What is Governance?
Definition
The complexity of governance is difficult to capture in a simple definition. The literature on governance proposes several definitions, and most of them rest on the following three dimensions: authority, decision-making and accountability, i.e. that governance determines who has power, who makes decisions, how other players make their voices heard and how account is rendered (Institute on Governance).
Process
In its most abstract sense, governance is a theoretical concept referring to the actions and processes by which stable practices and organisations arise and persist. These actions may operate in formal and informal organisations of any size. They may function for any purpose, good or evil, for profit and not for profit. Governance conceived in this sense can apply to states, to corporations, to cooperatives, to NGOs (Non-governmental Organisations), to CBOs (Community-based Organisations), to partnerships and other associations, to business relationships, to project teams, and to any number of situations involving purposeful human activity.
What is the context of Governance?
Governance can be used in several contexts such as global/world/international governance, national governance, local governance, public governance, private governance, corporate governance, information governance, information technology governance, risk governance, contract governance, internet governance, project governance and environmental governance to name but a few.
What is the object of Governance?
Organisations, which are defined as entities comprising of multiple persons (natural or fictitious) that have a collective goal and linked to an external environment, are the objects of governance. They include companies (corporations), partnerships, cooperatives, governments, government agencies, parastatals, interest groups, pressure groups, NGOs, CBOs, international organisations, institutions, associations and similar entities.
What are the Principles and Characteristics of Good Governance?
Defining the principles and characteristics of good governance has not been without controversy. There is however evidence that the 5 principles and 8 characteristics identified by United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) and the United Nations Development Programme (UNDP) have a claim to universal recognition. These appear, with slight variations, in much of the literature.
The principles of good governance do however often overlap or conflict. They play out in practice according to the actual social context. Applying them is complex, and they are not only about the results of power, but how well power is exercised.
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Principles |
Characteristics |
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Legitimacy and Voice |
Participation – all men and women should have a voice in decision-making, either directly or through legitimate intermediate institutions that represent their intention. Such broad participation is built on freedom of association and speech, as well as capacities to participate constructively. Consensus orientation – good governance mediates differing interests to reach a broad consensus on what is in the best interest of the group and, where possible, on policies and procedures. |
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Direction |
Strategic vision – leaders and the public have a broad and long-term perspective on good governance and human development, along with a sense of what is needed for such development. There is also an understanding of the historical, cultural and social complexities in which that perspective is grounded. |
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Performance |
Responsiveness – institutions and processes try to serve all stakeholders. |
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Accountability |
Accountability – decision-makers in government, the private sector and civil society organizations are accountable to the public, as well as to institutional stakeholders. This accountability differs depending on the organizations and whether the decision is internal or external. Transparency – transparency is built on the free flow of information. Processes, institutions and information are directly accessible to those concerned with them, and enough information is provided to understand and monitor them. |
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Fairness |
Equity – all men and women have opportunities to improve or maintain their well- being. |
What is the purpose of Good Governance?
The application of good governance serves to realize organizational and societal goals.
What is a Governing Body?
A governing body is a group or collection of elected or appointed people who jointly govern, administer, lead, manage or supervise an organisation. The governing body usually has ultimate control over and accountability for the actions of the organisation.
Examples of governing bodies include boards, boards of directors, councils, and certain types of commissions and committees.
What are the responsibilities of a Governing Body?
The four overarching responsibilities of the governing body are to provide strategic direction; approve policy to put strategy into effect; provide informed oversight of implementation and performance; and ensure accountability for organisational performance through among others reporting and disclosure.
What is Corporate Governance?
There are many and varied definitions of corporate governance. The simplest and most concise definition was provided by the Cadbury Report in 1992, which stated that corporate governance is the system by which companies are directed and controlled. Boards of directors are responsible for the governance of their companies. The shareholders' role in governance is to appoint the directors and the auditors and to satisfy themselves that an appropriate governance structure is in place.
The King IV Committee on Corporate Governance for South Africa 2016 defines corporate governance as the exercise of ethical and effective leadership by the governing body towards the achievement of the following governance outcomes:
- Ethical Culture
- Good Performance
- Effective Control
- Legitimacy
Ethical leadership is epitomised by integrity, competence, responsibility, accountability, fairness and transparency. It involves the anticipation and prevention or amelioration of the negative consequences of an organisation’s activities and outputs on the economy, society, and the environment and the resources that it uses and has an impact on. Effective leadership is results-driven. It is concerned with the achievement of strategic objectives and positive outcomes. It includes an internal focus on effective and efficient execution. Ethical and effective leadership should result in an ethical culture; sustainable performance and value-creation; adequate and effective control by the governing body; and the protection and enhancement of trust in the organisation, its reputation and legitimacy.
The King IV Code recommends that rather than dealing with the office of the company secretary in isolation, the governing body should ensure that it has access to professional and independent guidance on corporate governance, and that this should be the case even in instances where the governing body is not legally obliged to appoint a company secretary.
The corporate governance professionals at Mzaidume Consulting and its partners have a wealth of experience on matters regarding the governance of organisations.
Services
Our services include:
- Governance advisories
- Governing Body member contracting, induction and training
- Development and review of Governing Body Charters
- Development and review of Governance Frameworks
- Development and review of Governance Codes
- Development and review of Codes of Ethics
- Development and review of Codes of Conduct
- Development and review of Reserved Powers of the Governing Body and Schemes of Delegation of Authority
- Development and review of Materiality Frameworks
- Strategy Formulation and Business Planning
- Governing Body and Executive Management Structure, Selection and Recruitment
- Governing Body, Committee and Executive Management Evaluations
- Governing Body Committee Terms of Reference
- Governance Audits