Corporate Governance in Chicago
Due to technology, businesses are able to share information with their customers and affect the lives of others more rapidly than ever before. In turn, this drastically speeds up how fast a business performs its day-to-day tasks. With businesses accelerating faster and faster, the need for corporate governance is only increasing.
What Is Corporate Governance?
Corporate governance is a combination of the systems of rules, best practices, well-defined procedures, and structures that guide decision making throughout all levels of an organization. Without them, a business leaves a lot of loose ends unaccounted for and takes unnecessary risks that could cause major setbacks to the company. A corporate governance structure will help ensure that top leaders and stakeholders of an organization are on the same page.
However, it also affects the other layers of an organization. Employees from all levels, suppliers, and even the customers are in some way influenced by the corporate governance structure. There are many great benefits to creating a corporate governance plan. The following are ways a corporate governance plan will add value to your business.
Cost Savings by Avoiding Fines and Lawsuits
One of the largest components of a governance plan that will pay for itself many times over is compliance. Federal and state regulatory agencies impose strict rules and regulations such as health and safety standards. If these regulations are not met by you or your employees, you leave your business vulnerable to the ravages of fines, penalties, and lawsuits. In some cases, you could even pose a threat to your customers. A firm corporate governance plan will help ensure that adequate preventative measures are taken and also help ensure that employees follow the rules.
Helps Prevent Fraud
Rules and internal policies can help prevent unethical employee behavior that could otherwise be disastrous for your business. In some cases, these may take the form of contracts that forbid doing business with family members to prevent malicious intent. For example, it is common banking practice to forbid employees from having access to other family members’ accounts. Unfortunately, some people are always looking for a way to cheat the system for personal gain, making a corporate governance plan that much more valuable to your business.
Stronger and Cleaner Public Image
A corporate governance plan will also help you look more credible, both to the government and general public. Additionally, stakeholders and shareholders will trust your ability to do business more. Having plans and procedures in place show that you are taking responsibility to engage in ethical business practices. Not having adequate measures in place, however, could give you the reputation of a shady, untrustworthy business.
Definition of Roles and Responsibilities
A governance plan will also help you to identify and delegate roles that will improve your ability to do business while shielding you from risks and liabilities. Clarifying roles will help draw lines between the people who own the business and those who manage the business. This will help save time by expediting the decision making process. In some cases, responsibilities must be distributed among different individuals to balance power.
About Compliance & Competition Consultants of Chicago
We are a Chicago based firm helping companies comply with the latest rules and regulations to avoid consequences and major setbacks. Ignorance of the law can harm or even destroy your business. We are here to help you adhere to standards so your business continues to run like clockwork. If you have any questions, please visit our contact page.