Role of Stakeholders in Corporate Governance Process
Essay title: Role of Stakeholders in Corporate Governance Process
Role of Stakeholders in Corporate Governance Process
A corporate stakeholder is defined as a party who affects, or can be affected by, the companys actions. In addition, a corporate stakeholder is one who has a share or an interest, as in an enterprise or any party that has an interest in an organization, thus serving as an entity that can impact the attention or resources of your company (McRitchie, 2007). Their role in corporate governance lies within designing, developing, and establishing corporate governance policy and direction. Moreover, it is the stakeholder group along with company senior leadership to set the positive direction of the company, thus ensuring the company remains profitable and healthy. As such, individuals that would be considered as minor shareholders have the same rights and privileges as those individuals deemed as major ones. Additionally, regardless of whether minor or major, all stakeholders are required to abide by and uphold established company code of ethic regulations. In addition, corporate stakeholders are key stakeholders as they own the company and elect the Board of Directors who in turn hires the Corporate Officers (McRitchie, 2007). Given the nature of the stakeholder group, responsibility of corporate governance and individual influence and contribution will depend upon the role of the stakeholder. Individual stakeholders that are also shareholders will have greater responsibility and stake within the company structure and overall outcome. For example, shareholders are interested in a return on their investment. Shareholders are a stakeholder in the corporation due to the fact that their investment can add to the bottom line. The role that shareholders take in corporate governance is to ensure that the Board of Directors are making decisions that increase value to the shareholders which increases the return on their investment within the company as well (McRitchie, 2007).
How Failures in Corporate Governance Lead to Regulatory Action:
Corporate Governance defines how a company conducts its self and how will it react in the event something should go wrong. These serve as the ground rules for day to day operations and should never be deviated from.
These Governances must fall in line with existing regulatory policies, federal and state laws. It is for this reason that a Corporations Board of directors is capable and experienced.
If you are a relatively new corporation and lack the seasoned talents of a distinguished board of Directors, there are several specialty companies which advise on all regulations pertaining to your company. This type of outsourcing minimizes costly salary expenses and helps to ensure that your company is operating appropriately.
The two primary organizations with fine levying power are the EPA and OSHA. Both companies are essentially looking out for employees and communities. Failure to comply with existing regulations will result in substantial fines and even operating suspensions which