Corporate Governance, is a set of systems and principles that regulate the relationship between company parties such as: owners, senior management, the board of directors, and shareholders, with the aim of achieving transparency, efficiency, and accountability.
It is the proper way to ensure that the company operates professionally and efficiently, and that its decisions are in the interest of sustainability, not just for the benefit of an individual or a single party.
Governance works to achieve several objectives. It focuses on separating ownership and management authorities, ensures the existence of an independent oversight structure (such as internal committees), strives to achieve transparency in financial and non-financial disclosure, ensures the protection of shareholders' rights, and works to manage risks properly.
The Reality of Our Arab Companies Without Governance:
Despite the successes achieved by Arab companies in their markets and the impressive results they reach at the end of the year, and despite the large volume of business managed by these companies, a closer look reveals indicators of negative problems, phenomena, and serious administrative and organizational diseases in the medium and long term.
A close internal view of these companies reveals that a large part of them are run based on the thinking and vision of one person. There are no boards of directors to make critical decisions, nor specialized committees; even if they exist, their role is largely marginalized, with significant disregard for the opinions of technical and administrative teams.
These companies also suffer from a lack of clarity in authorities and responsibilities. If you ask employees about the nature of their roles, you will find a significant difference between what they do and what they should be doing. Likewise, departmental responsibilities are overlapping and unclear.
These companies also suffer from reliance on individuals rather than systems. There are certain trusted individuals in every company who manage operations without a defined administrative system, without control procedures, operational manuals, or written policies and procedures.
As a result, internal systems are affected, including the employee selection and hiring system. You will find that recruitment and selection are based on personal relationships rather than competence, with a complete lack of proper selection and hiring criteria, which means that outstanding talents flee to competing companies that enjoy a better organizational environment.
Let us discover together whether your company suffers from weak or absent governance?
The matter is simple; you can discover this yourself. If any of the following phenomena occur, your company suffers from or lacks governance, and you must act immediately toward correction before it is too late:
Decisions are made in informal meetings.
Inability to access accurate financial reports.
Absence of operational manuals, written policies, and procedures for key processes.
The owner alone manages, makes decisions, and sets strategies.
How to Develop a Corporate Governance Implementation Plan:
We mentioned that governance is a set of systems and principles that regulate the relationship between company parties such as: owners, senior management, the board of directors, and shareholders, with the aim of achieving transparency, efficiency, and accountability.
To build an effective governance system for your company, several steps must be followed, briefly summarized in the following points:
- Defining the company's vision and values is the fundamental starting point for governance efforts.
- Establishing an organizational structure for the company and its departments that clearly defines roles and responsibilities and separates ownership from management.
- Developing internal control systems and preparing clear policies in areas such as finance, production, recruitment, procurement, compliance, and others.
- Forming specialized oversight committees (such as a governance committee or risk committee).
- Implementing performance indicators to monitor transparency and efficiency in administrative, financial, and operational processes.
- Promoting a governance culture through training and periodic performance evaluations to ensure the system’s sustainability and effectiveness in the long term.
