Corporate governance: An introduction

Corporate governance is important to help foster good relations with stakeholders and provide reassurance to them that the company is being directed and controlled appropriately and according to relevant legislation. Good governance also helps foster cooperation and accountability internally and promote the image of the company externally. Corporate governance can contribute to an improved business and investment framework, supporting ethical business practices and responsible business. 

HR has a role to play in supporting the Chair, the CEO, the board, committee chairs and workforce directors. Responsibilities can include preparing and presenting board papers and providing skills assessments to identify knowledge and skills gaps of the board. HR can contribute professional knowledge and expertise to inform the board’s understanding of people-related issues and risks. In addition, HR leaders may hold executive or non-executive board positions.  

This factsheet explores what corporate governance is and why it is important. It then looks at the role and composition of company boards. There is a focus on the UK Corporate Governance Code before examining HR’s role in corporate governance. This factsheet ends by looking at the role of committees.