This article throws light upon the eleven main areas to ensure good corporate governance practices in contemporary society.
1. Define the objectives of the organisation in terms of what the customers want and supplying them at the right time and place.
2. Define the value system of the firm within which it must operate and ensure that all organisational members accept and implement these values as part of the organisational culture.
3. Define the stakeholders of the company which includes not only the shareholders, customers, financers, government, suppliers etc. but also the environmental elements like plants and animals. They have to ensure that business operations are not environment polluting.
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4. Maintain reciprocal relationships with the stakeholders. Firms should make prompt payment to suppliers to receive prompt delivery of goods, make prompt payment to creditors to receive payment from debtors, provide quality goods to customers to ensure no default on account of bad debts etc.
5. Reinstate the vision, mission, goals and objectives of the firm in the corporate strategy and fully comprehend its responsibilities towards the stakeholders. Responsible firms will have stakeholders to stand by it during times of crisis.
6. Be transparent with the stakeholders and involve them in the decision-making processes. This ensures implementation of decisions with commitment and dedication.
7. Define authority, responsibility and accountability of employees in the hierarchy and link accountability with performance to enhance members’ contribution to organisational goals.
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8. Achieve competitive advantage in the market by:
(i) Introducing differentiation in the marketing mix (product, price, place, promotion),
(ii) Using cost reduction strategies, and
(iii) Providing quick response to the needs of the market.
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9. Judge the performance of each employee not on the basis of exceptionally good or bad performance but on the basis of average performance. A balanced view of performance should be taken to consider their promotions and transfers in the organisation.
10. Relate individual performance to the benchmarks set up for each business process to ensure excellence in organisational operations. Benchmarking is the process of determining who is the best, who sets the standards, and what that standard is.
“Benchmarking is the process of comparing the business processes and performance metrics including cost, cycle time, productivity or quality to another that is widely considered to be an industry standard benchmark or best practice.”
11. Present only relevant information to the stakeholders in an understandable form and avoid the problems of information overload.