Governance: What is it, and why is it important?

Corporate Governance (CG) or governance in a company refers to the practices undertaken by a company to regulate, manage, and monitor its business activities in an effective and efficient manner as needed. Corporate governance plays a crucial role in ensuring that a company can make informed decisions, safeguard the interests of all stakeholders, and ensure transparency in business decisions.

Good corporate governance have positive impacts on the sustainability of a company, such as:

1. Building stakeholder trust

For stakeholders, a company that implements good corporate governance will be perceived as more secure. Research indicates that companies with a serious commitment to ethical, social, and environmental responsibility tend to have better financial performance.

2. Improving company performance

Good corporate governance can contribute to improving company performance through a well-structured and distributed workload. This ensures that strategic decisions are made accurately, and available resources are utilized effectively.

3. Reducing risk

With a good governance system, a company can evaluate the decisions it makes. This impacts the company’s ability to avoid uncertainty and respond to existing challenges.

4. Creating long-term sustainability

A company can incorporate sustainability elements into its policies, regulations, and decision-making. This way, the company can grow without neglecting environmental, social, and economic issues.

To implement good corporate governance, a company needs to prioritize transparency and accountability. Transparency involves presenting financial reports, activities, social and environmental impacts, and providing the necessary data for relevant parties. Meanwhile, accountability means the company can be responsible for the decisions it makes. This directly affects the trust of stakeholders, both internal and external.

Companies also need to implement ethical standards and integrity within the organization. With these ethical standards and integrity, the company can treat team members as they should be. The company will also uphold the core values that have been in place since its inception. Additionally, diversity and inclusivity are equally important. Implementing diversity and inclusivity within the organizational structure can bring diverse perspectives to the discussion table, enabling the creation of innovative ideas and better decision-making. Moreover, inclusivity ensures that every individual in the company feels valued, heard, and supported, allowing them to contribute to the fullest extent.

The implementation of good corporate governance can vary from one company to another. It not only requires attention to cultural values within society but also involves consideration of principles of justice and social responsibility to become a reputable company. Achieving good corporate governance is not an easy task, and Konstelasi Accelerator will assist you in accomplishing it. When your company has good corporate governance, many things can be done more efficiently.

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