A business’s success depends on policies that meet the needs of investors, stakeholders and managers. Corporate governance is the basis for how businesses develop and implement their policies. In an age of new demands and expectations, a well-functioning governance system is more important than ever before.

Corporate governance is only effective when the values, culture and mission of the business are clearly understood. It is also crucial to establish systems which allow companies to recognize and limit risks before they occur. This includes the creation of an ethical code of conduct, a system for reporting and regulating conflicts of interests.

The board needs to promote transparency, accountability, and openness to all stakeholders both internal and external. The board’s responsibility is www.theirboardroom.com/board-collaboration-and-communication/ to ensure that the company’s resources are utilized in a manner that will generate long-term value for shareholders. This is achieved through a process that involves identifying risks, developing strategies for managing risks and evaluating performance in relation to the goals.

Boards should consider appointing a director in the lead, often referred to as the presiding director to ensure the independence of board direction. This is especially important when the company’s chair and CEO are both combined. Boards should include non-management employees in the evaluations of CEOs, when appropriate, and evaluate senior management’s overall performance.

The board should be able to regularly communicate with shareholders and other stakeholders on issues that impact the long-term growth of the company even if they are not necessarily in a position to directly influence corporate strategy or decision making. It should encourage shareholders that want to influence corporate decisions to make public their ownership and identity where federal securities laws permit it.