It all starts when shareholders and business families have a clear understanding of the benefits of adopting good corporate governance practices. We know that the ultimate goal is for the organization to be profitable, sustainable, to transcend generations, and to have a return on investment.
What is corporate governance and why is it important?
Corporate governance refers to the system of rules, practices, and processes by which a company is directed and controlled. Its importance is based on the fact that it allows the organization to be led, defines a shared vision, establishes an effective strategy, improves efficiency and effectiveness, minimizes risks, and gives confidence to its investors.
Implementing good corporate governance practices brings a number of benefits for the company and its shareholders, including:
1. Performance improvement. Good corporate governance can lead to better decision making and better financial performance. As a consequence, it increases the competitiveness, growth and profitability of the company.
2. Reputation and credibility. Very important when today we talk about the corporate citizen, his responsibility with the environment and with the social. Companies with strong corporate governance practices often enjoy a better reputation among stakeholders, including their customers, community, collaborators, and investors. Its importance is not simple. We know that companies with high credibility and reputation have high customer loyalty, attract high-performing and high-potential employeesas well as improving access to better sources of financing.
3. Transparency. Effective corporate governance promotes greater transparency throughout the organization, especially in decision-making processes. It makes it easier to build trust among stakeholders and reduce the risk of unethical or illegal behavior.
4. Effective risk management. Good corporate governance practices help companies identify and mitigate risks more effectively. They reduce the possibility of financial losses, minimize legal risks and damage to reputation.