Strategic management of corporate governance is now a hot term in the corporate world. Implementation of this concept is being sought out by many organizations of various sizes and nature. In simple terms, strategic management of corporate governance is about putting in place a framework for laying out a clear-cut strategic plan for the organization’s operations, while at the same time ensuring that there is enhanced accountability in the organization.
Balance of profits and sustainability
A model for strategic management of corporate governance supplements the core aspect of the organization, namely quality of the product or service. Strategic management of corporate governance takes into consideration all the processes and systems and procedures needed for structuring authority and the organizational hierarchy, balancing respective roles and responsibilities by putting a system of checks and balances in place, and bringing in accountability to the organization’s stakeholders.
In essence, strategic management of corporate governance involves bringing about a healthy balance between the organization’s profitability and the way it sustains itself in the light of these aspects. It is a play of factors such as satisfying external and internal stakeholders while ensuring that ethics and accountability are maintained, even as the organization stays implements its corporate social responsibility obligations. The aim of implementing strategic management of corporate governance is to enhance the performance of the organization and take it a few notches higher.
Strategic management of corporate governance is unthinkable without stakeholders
One of the core elements of strategic management of corporate governance is the participation of stakeholders in the management process. Since stakeholders are central to strategic management of corporate governance; satisfying both internal and external stakeholders is the primary objective of strategic management of corporate governance.
Having said this, it has to be understood that as of now, there are no regulatory requirements from regulatory authorities on bringing about strategic management of corporate governance. It is a set of self-prescribed, self-directed processes.
Internal stakeholders: These are the people who are directly involved in this process, consisting of the decision makers in the organization, as well as those involved in production of the company’s product or services. So, strategic management of corporate governance has to take into consideration the factors that keep them happy and motivated. It is only when these internal stakeholders are in good mental shape that they produce better products or services, which in turn leads to greater profitability.
External stakeholders: External stakeholders consist of all those who are involved in the organization’s profits, from outside. These could be customers, investors, creditors and others. Keeping them satisfied is at the core of an organization’s business, because no asset matters as much as a satisfied customer.
Boardroom accountability: The Board level of an organization has to be held responsible and accountable for its collective decisions. One of the critical aspects of strategic management of corporate governance is to control the boardroom’s whims. The strategic management of corporate governance should ensure that the top management is not arbitrary and lacking in accountability when it comes to handling finances and other important matters of the organization.
Practicing Corporate Social Responsibility: Good strategic management of corporate governance should also take into consideration the important buzzword of today’s corporate governance, namely corporate social responsibility. This involves being involved in community work, being compliant with regulations relating to the environment, and so on. Thus, strategic management of corporate governance is a complete set of self-regulated laws that an organization has to implement if it has to show itself as being responsible to society in a larger sense and look beyond just profits.