Corporate governance is often associated with large businesses and is often viewed as something you do not need to pay much attention to, when running a small business. This could not be further from the truth.
Sound corporate governance has become a topic of discussion, especially in South Africa, where as a society we are facing the repercussions of state capture, collapse of Steinhoff and corruption.
“The framework of rules and practices by which a board of directors ensures accountability, fairness, and transparency in a company’s relationship with its all stakeholders (financiers, customers, management, employees, government, and the community).
The corporate governance framework consists of (1) explicit and implicit contracts between the company and the stakeholders for distribution of responsibilities, rights, and rewards, (2) procedures for reconciling the sometimes-conflicting interests of stakeholders in accordance with their duties, privileges, and roles, and (3) procedures for proper supervision, control, and information-flows to serve as a system of checks-and-balances.”[1]
It is therefore crucial that expectations, rights, duties and accountability measures are recorded in writing. What is also important is to record the policies or guidelines that will form the basis of decision making and controls to ensure compliance. So, documenting the measurables are not only good business practice for sound decision-making, but also key in ensuring that as your business grows it does so safely.
What is more, the reality is that where these are not in place and an incident occurs, it often has dire consequences from a PR perspective. In reality the world only remembers the incident and not everything that was sound and good that came before. This means the goods, services or concept of your business and your identity in relation to it, will be judged as the incident. This means ultimately that legacy and sound governance cannot exist in isolation, they need to co-exist at all times.
[1] http://www.businessdictionary.com/definition/corporate-governance.html: accessed 2 October 2018
