Governance cannot be completely automated, it’s a multifunctional system to steer the business in the right direction at the steadfast pace.
Corporate governance is a guidance system for achievement of planned strategic business objectives: Corporate governance is where resources are allocated to turn the strategy into a reality. Among executives in the company, if using the word "governance" in conversations, the mental model that they refer to includes the process for developing a strategy and creating plans to execute on it. In fact, corporate governance is part of strategic planning because if it isn't, strategic planning becomes a synonym for wishful thinking. In practice, GRC can be used to raise visibility and awareness for many things that are captured at the different levels of the organizational hierarchy, and bring them in front of the leadership team to oversee strategy management.
A set of good principles or policies guide the strategy management of the business. Implementing policy is a management activity, and monitoring policy compliance is a governance activity. The distinction between these activities is essential to understanding the difference between management structures & processes and governance structures & processes. The Corporate Governance rules and principles need to be followed to improve the functioning and transparency of the company, its business strategy, and management performance. Governance experts should push for boards to operate with and share a mandatory policy governance system. The strong senior leadership can enforce governance principles and practices, to ensure ROI is really going to achieve; control and explore business goals and objectives accordingly.
Corporate governance is a decision system to accelerate performance and manage risks: It is important to emphasize that governance is fundamentally about having a systematic approach to making decisions within the corporate entity. Good corporate governance enables a good decision-making system and a good controlling system. It can assure the corporation’s operation under the correct directions and behaviors correctly. So good governance can create good performance and manage risks effectively, especially in the long run. The companies which have good performance must have good governance structure and behavior as well. The governance structure can’t impact performance directly; it must be through the governance behavior.
Corporate governance has a great impact on corporate performance, not through governance structure directly, but through good governance behavior. The governance structure specifies the distribution of rights and responsibilities among different participants in the corporation. Statistically, the organizations with greater governance discipline usually results in significant better performance than their competitors, and they are doing better in well-embedding risk management into key business processes seamlessly.
Corporate governance is a facilitation system to harness collaboration: Corporate governance discipline can fulfill its purpose as a high-level corporate enabler by providing a structured communication bridge between shareholders/investors and top business leaders such as corporate directors. A good governance standard provides a common corporate "language," and work instructions to decide and take actions for either grasping opportunities or managing risks. Corporate governance helps to manage collaborative business results and best practices that view the organizational objectives holistically with the correct strategy lenses/focus.
Corporate governance is a facilitation system to harness collaboration. The chronic poor governance madness needs to stop, corporate Boards need to deal with the poor governance and eliminate all the bureaucratic regulations that deal with the symptoms, not the root cause. It will only be when the internal and external emphasis shifts from regulatory and compliance governance to identifying, reporting and developing the behavioral governance, so accountability comes from managers at the core, and the business performance is accelerated via the accountability of management and cohesiveness of business capabilities.
Governance is the structure and process of authority, responsibility, and accountability in an organization. Because without effective GRC discipline, the business will face significant risk for surviving, and opportunities which it creates cannot be properly transferred into multidimensional business value. On the other side, do not have your future strategy constrained by the current corporate governance or the corporate governance weakened by too much creativity. Governance cannot be completely automated, it is a fundamentally human activity. It’s a multifunctional system to steer the business in the right direction at the steadfast pace.
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