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There are five golden principles of effective corporate governance. Compliance with these five rules is the key to embracing best practices in business. When a company adopts these principles, the public image of the firm improves. At the same time, running the company becomes easier.

In every organization, there are ethics and cultures to abide by. This is why it has become a recommended best practice to establish a set of rules. Good employees abide by these rules while bad ones ignore them. However, there are some principles governing the five golden principles. These include:

• Ethical Approach: This includes recognizing the organization’s culture, society and standards to ensure best practices.

• Balancing Goals: The interests of all parties involved must be balanced to achieve the objectives of the business institution.

• Key Players: The roles of each key player must be defined to ensure compliance with laws and controls.

• Decision-Making Process: Models must be followed to ensure best practices in decision-making.

• Stakeholder Rights: The rights of stakeholders must be respected and taken seriously. Some stakeholders have higher shares than others. Nonetheless, they must all be handled with equal importance.

• Transparency and Accountability: Information about investments and returns must be transparent. The firm must ensure accountability through best practices.

Corporate governance is not only about who dominates the market or the worth of shareholders. Besides, it’s not only about profits and social responsibility. It is more about the ethics and culture of the organization. It is important to mention that though goals are set by entrepreneurs who setup the business, they must be accepted by all parties involved. That is because they are best practices in everyone’s interest.

Five Golden Principles

There are five standard principles that must be followed to ensure proper running of the business. These five principles are best practices that guarantee good management.

1. Respect for Ethics: There must be established ethical standards for the business.
2. Established Business Goals: Through compliance with decision-making models, goals must be outlined for key personnel.
3. Strategic Planning: This is an effective best practice that integrates stakeholder value in the company.
4. Organizational Structure: The structure of the organization must be structured for effective corporate governance.
5. Reporting Format: The system and format of reporting must ensure accountability and transparency. This best practice is the key to successful financial management and risk management.

Summary

In summary, corporate governance practices are the key to management best practices. They ensure risk management, operational management and compliance with controls. They also make achieving goals easier.

Compliance with these golden principles of effective corporate governance is a recommended best practice. They ensure success with the various aspects of business management.

Further reading: Corporate Governance | Audit | Performance Improvement