Article
Written by Brit Williams
Posted on 08/09/2014

The dangers of fixing too firmly on corporate governance

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With ever-changing governmental policies and compliance duties, corporate governance can seem a complex system of checks and box-ticking. But that’s not always the best way to build your business. What due diligence really means is understanding the reasons for new legislation and conducting your dealings in the most lawful way possible.

 

Divide the critical from the non-compulsory

Some best practice regulations simply cannot be ignored. Separating your chairman and chief executive roles, appointing independent non-executive directors, enlisting the support of audit committees and remuneration advisers – these are all actions that instil a sense of crucial objectivity and fairness in your business.

But what’s more important is how thoughtfully you fulfil these obligations – carefully considering how they reinforce your integrity, your growth strategy, and the values you share with your board members. This kind of attitude will also help you avoid increasingly common compliance fatigue.

Lead by example

In a recent column for the Financial Times, John Lee, author of How to Make a Million – Slowly, admires property company Daejan’s informal corporate governance buffet days and “change only for the best interest of the company” policy. They’ve rejected box-ticking in favour of genuine business assessments tailored to them, and open transparent communications with their shareholders.

Cast off confusion

Bonus structures and long-term incentives are also replaced by competitive basic salaries, making it easy to see exactly where shareholders’ money is going. No obscure performance indicators or convoluted peer group comparisons. Everyone enters on a level playing field, and shares the same corporate objective of firm-wide growth, global recognition and bigger turnovers.

Get shareholders on side

In a world where shareholders help to make key investments possible, keeping them pleased with a simple and reassuring corporate governance strategy ensures they feel integral to your business. Because you’d be a fool to think they’re not. 

 

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