What Are The Advantages And Disadvantages Of Corporate Governance?


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James Kent answered
Many businesses have a corporate governance department, including the NHS and multinational corporations. These decision-making and analytical executives are vitally important to ensure that managers within an organisation are accountable for their actions, and one of the main benefits of corporate governance is how a business can improve once protocols are implemented. It’s important to ensure that staff are productive, know that there is a set routine to conducting certain procedures, and that the same mistake doesn’t happen twice in a company. Even though errors and misjudgement can occur, it’s important to learn from the ramifications that improper conduct can provide. All of this in a nutshell summarises the pluses of corporate governance.

Naturally, there are going to be some drawbacks to this. It can be expensive and questionable when a business is already efficient. Also, as many of the decision-making individuals on the board of directors in an organisation are likely to be emotionally attached to a business, it’s possible for these sentimental feelings to get in the way of real progress. This is more prevalent when a business has been established within a family. Because many businesses have normal stakeholders who only have a financial interest in the development of a company and not a personal one, it makes it easier for necessary decisions to be made. This is usually essential when there is an underperforming element of a business that needs to reformed or eliminated to preserve profits. If a member of the family who started a business personally oversaw this department at the beginning of the company’s inception, they may be reluctant to make the necessary changes in spite of corporate governance’s advice.

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