Governance is everything that accompanies the work of a company. This includes the checks and balances that are in place and the structures in place to ensure that your business meets its objectives and avoids problems. It also covers tasks that focus on the ‘bigger picture’, such as preparing long-term strategies or assessing risks. You’ve probably been doing governance duties since the beginning of your business, regardless of whether you realize it or not. As your business grows your requirements for governance will increase as well. Governance can refer to any type of structure from a sole-proprietorship, to a board of directors. It is important to take the time to think about your governance plan carefully, and take into consideration how different options could play out for you and your growth plans.
As a business expands the complexity of governance increases and requires greater attention and resources. If your company is a publicly traded company with thousands of shareholders who have multiple share classes as well as various lenders, then you will require robust procedures to engage shareholders. Additionally, you will require the right people – directors with the required skills and experience.
Good governance allows a business to act in the best interest of its clients to improve its performance, and increase stability, efficiency, and trust. It also makes the company more attractive to high-quality investors and lowers the cost of capital. It improves transparency and allows rapid response to any crises or conflicts.
