Good practice begins at board level and filters down
Good corporate governance polices and practices provide the tools that can help lower cost of capital, generate higher returns on equity, provide greater efficiency and more favourable treatment of stakeholders.
According to the management of NWS Holdings, good corporate governance needs to begin at board and directorship level and permeate the entire company culture.
Tsang Yam-pui, NWS Holdings executive director, said the NWS's board and senior management had made a deep commitment to corporate governance by establishing a culture of accountability from top to bottom.
The company believed that corporate governance and director professionalism were the cornerstones of corporate performance which helped achieve a balance of the company's economic and social health.
'Corporate governance is a key element in enhancing investor confidence, promoting competitiveness and ultimately improving economic growth. Every well-run organisation needs strong mechanisms to ensure compliance, risk management and internal controls. At the end of the day, the most important thing is promoting a culture of transparency that enhances stakeholder value,' Mr Tsang said.
While meeting and exceeding compliance regulations and the basic level of good corporate governance is paramount, each company and organisation needs to develop its own corporate culture and checking systems.
'As a relatively new group of companies, having listed in 2002, developing a strong corporate culture has been a key focus from the outset. Older companies trying to improve their corporate culture may need to approach the process in a different way than we use,' Mr Tsang said.
Failure to focus on corporate governance issues would result in a negative impact on a company either through reputation or falling foul of compliance regulations.
NWS relies on a framework of 18 corporate governance building blocks, underlined by core values including stakeholder interest, community contributions and environmental awareness, reputable customer care, innovation, pride and teamwork.
The company also has corporate governance checking tools to ensure procedures and processes match the intended model and values. A corporate governance steering committee was set up this year. An independent risk management department mitigates risk throughout the organisation. The company also set up a corporate social responsibility committee to steer its CSR activities.
To underpin its commitment to good corporate governance NWS has corporate governance manuals that outline areas of compliance and responsibility covering its diversified range of businesses that operate in Hong Kong, the mainland and Macau. As the infrastructure and service flagship of New World Development, NWS employs about 40,000 staff.
NWS also includes in its internal company magazines positive and negative examples relating to corporate governance. 'These easy to understand examples allow employees to see how mistakes can be made and remind them how to conduct themselves responsibly,' Mr Tsang said.
It is important to integrate corporate governance checks and balances in a logical and systematic way so the concepts become part of the company culture.
As one of the winners in the inaugural Corporate Governance Excellence Awards Mr Tsang said participating in the scheme had been a rewarding experience.
'The judging process was very thorough and probing which underlined the seriousness of the competition. As a company we gained several new ideas from taking part, which we will be reviewing closely in the near future,' said Mr Tsang.
The judges said NWS had demonstrated that it had risen to the challenges posed by the diverse businesses it operated through strengthened internal control and risk management systems.
The judges were also impressed by the honesty and professionalism of the management and the pride of the staff in adhering to high corporate governance practices, which are key to achieving corporate goals. 'The company well understands the need to strike a balance between prudence, innovation and growth, and has implemented the necessary structure and mechanism to achieve this,' the judges said.