Regardless of the size of your company, delineating your corporate governance policy can help you on the road to success. A corporate governance policy puts procedures and policies in place to keep the company on track and operating efficiently. A good corporate governance policy should address financial management, conflicts of interest, hiring practices, and roles of board members. Having these procedures in place decreases the likelihood of errors or fraud and boosts profits. Read on to find tips on how to write an effective corporate governance policy.

Corporate Governance Policy Basics

A company's corporate governance policy is essentially the way a business handles its affairs and works towards its goals. To avoid any breakdowns in communication, it's essential to bear in mind these five topics when writing governance policy.

Established Laws

Corporate governance policy compiles corporate legislation, laws, and policy to bind directors and board members to the company they serve. These laws also grant these parties a fiduciary duty to act on behalf of the company. A corporate governance policy aids directors in fulfilling their function and legal expectations of them. The legal side of this policy also has ties to shareholders, the media, stock exchange, and any external interest groups. When putting together your corporate governance policy, any legal obligations of those involved ought to be clear.

Assess Any Risks

Risk management should be integral to any business's policy, especially if they invest or are in the process of acquisitions. As the financial plunders of a not-so-far-off past have shown, assuming too much risk can have disastrous outcomes. Therefore, it is essential to employ some standards for your company's risk tolerance. Furthermore, it is advisable to define how much cash flow should be available before assuming any risk. Inadequate risk management can send any good company to an early grave.

Have Strategies in Place

For a company to work like a well-oiled machine, it's pertinent that all its members be on the same page. This is where corporate governance policy helps companies immensely. Whether it's a company mantra or strategies for the future, there must be some plan or framework laid out for long term success. These strategies should also be indicative of your company's philosophy, i.e., moving towards renewable energy or improving profit cycles. With these strategies established, it will be easier to expunge any managers or employees who go against your ideology.

Name All Relevant Factors

All expectations or agreements should be in writing for them to hold water. A company's corporate governance policy is the best place for them to state important information and show their accountability explicitly. This can include the nature of the business and its goals, as well as its size and development stage. Also, this is where a business should state its available resources and any expectations of shareholders. With all relevant factors clearly stated, a company won't have to worry about their words getting turned against them.

Expect Compliance

When it comes to employees, especially those enduring veterans, it's crucial to consider and even expect compliance. Companies with a newly founded corporate governance policy should employ specific methods to promote compliance. Rules such as initial leniency, guaranteed anonymity for informants, and even termination for non-compliant parties belong in the corporate policy. The governance policy should also state how management should investigate violations on all levels of the business. In addition to that, the policy should convey that stakeholders and shareholders be up-to-date about any inconsistencies.

Beneficial Outcomes

The right policies can be a motivating factor in corporate leadership. In fact, many find that there is a direct correlation between long-standing shareholder value and good corporate governance policies. Some of the more significant outcomes are better risk management and improved monitoring of performance. Furthermore, it's possible that with these policies, there will be improved internal control and more accountable management. Most importantly, with effective corporate governance policies, you can expect higher performance from the Board of Directors.

Best Practices to Consider

With these topics in mind, it's time to draft your corporate governance policy and evaluate some key items. As each business is different, you may find some issues more pressing than others. Reflect on your corporate culture and assess which of these areas belong in your policy.

Your vocabulary should aim to underline your corporate culture. If your company doesn't have a team of in-house writers and editors, you can opt for services like Grammarly, Trust My Paper, and Grab My Essay to better calibrate your language in accordance with your mission and ethics.

Certified and Effective Board of Directors

Building the right team is no easy feat; therefore, having some guidelines to follow in the corporate governance policy helps. These guidelines ought to include criteria for hiring members that are qualified, skilled, competent, and knowledgeable. However, they shouldn't just tick all the boxes but also be independent individuals that can engage in discourse. Itb's also advisable that the policy incorporate an education system such as orientation and business development. Finally, there must be clear guidelines on how board members will be assessed to ensure they are fulfilling their duties.

Clearly Marked Responsibilities and Roles

When people fully understand their responsibilities, that makes everyone else's job a lot easier. Ergo, clearly describing and disclosing the duties of the CEO, board members, and management is vital. Does your corporate governance policy include the responsibilities and accountabilities of each member of the Board? Does your policy differentiate between the Chair of the Board and the company CEO? Be sure to make these distinctions and address where and when members can or can't delegate.

Strive for Integrity and Fairness

A business's corporate governance policy should set the tone for its company culture and way of doing business. To establish a tone of integrity and fairness, you must write a code of conduct, requirements, and repercussions for non-compliance. Moreover, someone must be in charge of overseeing the fulfillment of these procedures. Furthermore, the terms of treatment of members inside and outside of the company should be clear. Describe how your company will manage shareholders, debtholders, and stakeholders differently in your policy.

Uphold Accountability and Transparency

Last but not least, a well written corporate governance policy should dictate the company's ethics. Just like with your code of conduct, clear ethical guidelines can help members know what behavior is appropriate. Of course, for these to be truly effective, they must also be strictly enforced.

"Both operational and financial transparency has to be the norm in your corporate governance policy. Taking care to explicitly write about these topics can help your company avoid any huge disasters or negative publicity." - Maria Villalobos, senior writer at Studicus.


Writing your company's corporate governance policy is quite personal, but also vital to its long term success. Depending on your company's focus, history, and members, there will be different areas you wish to highlight. No matter the size of your company, you should write a corporate governance policy that denotes all legal obligations. Equally important are the terms of risk management, strategies, compliance rules, any relevant factors, as well as benefits.

An effective corporate governance policy will help future employees know how to hire certified board members and evaluate their performance. Moreover, it will make roles abundantly clear and set the tone for the company's culture and ethics. Once you have written your policy, all that's left is to uphold it and be consistent. Armed with a well-written corporate governance policy, your company will be able to stop trouble in its tracks.

Author Bio

Angela Baker is a self-driven specialist who is currently working as a freelance writer at Best Essay Education writing services and is trying to improve herself and her blogging career. She is always seeking to discover new ways for personal and professional growth and is convinced that it's always important to broaden horizons. That's why Angela develops and improves her skills throughout the writing process to help to inspire people. Also, she writes for LiveInspiredMagazine, rounding out her professional writing career.