By Rogério Matofino, business strategist and professor at Fapuga
The development of your business is, without a doubt, one of the subjects that never leave the mind of any business owner or manager. Sales, revenue, marketing, customers. Many factors are decisive for growth in market share, whatever it may be.
However, many entrepreneurs forget to invest in one of the most fundamental aspects of structured, solid and sustainable expansion: Corporate Governance.
The Importance of Corporate Governance
Although it is an increasingly widespread concept, Corporate Governance still raises some questions and confusion. It is a systematized format of management, monitoring and incentives among the various agents involved in the administration of the business.
Through it, partners, the board of directors, executive management, and oversight and control bodies have their relationships guided by good practices: they are guided by basic principles, aligned with the organizational culture and focused on preserving and expanding the company.
Many people still feel insecure about the subject, because they believe that Corporate Governance increases the bureaucracy of management processes. However, when applied correctly, it brings a number of benefits that we will see below.
It contributes to the quality of the organization’s management, increases its market value and eases access to important resources. Among its main functions, we can mention ensuring a permanently transparent process and a significant reduction of risks for investors.
The Four Basic Pillars
Corporate Governance rests on four pillars that, when coordinated, ensure improvement in the administrative routine and in business results. They are:
- Fairness
Equal treatment across the entire decision-making chain and other stakeholders must be taken seriously. Rights, duties, needs, interests and expectations are fundamental pieces of the internal control system.
- Accountability
Accountability must be developed in a clear and understandable way. In this way, responsibilities are distributed in a matrix so that each agent can fulfill their tasks and answer for any failures in the process.
- Corporate Responsibility
Economic and financial viability, always taking into account the particularities of each corporation, needs to be not only a goal but a path walked every day.
- Transparency
Corporate Governance offers tools so that, broadly, all interested parties have access to the various pieces of information that make up the life of the business.
Corporate Governance and Its Advantages
With the basic conditions for good systematization in place, the company begins to enjoy a series of advantages that can make a difference to its structured growth.
Among them are:
Competitiveness
The Corporate Governance process ensures compliance with basic procedures and guides the decision-making process. In addition, it usually brings together, in a systematized way, agents with different capabilities and from different sectors, ensuring a more complete and heterogeneous process in designing strategies.
Professionalization
Not every entrepreneur has the technical training needed to manage the various business processes. Systematizing management processes can be a great ally when evaluating the best strategies in the various areas necessary for the health of the company.
Prevents Errors and Fraud
When the basic principles seen above are followed, management is characterized by transparency and by employee accountability. Constant reporting to the board of directors ensures peace of mind for shareholders and investors.
An Ally in Succession Processes
One of the most delicate moments in a company’s trajectory can benefit greatly from Corporate Governance. The assurance that the new people in charge will have support and direction for a predefined path of expansion is also a security factor for investors, employees and customers.
But How Do I Apply a Management Control System in My Company?
The advantages gained by companies that opt for a Corporate Governance system are usually visible. However, changing established administrative paradigms is not always simple. Whether because of organizational culture or because of the difficulty of looking at one’s own organization pragmatically.
Seeking out consulting professionals may be the best option for obtaining the expected results. When we are guided by a person or group interested in developing the business, we have the conditions needed to look at and analyze the company as a whole.
It is also essential for results to carry out a detailed 360º analysis of all areas: marketing, sales, legal, executive management and customer service. Only then, with a well-structured company, is it possible to see excellent results in terms of profitability.
