Board of Directors should adopt good Corporate Governance practices for the long-term sustainability of the Company. Establishing good practices not only strengthens the internal control processes, but also improves the overall goodwill of the Company. Transparency and accountability are key words for governance. Investors have been increasingly started focussing on well governed companies, and are looking beyond financial numbers when they invest in any company.
In order to evaluate, implement, improve and monitor governance practices in a company, the Board of Directors of the company sometimes hires Corporate Governance consultants. Such consultants are expected to be highly experienced persons, who are equipped to conduct governance reviews based on the requirements of the company. They often provide an external perspective to the practices being followed by the company, by assessing and evaluating the focus areas viz. succession planning, Board evaluation, identifying gaps in Board skillsets, training of Directors, getting the composition of the Board right etc. They give a genuine and independent feedback to the Board on areas which need attention, and the possible interventions that could help.
When hiring Corporate Governance consultants, companies should consider some basic parameters such as
Some of the major scams and corporate failures in India have highlighted the need of building good Corporate Governance culture and practices in the corporate sector. Stakeholders suffer immensely when such scams happen. Getting an external view on the practices of the company from time to time helps, since this view is unbiased and objective. The focus of such an exercise should be on improvement, and not merely on fault finding.