Governance is considered a vulnerable area for multiple businesses, especially for the spheres involving investors, since many functioning mechanisms remain invisible to the broad audience and stakeholders. Therefore, each organization controls every team daily to establish systemized work; such an approach proves board employees’ value (Lan & Heracleous, 2010). Over the past decade, management needs have exceeded other requirements and achieved their target results more successfully (Birshan et al., 2020). Thus, this paper aims to find out why governance in the field of investment is essential and why it can promote success in the organization.
First of all, it is essential to note that management involves regulating and imposing standards within the company and compliance with them by controlling employees. Since miscellaneous firms worldwide lack real power, they suffer further losses. Therefore, by launching an effective management program, they can achieve increased productivity, employee motivation, improved operational performance, and innovation. It is also a matter of great importance that customers are satisfied with the cooperation. Both stakeholders and shareholders are interested in maximizing their value and try to regulate the firm in terms of corporate governance. The shareholder model aims to gain profit for investors and owners (Lan & Heracleous, 2010). The authors suggest that frequent management reviews are adequate protection from the demands of active investors and other shareholders and beneficial for corporate hygiene (Birshan et al., 2020). Thus, it is critical to alter the composition of the board of activist shareholders. Such reviews help test the company and the leadership team’s responsiveness.
Moreover, shareholders demand that companies habituate faster to business changes, which can be quite complicated since they try to set mostly the long-term perspectives. Because the difference between stakeholders and shareholders is not completely clear, they may adjust to each other’s conditions and make work more efficient (Birshan et al., 2020). As a result, their cooperation will alleviate the work of the board team which is supposed to boost the employees’ performance.
What is more, remuneration policy needs to be taken into account since metrics may measure productivity; in other words, payments depend on performance. Transparency must be revised as well during significant projects, audits, and transactions for decisions to be made properly. To dispel concerns, the board should present a coherent plan to the stakeholders and how it will affect the corporation. Stakeholders are the most vital subjects in any business since the stakeholder model measures corporate activity’s impact on the firm. Therefore, their interests and suggestions must be primarily considered by the leadership team in the decision-making process. However, this framework does not entirely allow focusing on the corporate environment since all the attention is paid to the customers and other stakeholders.
In conclusion, it seems necessary to state that corporate governance can become a key to a company’s success. Shareholders and stakeholders in all sectors continue to make it clear that the impact of any business on the environment and society is of great importance to them. Governance imposes means of adjusting and handling tasks administered by the board team. It identifies the organization’s further directions, encourages employees, and improves general performance. Therefore, either stakeholders or shareholders must impose their corporate governance model to regulate and control internal operations and productivity in the firm.
References
Birshan, M., Goerg, M., Moore, A., & Parekh, E. (2020). Investors remind business leaders: Governance matters. McKinsey & Company.
Lan, L. & Heracleous, L. (2010). Rethinking agency theory: The view from law. The Academy of Management Review, 35(2), 294-314.