2. 1. Encouraging positive behaviour.
• “Having clearly delineated policies and processes and
a board of directors and executive managers who
maintain the compliance culture directly supports
improved results,” writes chartered secretary Monique
Legair.
• It is imperative that all board members themselves
participate in that culture, ensure clear lines of
communication with management and the rest of the
organisation, and are immediately responsive to any
evidence that part of the organisation is not
participating.
3. 2. Reducing the cost of capital.
• In today’s volatile environment, the implementation of
good governance practices can lead to a reduction in a
company’s cost of capital.
• An organisation that is seen to be stable, reliable and
able to mitigate potential risks will be able to borrow
funds at a lower rate than those with weak corporate
governance.
• Companies with debt or equity investors may find that
their investors pay a premium to work with a company
that has a sound governance framework.
4. 3. Improving top-level decision-
making.
• There is a strong and demonstrable link between an organisation’s
governance and rapid decision-making associated with improved
performance, explains the Corporate Governance Institute in a recent
report.
• Moreover, a number of performance failures have been directly linked to
poor governance.
• There is no doubt that good governance assures rapid access to
information and the good communication among stakeholders that leads
to better results.
• Good governance also enables rapid and accurate prioritising of actions.
This can prove invaluable in enabling the organisation to weather tough
economic storms and supports the organisation’s sustainability.
5. 4. Assuring internal controls.
• By implementing corporate governance correctly
across the organisation, the board may be certain
that an adequate and effective control
environment is in effect, with the level of
assurance associated with each important
component of governance.
• What’s more, the board or the board committee
is better positioned to take action when the
controls signal non-compliance.
6. 5. Enabling better strategic planning.
• With more rapid access to information and good communication
with management, boards are able to formulate more successful
strategies.
• This includes more efficient allocation of resources and capital.
• The strong governance framework will further assist the board in
some of the following ways – understanding the regulatory
environment governing the business; leveraging technology from a
production, distribution and communications point of view; and
identifying and managing the reasonable interests of all
stakeholders in the business. All these components are essential
elements of a robust strategic plan.
7. 6. Attracting talented directors.
• Bringing in talented non-executive directors with
complementary skillsets helps to make an overall
and comprehensive assessment of the overall
sustainability of the organisation, including its
level of compliance with relevant legislation.
• This kind of new talent is vital to the sustainability
of the organisation which has to adapt to the
ever-evolving conditions of the market. For the
candidate to the non-executive post, providing
this kind of environment is equally important.
8. 7. Builds morale, reputation, and a
legacy:
• Implementing procedures that support good
governance enhances a company’s identity
where stakeholders and potential investors
are confident to place increased levels of trust
in you, which in turn allows you to develop
stronger, longstanding relationships.
9. 8. Increases success rate for financial
performance and enhances
sustainability:
• Implementing protocol for good governance is
intended to assist with being able to quickly
identify issues as well as to quickly make
decisions to resolve these potential issues
thus reducing the eventuality of a crisis and
the cost it bears.
10. 9. Creates a greater ability to attract
and retain talent:
• A significant focus has been placed on culture
being a key contributing factor to the success of a
company.
• Maintaining transparency surrounding fairness,
accountability and operations, gives your
employees a greater sense of responsibility and
awareness as to where they are positioned to
create value within an organisation.
11. 10. Creates an effective framework
aimed at meeting business
objectives:
• Decision-making that takes into consideration
major stakeholders such as employees,
suppliers and the community alike, has
created a wider vision for successful results.
• Providing each stakeholder with a percentage
of valuable involvement creates a more
accountable culture, generating a higher
potential to reach objectives within an
organisation.
12. 11. Creates more opportunities to
gain a competitive advantage:
• Every industry is either constantly evolving or
has the potential to evolve at a certain point;
adopting good governance and creating an
environment where its practices can be
sustained is vital to ensuring that your
organisation is adaptable to change, thus
providing a greater competitive advantage
and chance at survival.
13. 12. Creates opportunities for
investment:
• An organisation that represents stability and
reliability increases its chances of attracting
premium investors, as well as increasing their
opportunity to borrow funds at a better rate.
14. 13. Provides a practical way to guide
decision-making at all levels:
• The ability to make informed decisions can
quickly improve performance and reduce the
effects of potential failures.
• One way to promote this kind of decision-
making ability is to ensure that information is
readily available to key stakeholders, i.e. a
culture of transparency.
