Business is a system of system, if one part of the system is working and another part of the system is not working then their will be problem somewhere.
Just like a car, if the engine of a car is working and the break develop a fault definitely that car is still dangerous to drive.
So is corporate governance is a key system of a business that determines the growth of the business and the determine the scaling level.
What is corporate governance
According to Wikipedia
Corporate governance is the mechanisms, processes and relations by which corporations are controlled and directed.
Governance structures and principles identify the distribution of rights and responsibilities among different participants in the corporation (such as the board of directors, managers, shareholders, creditors, auditors, regulators, and other stakeholders) and includes the rules and procedures for making decisions in corporate affairs.
Corporate governance includes the processes through which corporations’ objectives are set and pursued in the context of the social, regulatory and market environment.
Governance mechanisms include monitoring the actions, policies, practices, and decisions of corporations, their agents, and affected stakeholders. Corporate governance practices are affected by attempts to align the interests of stakeholders.
A growing business is well structured and a well structured business is built on People, Process, Policy.
Corporate governance is made up of thee three Ps (People, Process and Policies)
This as to do with your board of directors, shareholders, advisory board, management and staff, customers, debtors, creditors.
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This as to do with channel, method, mode of operation, ways things are done. Your business must have a way of operations. How works are done, distribution of rights and responsibilities, hierarchy in power.
This as to do with lay down rules and objectives, regulatory etc.
If your business must out live you and if you must gain the freedom you went into business for, your business must be well structure and corporate governance is part of that structure and which must includes this three Ps of business
When you want to grow your business and scale high do the following,
- Set up an advisory board which can include the following as a budding entrepreneur;
A mentor, a professional accountant, a legal adviser probably your company lawyer, and any other two business advisers
- 2. Board of directors: this could include a member of management, shareholders, investors. This board will have a chairman, secretary and you meet maybe once or twice a year to review the company growth.
- 3. Management team: this can include your team and staff
Sometime has the founder or CEO you can be the chairman board of directors, this board approve the company policies and rules set for your employees, customers and everyone involved in the business.
Additional to process and policies,
There must be hierarchy. Draw or design the company Organogram, let the organogram shows hierarchy and there must be roles, responsibilities, right and obligations distributed to everyone on the hierarchy so that when things goes wrong you can know who to take responsible for what. Everyone in the company knows who is responsible for what, this how process is done.
Policies to guard all staff must be clearly stated. E.g time of resumption, closing hour, payment term, can you afford to give staff leave at the inception of the business, do u accept cash payment etc.
For me the most important aspect of building a corporate governance is getting the right people on the board, employing the right people and how to make them fall in love with what they do
This is one of the reasons why hiring the people into your business can not be delegated to anyone, you must be part of the process.
The most important of the three Ps of your corporate governance or business is your people.
Your people and the culture/policies/etiquette around those people are the heart and soul of your business. This means that getting, keeping and leading good people (shareholder, management, team, advisory board, staff etc) is one of the most valuable thing you can do to scale your business.
To do this successfully, you must develop a good leadership skills. It’s important to know how to develop this competitive advantage and how to get the most from your people.
Every Policy of the company is made for the people, and every process will be carried out by people. Businesses are nothing more than a group of people with a common goal and a feeling of purpose.
Post by: Adeyanju Opeyemi
MD/CEO, Mabo Brand Concept Ltd.
Lagos State Executive Director For Africa’s Young Entrepreneurs