Why Governance Is Necessary For Success

Governance, risk management and compliance (GRC) is a multi-step approach to achieving business success. Building a government is the first and most important step for every business to achieve. Every company needs a hierarchy of good leaders to manage its affairs and ensure that the rules are being followed. Here is why governing is a necessary part of success.

The Method

GRC covers three major aspects of business. First is the process of governing the company by hiring leaders who are arranged by rank. There must be a system of identifying, reducing and controlling risks, also known as threats, that appear within and outside of your company. An example is installing a security system to protect the building. Complying with laws is necessary to continue operating your business in the public. An example is striving to meet all state licensing requirements.

Why a Government Is Important

Set up the process of managing a government within the company by establishing laws and standards. The workers with the most education and experience are hired to make the most important decisions. They develop policies and set standards for how employees work and conduct themselves. They develop a wide range of policies that affect:

  • Dress code
  • Workplace conduct
  • Discrimination and harassment
  • Leave of absence
  • Hiring and termination

This system is similar to a political government that hires politicians to make and enforce laws in certain jurisdictions. Without laws, many people and organizations would commit crimes that serve themselves and not the rest of society. A company needs its own rules to reduce the incidences of fraud, theft and abuse of power. These are necessary to prevent a company from becoming corrupt and failing to serve the community.

Building trust and maintaining integrity are the main reasons why businesses succeed. Customers want to trust the companies that they give their hard-earned money to, and companies have to continuously prove that trustworthy. Eliminating corruption is necessary and possible only by creating laws and standards of quality.

Steps to Achieve Success Using the GRC System

First, provide continuous training for your staff. GRC components cover many areas, such as policy development, internal audits and security systems, that are updated regularly. Retrain your employees regularly to keep them informed about changes in laws and company procedures. It’s also important that they refresh their memory on important concepts that they’ve learned.

Create a balance of powers and duties. Do not invest more time and effort in identifying risks than in enforcing policies. Eliminating risks is not more important than hiring good leaders or complying with state laws. Divide the resources, such as money and staff, equally among each department.

Governance, risk management, and compliance have numerous positive effects on individuals, businesses and society. The system protects society from corrupt businesses and protects businesses from corrupt employees. Within a company, laws exist to prevent employees from working on their own terms. Develop a GRC system that maintains order, divides power and ensures long-term success for your business.