WHAT ARE THE PITFALLS AROUND CORPORATE GOVERNANCE? Tom Mercer, commercial director at GAIN LINE, is a leading tech and business growth expert and has helped hundreds of businesses evolve for the future providing bespoke services in digital marketing, tech advice and leadership management. He says there are a number of significant corporate governance pitfalls that companies need to be aware of: • Risk of fraud and corruption – Companies with poor corporate governance are more likely to be involved in fraud and corruption. This can lead to financial losses for shareholders, as well as damage to the company’s reputation.
• Lack of transparency – Companies with poor corporate governance are less transparent about their activities. This can make it difficult for shareholders and other stakeholders to hold the company accountable.
• Poor decision-making – Companies with poor corporate governance are more likely to make poor decisions. This can lead to financial losses, as well as damage to the company’s reputation.
• Increased risk of shareholder activism – Shareholders of companies with poor corporate governance are more likely to become active and demand change. This can make it difficult for the company to operate effectively.
“Good corporate governance is essential for companies that want to be successful in the long term,” he says. “By following the best practices of good corporate governance, companies can minimise the risk of fraud and corruption, improve transparency, make better decisions, and reduce the risk of shareholder activism.”
GOVERNANCE IS ABOUT EQUALITY AND A ROBUST FRAMEWORK On a governance level, companies need to report on the gender pay gap in the UK, as well as complying with new EU rules on ensuring that suppliers have paid their staff a living wage. “If you see a board with the same people for 20 years,
that is concerning,” David Duffy says. “Diversity around the boardroom table is not just about gender or ethnicity, it is about getting the right minds and real independence of thought,” he says. “If you want your culture to change, then look at your staff, where they come from, where do your customers come from? Collect some data to try and figure out what skills you need to look after your staff and your customers. Diverse boards tend to make better decisions compared to all-male boards.” Tom Mercer says that whilst there are some risks to
wrongly managed corporate governance, there are a number of examples of companies with good corporate governance. Some of these include:
• The Coca-Cola Company has a strong corporate governance framework that is designed to protect the interests of all stakeholders. The company has a board of directors that is made up of independent directors, and it has a code of conduct that sets out the standards of behaviour that are expected of all employees.
• Apple Inc. has a robust corporate governance framework. The company also has a board of directors, and it too has a protocol that outlines the necessary standards required.
• Microsoft Corporation, like Apple Inc. has an impressive corporate governance structure.
“Microsoft’s corporate governance structure is designed to protect the interests of all stakeholders, and the
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