Very long overdue, 2 months ago, YEC held a Good Corporate Governance(GCG) talks (coincidentally at my birthday!) with Drs Thomas Sugijata, MM, CA. A Master Consultant of the Jakarta Consulting Group, Drs Thomas Sugijata is an expert in good corporate governance and audit. This article serves as a summary and key points of the session.

Before being a master consultant in JCG in 2011, Drs Thomas Sugijata already had 32 years of experience in the government under his belt, especially in the customs and excise department. The last position he held there is the director general of customs and excise.

Corporate governance is the system of rules, practices and processes by which a company is directed and controlled. It involves balancing the interests of a company’s many stakeholders.

Bad corporate governance can cast doubt on a company’s reliability, integrity or obligation to shareholders. It is necessary to have a good corporate governance to facilitate effective, entrepreneurial and prudent management that can deliver the long-term success of the company.

The 5 principles of corporate governance:

• Transparency
• Accountability
• Responsibility
• Independency
• Fairness

And the business ethics code of conduct:

• Conflict of interest
• Gratification
• Compliance
• Confidentiality
• Whistle Blower System

GCG will help your company in balancing the interests of all stakeholders and ensure that there’s unfair priority or advantage to a certain group of stakeholder. These stakeholders include both internal (employees, shareholders, board of directors), and external (customers, suppliers, society, government, partners, etc).

The core benefits of GCG are:

• Reducing agency cost
• Reducing cost of capital
• Increasing shareholder values
• Creating stakeholder support
• Improving reputation
• Improving credit ratings
• Risk mitigation
• Enhancing Corporate Performance
• Improving networking

And it has been shown consistently that GCG is integral to a company’s sustainability. Companies that can survive and sustain until 100 years are those that implement the principles and values of Good Corporate Governance (Jim Collins:Built To Last).

Implementing GCG in a company is not a one shot process, in general it involves 3 processes in a cycle:

• Preparation
  • Awareness Building
  • GCG Assessment
  • GCG Manual Building
  • Roadmap Implementation
• Implementation
  • Socialization
  • Implementation
  • Internalization
• Evaluation
  • GCG implementation assessment
  • Recommendation on the improvement of GCG implementation

Sample outline of a GCG Manual:

1. Company’s GCG Policy
2. GCG Guidelines
3. Code of Conduct
4. Audit Committee Charter
5. Disclosure and Transparency Policy
6. Risk Management Policy
7. Roadmap for Implementation

In the sharing by Drs Thomas, he shared how change management is crucial in implementing GCG, and that there are challenges in mitigating/responding to resistance from impacted stakeholders. A good change management process needs to be able to properly address stakeholders’ concerns, and ensure that change is implemented as smooth as possible.

All materials are owned by Drs Thomas Sugijata and the Jakarta Consulting Group.