Next read: Examples of Governance
Governance FrameworkThe framework of principles, processes and rules that govern a firm.
Roles & ResponsibilitiesGovernance establishes the roles, responsibilities, authority and accountability of board members and executive management.
Protecting Stakeholder InterestsCorporate governance is accountable for protecting the interests of stakeholders in a firm, particularly owners such as shareholders.
Transparency & DisclosureProviding timely information to stakeholders.
OversightGovernance provides oversight of executive management and can replace them.
Strategic GuidanceGovernance boards approve the major strategy of a firm and provide strategic guidance.
Risk ManagementMonitoring of risk and oversight of risk management efforts.
Managing Conflicts of DutyMechanisms to prevent, identity, disclose and manage conflicts of interest such as self-dealing.
Ethical ConductSetting standards and establishing culture for ethical conduct and handling ethical issues promptly and openly.
Executive CompensationAligning executive compensation to stakeholder interests. For example, making sure it is not excessive or out-of-line with performance.
Regulatory ComplianceMonitoring compliance and oversight of compliance.
Corporate Social ResponsibilityMaking sure a firm’s strategy and execution take into account social, environmental and ethical impacts.
Whistleblower ProtectionImplementing policies that allow stakeholders such as employees to report concerns without fear of retaliation. The governance board itself should be reachable and open to receiving such concerns.
Resolving Issues and DisputesProvides the top level structure in an organization for resolving issues, conflicts and disputes within the firm.
Strategic PerformanceEnsures accountability for the performance of strategy and execution. For example, calls on executive management to explain strategic failures. This can result in replacement of management and is a consideration in compensation.
The FutureEnsuring that the strategy and execution of a firm are aligned to long term value creation and the future as opposed to things such as short term compensation targets.