How does Corporate Governance work?

To explain how Corporate Governance works, we can make the analogy with any board game. Well, hardly anyone starts playing a game without knowing the rules, right? So Corporate Governance works the same way, it defines a set of rules that when together form the routine of the company, providing more agility, transparency and autonomy to carry out its activities and maintain its operation. Bringing back some of what we talked about in the introduction, growing on Corporate Governance means making that growth healthy as processes become increasingly improved. So the need for the right governance training comes essential there.

In particular, governance has the power to put an order in the house. It will help in making strategic decisions, especially when it comes to starting new projects or when there are dead ends in decisions between the boards.

In practice, it helps to know who should vote, who has the final say, which has the power to approve budgets, among many other occasions. That is, it defines the rules of the game. Thus you can say that it is extremely useful in critical situations. An example of this is when important decisions are divided by the opinions of business partners.

What are the benefits of corporate governance?

Implementing corporate governance in your business can bring very significant benefits to your growth. We have briefly summarized some of them:

Market visibility

Companies that have governance practices have more positive market visibility, as this practice demonstrates transparency and agility in their decision making, which is highly valued. As such, your visibility increases as it is very likely that your growth process will not be interrupted for some reason. In addition, these companies are more likely to keep up with market trends than others.

Ease of fundraising

Be aware that companies implementing Corporate Governance are easier to raise funds. The reason for this is very clear, they have the best practices for running a business and this ensures that the risk of their operation going wrong is decreasing, and the chance of a return on investment of their shares being much greater.

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As such, these companies are much more valued and this provides some ease of fundraising, such as a financial investment to support their expansion plans. Interestingly, these companies are likely to consistently use these fundraising resources and this will help to increase their reputation and make them even more valuable in the marketplace. This is what we call the ongoing process of value creation.

Problem Prevention

Having good corporate governance also helps the business to guard against problems that are considered serious and may compromise its entire operation. These problems can be abuses ranging from abuse of power by any party involved, conflicts of interest, or even the issue of the board making strategic mistakes when too much power is concentrated in just one person.

Don’t do it all at once

When it comes to the business environment, any change that is adopted will never be easy. As much as this change is to provide something better, no business is immune to an adaptation process that can create friction.