IN my last column, I talked about CMCI or Cities and Municipalities Competitiveness Index highlighting the pillars being considered for a city or municipality to be dubbed as competitive –economic dynamism, resiliency, quality of infrastructure, government efficiency and innovativeness.
Zeroing-in on one of the pillars, the government efficiency pillar evaluates the effectiveness of the delivery of service of the government to its people. It also includes one of the most important and potent force in achieving organizational success–GOOD GOVERNANCE. But this article will not focus on the good governance in the government offices, hence having thisthis fearless claim: good governance is, in many cases, conspicuously absent from government offices. This is precisely why I don’t want to tackle the concept of ‘good governance’ in this context. Frankly, I believe the reality speaks for itself—and needs no further explanation.
Having said the aforementioned, I will be discussing good governance in the context of organizations, companies and businesses instead. Businesses nowadays are required to be transparent, accountable, sustainable and socially responsible. They should not be profit-centric, instead it has to be alignedwith the theory R. Edward Freeman postulated the Stakeholder Theory, which posts that a company should strike a balance between the interests of all its stakeholders—not just its shareholders. According to this theory, good governance requires a company to act responsibly and ethically toward everyone it affects, including employees, investors, suppliers, customers, and the broader community.
Employees are the lifeblood of the business. But we cannot ignore the fact that most companies think their employees are only liabilities, not an asset because they have to regularly compensate and give them benefits. This is by far the ultimate good governance test for all companies. Do they pay their employees fairly? Do they give them not just the government-mandated benefits, but also safe working environment? Is the workplace safe from harassment and free from discrimination? Are they being transparent about the challenges and the successes of the firm?
But companies should understand that having a good governance does not only concern the welfare of employees. Freeman’s stakeholder theory shall be all-encompassing. For example, the company is also responsible to be behave ethically towards its customers. We have been seeing companies luring customers to buy their products which were falsely advertised and misrepresented. We have been victims of surcharges and hidden fees whenever we avail subscription plans and loan products. These are just a small portion of what some unethical business have been doing. Some of them have already become “predators” when all they want is to incur profits at the expense of their “prey”- their customers.
Good governance can also be seen in all facets of business operations and its interaction to all its stakeholders whether direct or indirect. But in order for it to become ethical and govern in a good way, knowledge about the building blocks of good governance is crucial. For example, the company should have a clear ethical code or code of conduct which will serve as a guideline not just for the company, but for all of its stakeholders. A sound risk management strategy should also be in place. The company must also identify stakeholder engagement strategies based on prioritization. With these initial steps, companies and organization may achieve good corporate governance. This can spur positive effect on the overall image and reputation of the organization. A good reputation would mean increased customer loyalty, minimized legal implications and business longevity.|
