WRITTEN BY ISAAC LEKWOT ABRAKSON
Governance is the process by which corporations establish their rules and policies, implement and monitor them. Good governance has a variety of important characteristics, and it can mean different things to different people. Groups and individuals that hold positions of power must have a sense of accountability and a mode of checks and balances if they want to govern successfully.
One of the first forms of governance was the monarchy. Since then, many other different forms of governance have emerged. In addition to formal types of governance, people in our society sometimes create their own versions of informal governance practices. A couple of notable examples are mobs or the mafia. A powerful member of the family could also govern others in how they live and behave. Informal governance practices have taught us much about the importance of checks and balances and about how governance without accountability can lead to fraud and corruption.
Good Governance constitutes nine major characteristics:
Effective and efficient
Equitable and inclusive
Follows the rule of law
Good governance sets the tone and environment for all individuals to have a voice, whether they’re a majority or a minority. Good governance holds that many perspectives combine to result in the best possible decision-making. Good governance is important for the way it impacts today’s decision-making, as well as how it impacts the decision-making of the future.
Best practices for good governance include highlighting the importance of multiple perspectives in the boardroom. Historically, men have held board positions. As women have risen as leaders in the corporate world, governance experts have seen the value of having gender and ethnic diversity on corporate boards. Some leaders have responded to pressure to add women and members of ethnic groups to their boards by increasing the number of board seats in order to give the appearance of diversity.
The executive meeting/boardroom is an appropriate forum for hosting robust discussions and debates. In fact, it’s expected. Some of the most heated debates result in the best decisions. Representatives from many different walks of life come together with varying perspectives. They represent various historical, cultural and social contexts of their lives and experiences. A broad consensus typically serves the best interests of communities and companies.
Accountability is key in good governance best practice just as it is in many other areas of business and societal life. The executives are accountable to the electorates, groups and individuals who are affected by their decisions, including the legislators, stakeholders, employees and the general public.
Transparency and the rule of law go hand-in-hand with accountability.
Good governance requires that records and processes are transparent and available to all stakeholders. Financial records should not be inflated or exaggerated. They should be presented to stakeholders in ways such that they can understand and interpret the findings. Transparency means that stakeholders should be informed of whom the contact is that can answer questions and explain reports, if necessary. Executives should provide enough information in their reports so that readers get a complete view of the issues.
The corporate world can often become overtaken with crises and controversies in record time. Corporations that practice good governance are usually able to find time to better communicate to stakeholders within a reasonable timeframe and in ways that enable them to provide honest answers to the direction of the organization.
Effectiveness and Efficiency
As planners and overseers, the Executive have a responsibility to conduct their duties effectively and efficiently. Effectiveness and efficiency pertain to material resources and time. Many corporations also consider the impact on the environment as they perform their duties and responsibilities.
Equity and Inclusiveness
Each board director has an equal seat at the board table. Each director can and should use their voice to share their experiences, opinions and philosophies to enhance and broaden discussions. No one should feel left out or feel that their opinions have less meaning than others.
Rule of Law
The rule of law means the executive, boards and other leaders should be fair and impartial in their collaborations and in their decision-making. Certain circumstances may require the executive, boards or other leaders to seek outside counsel, guidance or expertise from outside, third-party experts. Good corporate governance requires leaders to act ethically, honestly and with the utmost integrity.
One of the primary responsibilities of leaders is strategic planning, which includes the mission, vision and values statements. The process of strategic planning give leaders better understanding on where the corporation is going and exactly how they will get there. Planning incorporates action plans, budgets, operating plans, analysis, reporting and much more. Strategic planning is a coordinated and systematic plan for the short- and long-term direction of the state. The strategic plan holds leaders accountable for their decisions and for monitoring their goals. Strategic planning also includes risk management and protecting the state reputation.
Wrapping Up Thoughts on Good governance is so multifaceted, it can be difficult to conceptualize and to achieve its totality. However, good governance is an ideals that continues to evolve as leadership evolve. Every corporation should strive to master the basic principles of good governance.
Isaac Lekwot Abrakson write from Kafanchan.