The four most relevant pillars for good corporate governance
Hand in hand with globalization, the concept of Corporate Governance has been implemented in an accelerated manner, understanding that it is undoubtedly a tool for competitiveness, where the objective is to ensure the proper management and administration of companies, protect the rights of investors and other interest groups, it is not just a set of external rules, it is a business culture necessary to maintain a stable and productive relationship between the participants of any organization.
The implementation of a Corporate Governance model in private and public entities has had a transcendent approach as a vital and transversal axis for senior management, where it allows the adoption of good organizational practices; granting strategies framed in business ethics, value generation and efficient and transparent information for the parties such as shareholders, administrators, senior management, and other interest groups.
Therefore, to achieve effectiveness in the Corporate Governance model, it is necessary to use four transversal pillars that obey the nature and organizational essence.
The first pillar, inadequate or irresponsible administration: corresponds to the lack of professional, business and personal ethics and the development of prohibited behaviors carried out by senior management, which are configured in business failure; bad administrative practices translate into greater risks, harming the fulfillment of organizational objectives.
The second pillar, lack of control systems: refers to the delegation of responsibility for decision-making and the execution of strategies to third parties other than shareholders or administrators, leaving a gap between what was planned for the adequate development of the specific organizational objectives by senior management and what is really transformed by the executors and business managers, thus generating among the best known and recurring: private benefits, fraud, embezzlement, loss of timely action before business situations and problems.
The third pillar, communication in organizations: corporate communication, is one of the strategic tools that allow a company to achieve a good position in the market and improve the relationship between its members. As the organization grows and the number of employees and clients increases, it is increasingly important to implement and manage good communication, taking into account the company’s objectives, the organizational climate and the unforeseen or different situations that may occur in the environment and that may require any type of information.
The fourth pillar, guidelines and decision-making: the importance of linking and implementing solid guidelines that allow not only to meet profits for shareholders, but also the commitments for society, plan and inform in advance the objectives that emit measurements and judgments on the performance of the company’s management, which evidences the existence of appropriate guidelines that prevent possible failures in corporate management for approval.
Based on the foregoing, it can be identified that Corporate Governance is treated as the pillar of organizational transformation, focused on controlled qualitative and quantitative instruments that show the financial, administrative and management reality, that establish trust and the minimum risk to the interested parties, with the relevant purpose of generating economic sustainability, business growth, success and organizational transparency, through the good management of information and assertive communication.
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For further information please contact:
Sindy Lorena Vargas
Audit Supervisor at ECOVIS Colombia
bogota@ecovis.com