Governance is the connection between a company’s shareholders, board of directors and management. This framework is designed to align the interests of all parties and helps the company succeed in its long-term plans. Transparency, accountability, and responsibility are the cornerstones of a good corporate governance. They can build trust among customers, investors and employees, and help to create an environment that is healthy.

A good board of directors consists of a mix of insiders (major shareholders, founders and executives) and independent members that do not have close ties to the business. Directors from outside bring a fresh perspective and knowledge which can be useful in making business decisions. They can also function as a sounding board for insiders and provide them with additional insight and assistance.

The most important aspect of corporate governance is fairness. This requires that the company treat all vendors, shareholders, and employees equally. This is achieved by the disclosures that the company makes to its shareholders including major decisions made as well as financial performance and results of meetings.

A well-run board must have a meaningful mechanism for evaluation of its effectiveness and that of its committees on a regular basis. Surveys or self-evaluations can help in this. The board should also review the CEO and the senior managers on an ongoing basis and, when appropriate take part in their evaluations. The board should also set guidelines for its committees, members and the top management. This will ensure that the company’s leaders and members are accountable for any actions they undertake.

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