At the end of March 2023 there were 4,645,402 entities on the effective register of UK companies. That’s an increase of 1.5% on the number seen at the end of 2022 and a 3.2% increase on the number as at the end of March 2022.

Whilst many of these organisations will be small private companies, others will be more substantial, perhaps having grown to achieve a listing on the London Stock Exchange or Alternative Investment Market (AIM). Those companies will be required to adopt a recognised corporate governance code as will other larger organisations. But large or small, the basic ethos behind corporate governance codes, that of transparency and communication, can benefit all organisations.

That’s the message which the late Sir Winfried Bischoff, then Chairman of the FRC highlighted in 2018 when he said that: “having an “efficient, effective and dynamic management framework” will allow companies to deliver growth in long-term shareholder value. This is true for companies of all sizes.”

But effective governance is far more than the board agreeing to follow a set of guidelines. And effective governance doesn’t just rest with the board. It’s true that some of the principles of corporate governance codes look to areas such as boardroom experience, skills, and succession planning. But others are directed more widely, taking in areas such as stakeholder and social responsibility or effective risk management. These take governance out of the boardroom and into the wider organisation.

Openness, Communication, Training

With that in mind what steps could organisations take to disseminate governance principles across the business? The key to success comes through openness, communication, and training. Corporate governance codes may look to an open dialogue with stakeholders but that dialogue also has to look inwards, taking steps to ensure that every individual in the organisation is aware of and engages with the culture required to deliver the aims and values of the organisation.

And that is not going to happen without effective levels of communication between the board and employees. But knowledge is one thing, being able to put that knowledge into practice is quite another. This is where training comes in. Training programmes need to be effective and targeted not only with a view to enable people to best carry out their roles but also to do so in line with the aims and ethos of the organisation.

This year marks the tenth anniversary of the launch of the QCA Corporate Governance Code for small and medium sized companies. Those ten years have seen a marked improvement in boardroom planning and communication with stakeholders. With people sitting at the heart of effective governance regimes that improvement can only continue, benefitting investors, other stakeholders and companies alike.