"In the first quarter of 2022, 347,000 new businesses were formed in the United States. In the second quarter of 2020, new business starts experienced a dip to 227,000, but have picked up quickly in subsequent quarters". That equates to approximately 1 million new businesses being established each year in the United States alone. Worldwide, it can be an unreadable number; but how many of those businesses can we trust? How many of them have values to protect their customers' mental and material rights?
When purchasing a product from a company or investing in one, you should be aware of the extent to which your rights will be protected. Is there a real value for you in buying this product or service? Or will it simply be a "willfully promoted" product that adds nothing to your life?
If a conflict arises, would you be able to take your rights from this company? Or would you be considered just a whiner?
Customers can be wrong at times, I believe, but there are also a huge number of companies and corporations appearing every year, with different cultures, languages, beliefs, and different moral codes, and many of them are expanding abroad through online platforms like AliExpress and Amazon. It’s hard to ignore that many companies had no time to define rules for handling conflicts or differences inside or outside the company, how to maintain audience trust, or how to keep the loyalty of stakeholders and clients.
What is corporate governance ?
Corporate governance refers to the way in which companies are governed and to what purpose. It identifies who has power and accountability, and who makes decisions. It is, in essence, a toolkit that enables management and the board to deal more effectively with the challenges of running a company. Corporate governance ensures that businesses have appropriate decision-making processes and controls in place so that the interests of all stakeholders (shareholders, employees, suppliers, customers, and the community) are balanced.
Governance at a corporate level includes the processes through which a company’s objectives are set and pursued in the context of the social, regulatory, and market environments. It is concerned with practices and procedures for trying to make sure that a company is run in such a way that it achieves its objectives, while ensuring that stakeholders can have confidence that their trust in that company is well founded.
The Chartered Governance Institute UK & Ireland believes that good governance is important as it provides the infrastructure to improve the quality of the decisions made by those who manage businesses. Good quality, ethical decision-making builds sustainable businesses and enables them to create long-term value more effectively.
After all, a corporation is an entity that interacts with the real-life identities of humans, such as employees, audience, customers, board members, managers, and stakeholders. There must be a moral code that everyone comes back to in any case of controversy. This moral code has two categories:
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Agreed On:
referring to the company values and ethics defined by the founders of the company, and transferred by awareness inside the company, they’re general and considered to be a code of action and interaction within the company.
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Committing:
refers to corporate governance as defined by board members and delivered through education, committing everyone to them and holding them accountable.They’re more specific, and they define the responsibilities of everyone towards inside and outside individuals that have any relation to the company.
What’s the difference between business ethics and corporate governance ?
Business ethics are the moral standards that an organization upholds when conducting its business actions.
Corporate governance is the internal structure that a business develops and uses to rule and protect those who have invested in it and whomever is involved in this business.
The company values are defined by its founders, most of the time, and are also reflected in the company’s personality that is shown to the audience. Business ethics are the application of the company values through actions, and are more relative to the internal atmosphere of the company and how the company members are interacting with each other, with their managers, with their team members, and with customers.
Values and ethics are a moral code that people in an organization agree on and act upon,
they’re even taught to new members of the organizations. They delivered to the customers and audience in the company’s personality.
While the company rules are more about rights and boundaries, they also include a rewarding and disciplining system.
Corporate governance is somewhere in the middle: it's stricter than company values,
implying that we're more committed to it, and it's on a higher level than just company rules.
We can say that corporate governance is a set of main values that we’re responsible for and will be held accountable for; accountability, transparency, fairness, and responsibility are the fundamentals of it.
What’s the role of ethics in governance?
According to many public opinion polls, today's business industry is not highly trusted.
As a result, it is more important than ever for today's businesses to establish well-defined,
actionable governance plans that are based on the ethical values of integrity, honesty, and openness in their operations.
This promotes positive behaviors that result in long-term business success and sustainability.
It also assists businesses in gaining increased trust, an intangible but extremely valuable social and cultural currency.
Fortunately, many modern businesses are aware of the benefits of ethics in corporate governance and desire to operate
"the right way" by following governance rules that lead to:
- Accountability
- Transparency
- Fairness
- Responsibility
And these four are the most widely agreed-upon fundamentals of corporate governance.
Conclusion:
Though the ethical principles in corporate governance are stricter and more committed, they are derived from the company's overall values and ethics.
Both are becoming more important every day to ensure that we all have a basic moral reference to come back to, that also defines how to take the next steps in our business.
Sources:
https://www.cgi.org.uk/about-us/policy/what-is-corporate-governance https://www.smartcapitalmind.com/what-is-the-relationship-between-business-ethics-and-corporate-governance.htm#:~:text=Business%20ethics%20represent%20the%20values,those%20invested%20into%20the%20company https://onlinedegrees.scu.edu/media/blog/ethics-in-corporate-governance https://mindleap.co.uk/downloads/areviewoftheethicalaspectsofcorporategovernanceregulationandguidanceintheeujune2013.pdf https://www.statista.com/statistics/771207/quarterly-business-starts-us/