Considering the importance of implementing this strategy, we have gathered together the main information on the subject in this article. Check out what corporate governance is, what its benefits are, and what are the ways to implement a compliance process that works.
What is corporate governance?
Have you ever thought about what would happen if, during an important decision-making process for the future of the company, two majority shareholders had converging ideas? Corporate governance is practiced to ensure that this situation can be resolved and the future of the company is safeguarded.
According to the Brazilian Institute of Corporate Governance – IBCG – corporate governance focuses on facilitating the raising of funds and promoting the quality of the organization's management. In addition, it also promotes the well-being of those involved in the organization's objectives and the good of the business itself.
In simpler terms, corporate governance is like several small rules vp engineering email lists that govern the day-to-day running of a business. These small guidelines, in turn, provide agility and transparency in the company's practices, in addition to also giving autonomy to the tasks of each department.
In practice, the strategy standardizes and formalizes what should be done in situations such as:
meeting dates;
participants in each type of commitment;
voting participants;
responsible for decision-making in each part of the process;
responsible for approving budgets, etc.
An interesting point to highlight is that this entire process happens regardless of the size of the company. After all, corporate governance has the main objective of bringing order to every company, from those with just five employees to those with thousands, which needs order and organization.
A second issue to be highlighted is that for entrepreneurs who are focused on raising investments, the practice of corporate governance is essential. This is because it offers more credibility to those who will invest revenue, and does not force the entrepreneur to seek information and try to organize the house in a hurry just to receive investment.
Some companies, to begin this process, start by hiring directors and thematic managers. For example: financial manager, marketing manager, sales manager, etc. It is also common practice to create an administrative or advisory board to present reports, management tools, etc.
In general, corporate governance is governed by four pillars: transparency, equity, accountability and corporate responsibility. All of these help companies to have competitive intelligence . Below, we list the details of each principle.
Transparency
One of the first principles of corporate governance is transparency. A company that practices this keeps all stakeholders — partners such as government, suppliers, the community, shareholders, customers, etc. — informed about organizational processes, strategies, and relevant information. This way, there will be no noise in corporate communication .
Continuous, clear, and consistent communication at all levels is essential to ensure that compliance is a daily priority as part of the organization’s standard of behavior. — Harvard Business School
Equity
A second pillar is equity. This corresponds to the equality with which everyone involved in the organization's objectives must be treated regardless of hierarchy or level of influence.
Accountability
The third principle, accountability, indicates that all professionals must present due accounts of their actions. And this accountability is not only directed at financial issues, but also extends to the execution of activities.
Corporate responsibility
In general, companies are created to generate profits. After all, they are what guarantee the longevity of the business. However, an organization that practices corporate governance recognizes its social role, contributes to the development of society and works on issues such as sustainability, among other social issues.
In addition to the principles, professors José Paschoal Rossetti and Adriana Solé developed the 8P's methodology with the aim of helping companies apply corporate governance concepts. Below, we list some details about it.
Ownership: at this point, the methodology measures cohesion between shareholders, succession and corporate protection;
Principles: senior management is the one who defines the principles of corporate governance;
Purposes: at this stage, the alignment between the business action plans and the planned mission and vision is analyzed;
Roles: it is important to define the roles of each department, action, employee and those involved in the company's objectives;
Power: leadership must be legitimized by subordinates. Therefore, at this point, it is necessary to analyze the divergence between authority and authoritarianism;
Practices: at this point, it is necessary to take into account the concepts of Dava-Driven — a company's decisions based on data — and CRG — which aims to integrate the organization's processes;
People: at this stage, the objective is to ensure the quality and efficiency of the actions of the human resources department;
Permanence: the vast majority of companies aim to remain healthy over the years and at this point the probabilities of this happening are considered.
Benefits of corporate governance
Now that you know what corporate governance is and how it works in companies, it's time to understand the advantages of implementing a good compliance program. Check out some of them below.
Problem prevention
Compliance practices help companies avoid making mistakes such as abuse of power, strategic errors such as wrong decision-making, lack of aligned information and even conflicts of interest. In this sense, a business diagnosis can be of great value.
Troubleshooting
When a problem could not be prevented, corporate governance helps to solve it with crisis management . This is because when compliance makes clear what the sanctions are for certain attitudes, the issue between manager and employee does not become personal or questionable. After all, management will simply be following the processes that have already been clearly communicated.
Practice
Some companies have signs in their hallways indicating the company's mission, vision and values. However, in their daily routine, employees themselves begin to realize that these words are not being practiced. Corporate governance is here to transform these words into actions.
Resources
With the practice of corporate governance, it is possible to raise funds more easily. This is because investors trust more in transparent and more structured companies.
Image and credibility
An interesting point is that a company with corporate governance is better regarded in the market. With transparent practices, the branding of the company that practices the strategy has tools for effective internal conflict resolution and makes all information more aligned among its employees, departments, managers and directors.
Sometimes, entrepreneurs are resistant to making their business management more flexible. This is because they are afraid of losing control of the organization. However, this micromanagement harms the growth and even the survival of the company.
