trust with all the stakeholders including society. Board of governance must realise that business is a social function. Business is a collective function. No business can be successful in isolation and separation.
Stakeholders must be considered as partners in success and growth and business should remain committed to maximising stakeholders’ value, be it Customers, Local Communities, Employees, Suppliers, Trade Unions, NGOs, Investors & Shareholders and Government & Regulatory Authorities.
Every business must have a defined policy framework for ethical conduct of businesses. Business conduct can be ethical only when it rests on the key core values such as – Customer Value, Respect for all, Integrity among people, Excellence towards quality, Safe and decent workplace etc.
Good governance practices stem from the dynamic culture and positive mindset of the organisation.
Most of the business organisations feel that they are committed to meet the aspirations of all their stakeholders.
The commitment towards strong Corporate Governance is demonstrated in shareholder returns, high credit ratings, awards and recognitions, governance processes and an entrepreneurial performance focussed work environment.
Delivery of high quality products to customers at extremely competitive prices is also a key subject for Corporate Governance.
For every business, the demands of good Corporate Governance require professionals to raise their competence and capability levels to meet the expectations in managing the enterprise and its resources effectively with the highest standards of ethics.
It has thus become crucial to foster and sustain a culture that integrates all components of good governance by carefully balancing the complex inter-relationship among the Board of Directors, Board Committees, Finance, Compliance & Assurance teams, Auditors and the senior management.
In a good business environment employee satisfaction is reflected in the stability of senior management, low attrition across various levels and substantially higher productivity.
Business not only adheres to the prescribed Corporate Governance practices as per the Listing Regulations, but is also committed to sound Corporate Governance principles and practices. Business should constantly strives to adopt emerging best practices being followed worldwide.
It is expected that business must endeavour to achieve higher standards and provide oversight and guidance to the management in strategy implementation, risk management and fulfilment of stated goals and objectives.
For larger corporations, Corporate Governance is not just a destination, but a journey to constantly improve sustainable value creation.
How business is conducted and value is generated is also a key area of business governance function.
(Rusen Kumar writes on CSR, Sustainability, Corporate Governance, Business Affairs and Responsible Business. He is the founder of India CSR Network)