Efficient corporate governance (AKA internal governance) is the foundation of any successful business. Not just for large companies, small businesses can benefit just as much from an effective corporate governance structure. The key to implementing good corporate governance is to ensure that the right decisions are made by the right people. However, that simple notion is far easier said than done. We’ve outlined 5 steps below that will indubitably improve the internal governance of your business.
Defining what type of corporate governance you’re after
Different business will require different corporate governance processes. Depending on your product offering, the industry you’re in, the structure of your business and your overall goals there are varying corporate governance styles that can be adopted, such as:
Thus, the first step to improving your business process is to investigate the various types of corporate governance.
Having a hierarchy of authority
When it comes to important decisions being made within your business, the first step to success is having the right person making them. Ensure that you have a failsafe hiring process, and have trustworthy, competent and compassionate individuals in leadership roles. Also, set up clear lines of authority, so your staff know where the boundaries are when it comes to decision making.
Developing clear policies and procedures
The best way to ensure that your lines of authority work as they are meant to is to implement effective communication processes. For every problem or development, there needs to be a solution that has been agreed upon for each staff member to follow. The best policies are clear, concise and are communicated to staff members when they are first trained so as to reduce risk and guide behaviours.
Managing employees and ensuring accountability
It’s undeniable that accountability is the after effect that comes with clear lines of authority, effective communication and appropriate procedures. Accountability is an important aspect of a business, which can involve both rewarding or disciplining staff. However, providing constructive feedback and ensuring better decisions are made in the future is the cornerstone of accountability.
With an effective corporate governance structure, your employees will be willing to grow and adapt and eventually take on more responsibility. This is how your business will expand and succeed, as well as how risks are mitigated. Then, as a business owner, you can focus on the management activities that make your business boom. If you need professional advice, contact Next Level Accountants today to see how we can take your business to the next level.