One of the most important differentiators of business is corporate governance – that impacts the profitability, growth, and sustainability of the business. The corporate governance process is multi-level and multi-tiered – distilled from an organization’s culture, its policies, values & ethics of the people (who run the business), and the way it deals with its stakeholders.
Businesses require to run with a high degree of ethical conduct and good governance, where compliance is in spirit and not just in letters. Therefore, one needs to create value that is profitable to the business as well as sustainable in the long-term interests of stakeholders.
Past, Present & Future of Corporate Governance in India
In this changing business environment, good corporate governance has emerged as a powerful tool for competitiveness and sustainability. At present, this tool is very crucial and requires corporation for one and all (from ordinary staff to the CEO of the company) to maximize the value of stakeholders as well as the pleasure and minimize the pain for the long term business.
For competitions in the global market, a business requires the best planning, innovative ideas, management, compliance with laws, good relation between directors, shareholders, employees & customers of companies, and value-based corporate governance to grow, prosper, and compete in international markets by strengthening their strengths, overcoming their weaknesses & running them efficiently and effectively. One must adopt the best practices to cater to these requirements efficiently and transparently.
Corporate India needs to become an innovative, reliable, and prompt service provider to its customers and also become trustworthy business partners to prosper.
Corporate Governance is all about ideas, creativity, innovation, thinking with certain values, ethics, principles, etc. It gives direction and shape to the people of an organization, i.e., employees, and owners and helps them flourish in the international market.
Indian Corporate Bodies who have adopted good corporate governance will create a benchmark for the rest of the world. Corporate governance brings laurels as appreciation. It lays down the values, ethics, principles, and management policies (incorporated and practiced) of a corporation. Corporate governance is essential as it helps promote and maintain integrity, transparency, and accountability throughout the organization.
Corporate governance has existed since the past but in a different form. Running corporate bodies with rules, laws, values, ethics, morals, etc. are the same as running states in the Vedic period. Earlier, kings had their ministers, ethics, values, principles, and laws to run their states. Now, corporate governance helps corporate bodies run in more effective ways to become a global giant of the modern era.
Indian companies such as Tata, Reliance, Wipro are the global giants that got success due to good corporate governance.
At present, the law also plays a crucial role in a successful and growing economy. Laws and regulations such as FEMA, SEBI, Cyber Laws, Competition Laws, etc. that have been enacted by the government and judiciary have brought several amendments. Corporate bodies must repeal the laws if they don’t act as a barrier for these bodies as well as developing India. Judiciary has also played a crucial role in solving corporate disputes speedily.
Corporate bodies climb the ladder of success through their aim, motto, value, ethics, principles, etc. Organizations (small or big) have their magazines and annual reports reflecting their failures, achievements, profit & loss, and their current position in the market. Companies like Deepak Fertilizers and Petrochemicals Corporation Limited have shown awareness of environment protection, social responsibilities, and the cause of upliftment and social development; they have deeply committed themselves to it.
In the current scenario, stakeholders are more important than shareholders. They can attend general meetings, vote, and make observations & comments on a company’s performance.
In the future, corporate governance will play a crucial role. Corporate bodies have a much futuristic approach. They work on the vision of their company (that they had) for future success. They take risks in adopting innovative ideas; have futuristic goals, motto, and objectives to achieve.
Owing to an increase in interdependence and free trade among various countries, Indian companies who want to distinguish themselves in global footprint give importance to internationally accepted corporate governance standards. Companies need to improve, enhance, and upgrade themselves continuously by bringing more reliable integrated product and service quality. They require to be more transparent in their conduct.
Corporate governance must have a holistic approach and value-based governance. It must be committed towards corporate social upliftment and social responsibility and environmental protection. It includes creative, generative, and positive things that add value to the stakeholders – served as customers. Every area – from finance, taxation, banking to the legal framework requires good corporate governance.
Corporate governance is simply a means and not an end; corporate excellence must be an end.
Summary
The corporate governance concept focuses on total transparency, integrity, and accountability of the management as well as the board of directors. It contributes to business prosperity and accountability.
In this age of globalization, good corporate governance is a useful tool for corporate bodies. It existed from ancient times (Vedic period) as the highest standards for ArthaShastra to modern day’s ethics, morals, values, principles, rules, thinking, laws, etc. as good corporate governance.
If an organization achieves good corporate governance, it means the Indian Corporate Body will become globally successful.