Corporate governance refers to a framework of procedures, policies, and rule that is used to determine the overall performance and direction of the company. Senior executives and board members use this management approach to direct and control an organization. This framework is used because it ensures directives, instructions, and strategies are carried out effectively. On the other hand, compliance is a term used to describe the process through which businesses showcase they’ve conformed to requirements in contracts, regulations, policies, and laws.
Corporate governance and compliance are linked. In fact, they fall under the umbrella term of governance, risk management, and compliance (GRC). Risk management represents a set of processes management uses to identify and analyze risks that may have an effect on the business objectives of the organization. If you implement an innovative GRC program at your organization, it will help you and your staff members address a variety of factors which are crucial when it comes to controlling and managing enterprise risk. Some of these factors include cost reduction, high number of control failures, process standardization, talent management changes, and regulatory changes.
Even though corporate governance and compliance are linked, there are some key differences between them. For instance, governance is focused on how the organization will perform in the long run. Therefore, you will have to take a strategic point of view when it comes to making decisions like choosing which service providers or vendors your company will use. On the other hand, compliance is all about having a tactical mindset. Since you’ll be tasked with meeting a particular set of regulations, you will need to decide how you’ll make necessary changes to meet them.
Another key difference is that corporate governance originates from internal sources, while compliance comes externally. Governance describes a set of rules created by executives and the board of directors in order to set the ethical tone for their company, as well as avoid and manage risk. Each company can decide on a way to deal with breaching of government mandates. In most cases, consequences for this include termination or demotion.
However, compliance policies are not optional. They represent requirements that your organization must meet in order to stay within the bounds of the law. If you don’t have them, you could face legal action, fines, and penalties. It’s important to separate governance and compliance. Although they’re designed to protect against the same risks, they are different. While corporate governance determines what the company’s attitude towards business practices and risk will be, compliance ensures the attitude is within the bounds of law.
Keep in mind that as a member of the organization you’re part of, you have to carry out your job responsibilities in a professional manner according to regulations, policies, rules, and laws. If you notice any action taking place on company grounds which violate law or ethical practices, you should report it immediately. Every employee should be aware of the rules and laws that apply in the office. For example, you can’t smoke at work unless you have a designated smoking area. If you don’t follow rules like this, you can become subject to disciplinary procedures.
It’s recommended you do research on what can get you in trouble at the job. Although smoking is banned, you may be allowed to vape. Even though it’s a relatively new technology, vaping has proven to be a healthier alternative to traditional tobacco cigarettes. Since it doesn’t produce second-hand smoke, executives may allow the use of e-cigarettes at the office. However, you will need to inform yourself regarding this subject before doing anything.
Companies use GRC programs to improve their business performance and realize cost savings. Not only that, but your company will be able to respond to risk more effectively as a result of these programs.