Corporate governance structure

A system by which an organization is directed and controlled.

DESCRIPTION

Corporate governance is the system by which an organisation is directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different stakeholders such as the board, managers or shareholders, and spells out the rules and procedures for decision-making in corporate affairs.¹ Good corporate governance requires an effective system of mutual checks and balances among the top corporate bodies.²

PURPOSE & LINK TO INTEGRITY

Clear roles and responsibilities at each level (from the board to the management, staff and stakeholders) are essential for an organisation to function efficiently and to ensure that each level is held at bay by a system of checks and balances. Clarifying corporate governance structures means establishing a system of sound approaches by which organisations are directed and controlled, focusing both on internal and external corporate structures.

Clear corporate governance structures allow monitoring of the actions of management and directors and thereby mitigate agency risks that may stem from the misdeeds of staff members.³ Cost effective and efficient management and operation can only be realised if the leadership in the water sector organization is guided by the tenets of good governance.⁴

KEY REQUIREMENTS

• Does your corporate governance structure incorporate and comply with laws and regulation applicable to your context?

HOW TO

Principles of good corporate governance:⁵

• An ethical approach towards society must be a key organisational paradigm
• Objectives should be balanced and respect the goals of all interested parties
• The roles of key players such as the board, the management or staff/stakeholders must be clarified
• A decision-making process must be in place – reflecting the first three principles and giving due weight to all stakeholders
• Equal concern must be given for all stakeholders – albeit some have greater weight than others
• Accountability and transparency is necessary – to all stakeholders

KEY GUIDING DOCUMENTS

OECD, 2004, The OECD Principles of Corporate Governance, Organisation for Economic Cooperation and Development (OECD), France

WASREB, 2009, Corporate Governance Guidelines for the Water Service Sector, Water Services Regulatory Board (WASREB), Kenya

Applied Corporate Governance, 2013, Best Corporate Governance Practice, Applied Corporate Governance, http://www.applied-corporate-governance.com/best-corporate-governance-practice.html, accessed 02.12.2015

FURTHER  READINGS

Economiesuisse, 2008, Swiss Code of Best Practice for Corporate Governance, Economiesuisse, Switzerland

Mulili and Wong, 2011, Corporate Governance Practices in Developing Countries, International Journal of Business Administration, Vol. 2, No. 1, Canada

Swiss Re, 2013, Our approach to corporate governance: fulfilling our commitment to our stakeholders, Swiss Re, http://www.swissre.com/about_us/corporate_governance/, accessed 02.12.2015

FULL REFERENCES

1. OECD, 2004, The OECD Principles of Corporate Governance, Organisation for Economic Cooperation and Development (OECD), France
2. Swiss Re, 2013, Our approach to corporate governance: fulfilling our commitment to our stakeholders, Swiss Re, http://www.swissre.com/about_us/corporate_governance/, accessed 02.12.2015
3. Wikipedia, no year, Corporate Governance, Wikipedia, https://en.wikipedia.org/wiki/Corporate_governance, accessed 02.12.2015
4. WASREB, 2009, Corporate Governance Guidelines for the Water Service Sector, Water Services Regulatory Board (WASREB), Kenya
5. Applied Corporate Governance, 2013, Best Corporate Governance Practice, Applied Corporate Governance, http://www.applied-corporate-governance.com/best-corporate-governance-practice.html, accessed 02.12.2015