What is corporate governance in Australian business?
Keeping businesses in line with their values, corporate governance ensures organisations are operating in the right way. To do so, corporate governance oversees how a business’ people, processes and purpose are held accountable. There are currently no defined corporate governance models in Australia as each business has individual structures and values. However, there are foundational principles developed by the Governance Institute of Australia with guidelines to follow for developing a tailored organisational governance plan for a business. These principles include transparency, accountability, stewardship and integrity. The implementation of corporate governance has become a central concern for businesses as ethical business practices are more important than ever. Following alarming events like the global financial crisis in 2008 and the Royal Commission into banking misconduct in 2017, the business world has demanded that organisations are regulated and governed more closely. When developing a strong business model, organisations should consider what their corporate governance is and develop a plan to implement it across the company.
Organisational governance’s guiding principles
Each business should develop its organisational governance model when considering its values and strategic business goals. The Governance Institute of Australia has outlined organisational governance foundations that can help guide businesses when developing their corporate governance action plans.
Businesses should be open and communicative about their operations, performance and organisational governance models to internal and external stakeholders. Business transparency reassures and instils confidence that the business is authentically performing in-line with its values.
With consequences to actions, proper accountability confirms that business decisions are carefully considered without acting irresponsibly. Accountability reinforces correct roles and ensures a clear chain of authority with ramifications when people act out of their jurisdiction.
Nurturing a company culture where the business is acting in the interest of its key stakeholders or members. Stewardship is taking appropriate care of the organisation’s members, customers or shareholders, working towards their best interest whilst simultaneously creating business growth opportunities.
Bringing ethics to the forefront of business, having integrity means looking for responsible and moral solutions in the business. This ensures that organisations are complying with corporations law in Australia and acting to benefit the wider community with sustainable business decisions.
Where can businesses find resources on corporate governance in Australia?
With so much information circulating, it can be confusing when looking toward a singular point of clarity on corporate governance. We offer three useful resources for developing a corporate governance plan, Australian Stock Exchange (ASX), industry associations and government.
1. The ASX Corporate Governance Principles and Recommendations
This independent branch of the Australian Stock Exchange has outlined guiding principles that publicly listed companies should follow to improve their corporate governance. From promoting a lawful, ethical and responsible company culture to managing risk, the ASX attempts to keep companies operating with best practice corporate governance. Private companies can still look to the ASX when developing a robust business governance plan.
2. Your industry’s governing bodies and associations
Most industries have professional associations and bodies to protect and regulate the field. Many of these groups have recognised the importance of corporate governance in Australia and have produced guidelines on how to fulfil organisational governance responsibilities for their field. For example, the Australian Centre for Healthcare Governance is a healthcare-related association to support practices in adopting good governance. Look into your industry’s association and see if there are existing resources to help.
3. The Australian Government offers additional resources on corporate governance
The Australian Government encourages businesses to implement corporate governance and has planning tools publically available. Their guide breaks down actionable points that are useful for large and small businesses alike. Covering topics around the delegation of power, procedures and accountability, the Australian Government is another worthwhile resource when creating a corporate governance plan.
UNICEF Australia demonstrates strong corporate governance
Many public companies adopt business governance policies to fulfil the ASX recommendations. However, as a not-for-profit organisation, the Australian Committee for UNICEF Australia has chosen to adopt a strong corporate governance policy to better their business practices. Outlining their Board of Director’s involvement and responsibilities, risk management plans, financial reporting and stakeholder communication commitments, their organisational governance is thorough. The Australian Committee for UNICEF Australia has outlined all of their policies, procedures and checks in their Corporate Governance Statement. They take their corporate social and ethical responsibilities seriously and their willingness to create a detailed business governance statement exemplifies this.
Becoming a responsible corporate leader
Promoting these values and ensuring a business is following its organisational governance plan requires ethical and responsible business leaders. Making judgement calls and holding people accountable comes with certain expertise, it requires critical thinking and dependable reasoning. Gaining the right skills to operate an organisation that values corporate governance is simple with the right training. Griffith University’s online Master of Business Administration is designed to teach the next generation of leaders. Learn how to guide a business with purpose from courses like ‘Developing Values-based Leadership’ and ‘Innovation for Impact’, this digital-first program is built from modern and real-world case studies. Become a leader that understands the importance of corporate governance and wants to do better.
For more information about studying Griffith University's 100% online Master of Business Administration, call us on 1300 737 945 or book a call with an Advisor today.