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By Muchadeyi Masunda
A STRONG business community is an essential feature of any successful, free and democratic society. It is through business leadership that our country can build an international network at the highest and most effective level.
People do business with people they like and trust. They don’t do business with those who cheat them. In any society, corruption in both business and government retards economic growth. There is a moral dimension to any efficient and effective economic system.
Corporate governance is the system of rules, practices and processes by which a company is directed and controlled. Corporate governance helps to balance the respective interests of each of these stakeholders. We have certainly come a long way since the mid-1990s with regard to the implementation of good corporate governance practices in Zimbabwe.
The journey started with the recommendations gleaned from the Adrian Cadbury Commission in the UK and the Mervyn King Committee on Corporate Governance in South Africa.
We have since developed our own product, the National Code on Corporate Governance (ZimCode), and in May 2018 our Government enacted the Public Entities Corporate Governance Act. In fact, most sectors are developing regulations that will ensure that entities and organisations practice good corporate governance.
This arises to a question of, “What constitutes Good Corporate Governance?” For any company to be effective, the leaders of that particular corporate entity must take responsibility for their decisions as well as the performance of the company as a whole.
For example, the company’s board of directors should design and adhere to a code of ethics that helps management to promote each of the important characteristics of good corporate governance. It is absolutely imperative for a company to have the following:
1. Clear Strategy
Good corporate governance starts with a clear strategy for the corporate organisation. The Board of Directors of a company, ably assisted by the management team, should scan the market to identify a profitable niche; create a product line to satisfy the needs of that target market and then advertise the company’s products through a marketing campaign that is designed to reach the consumers directly.
2. Effective risk management
Even if your company implements smart policies, competitors might steal your company’s customers, unexpected disasters might cripple your company’s operations and volatile fluctuations in the political and socio-economic environment might erode the buying capabilities of your company’s target market. If you are in business, you simply cannot avoid risk. Accordingly, it is absolutely vital to put in place effective risk management stratagems.
3. Discipline
Corporate policies are only as effective as their implementation. A company’s management team can spend years developing a strategy to push into new markets, but if the team can’t mobilise its workforce to implement the strategy, the initiative will inevitably fail. Good corporate governance requires having the discipline, commitment and courage to implement policies, resolutions and strategies.
4. Fairness
Fairness must always be a high priority for the management team. For example, managers must push the company’s employees to be the best that they can be in their respective fields of endeavour but they should also recognise that a heavy workload can have negative long-term effects, such as low morale and high turnover of staff. Companies must also be fair to their customers, both for ethical and PR reasons. Treating customers unfairly, whatever the short-term benefits may be, always comes back to bite and hurt a company’s long-term prospects.
5. Transparency
Sometimes management teams in various companies have an inexplicable tendency of limiting the information that should filter down to employees. On the contrary, transparency actually helps to unify a corporate organisation. It makes it possible for management and employees to sing from the same hymn book. When employees understand the company’s strategies and are allowed to monitor the company’s financial performance, they get to understand their respective roles within the company. Transparency is also important to members of the public who generally do not like corporations which tend to keep their cards close to their chests.
6. Corporate Social Responsibility
Corporate Social Responsibility has increasingly become a topical issue. Consumers expect companies to be good corporate citizens, for example, by initiating recycling efforts and reducing waste and pollution within the communities where they operate. It is a good corporate governance practice for a company to promote social good by reinvesting in the local community. I am sure we have seen how well some corporate entities responded to the recent outbreak of cholera and typhoid in Greater Harare.
Online Reporter