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Commentary>Governance: Much Discussed, Little UnderstoodBy Vindel Kerr, Contributor |
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I am obliged to come forward and to provide some clarity and order to the present state of chaos and confusion surrounding the word 'governance' in the manner it is being used by most scholars, politicians, journalists, businessmen and others. Most strikingly demonstrative of this misuse is when referring to almost any issue to do with Government.
It is true that one of the fundamental roles of Government is to preside over, and direct the affairs of the state. In so doing, this is done through the process of political governance. The Concise Oxford Dictionary defines governance as the, 'act of governing; sway, control'. When used as the verb (to govern), it means 'rule with authority, conduct and policy, actions, and affairs, of (state, subjects) either despotically or constitutionally; regulate proceedings of corporations etc.; ~ing body, managers of hospital, schools', etc.
A CYBERNETIC CONCEPT
The field of cybernetics also embraces governance. Governance is a cybernetic
concept. Cybernetics originates from the ancient Greek word kybernetikos
('good at steering') referring to the skills of a helmsman. The science
of cybernetics, established by Norbert Wiener (1894-1964), a United States
mathematician, nowadays stands essentially for control theory as applied
to complex systems, which could be mechanical, electronic, biological
or social. Cybernetics critically refers to the feedback and control mechanisms
by which a system, and any system, keeps itself oriented towards the goals
for which it was created.
PUBLIC SECTOR GOVERNANCE VS PUBLIC SECTOR MANAGEMENT
The Oxford definition above clearly provides for the corporation and any
body corporate for that matter, not just Government. Therefore, the word
governance should not be limited to Government or matters political. Its
proper application should be guided by the subject matter at hand, and
more importantly, the context within which it is used. An example of its
frequent misuse in Government can be seen in the act of re-engineering
a 'Ministry' or department to improve cost efficiencies and business processes.
Such an action is being frequently described as public sector governance
wrong.
Instead, it is an action of public sector management re-engineering for business improvement. So let's say public sector management instead of public sector governance in this context. Governance cannot be improved at the functional level in Government without the directive (rule, regulation, and directing) coming from the top and must impact not just one entity but the whole or a part of all entities of government. More so, because the public sector is an amalgamation of various functions and disciplines, one should be at all times very contextual in applying the word governance. Has the public sector a significant corporate role? Yes. Therefore, corporate governance affects the public sector at the institutional level (through it agencies and departments), while central governance has a wider role and mandate of political governance.
ECONONMIC VS SOCIAL GOVERNANCE
Governance therefore applies to any system or institution where controlling,
directing, and/or monitoring is necessary to ensure survival and sustained
prosperity.
Some scholars speak to governance when referring to the management of economic affairs hence Economic Governance is usually strongly linked to the political process, and more commonly used in the Socialist Communist States a branch of political governance. Yet, many persons associate governance with the ability and propensity of a political administration to include the rest of the population (representative of) in policy and decision-making processes. This can be seen as social or inclusive political governance.
Contrary to those who use governance loosely and especially when referring to matters political, economic, social and/or inclusive, Tricker (1984), states: "Whilst management processes have been widely explored, relatively little attention has been paid to the processes by which companies are governed. If management is about running businesses, governance is about seeing that it is run properly. All companies need governing as well as managing."
CORPORATE GOVERNANCE
It should follow that there is a clear distinction between corporate management
and Corporate Governance, as we have in recent years come to realise.
And to concur with Tricker, we can agree that there is public sector governance
as well as public sector management, based on the use of the two terms
above. Many other authors have their views as to what corporate governance
is and does, for example, Cochran and Wartick (1998), sees corporate governance
as an umbrella term covering many aspects related to concepts, theories
and practices of boards, concentrates on the relationship between boards,
shareholders, top management, regulators, auditors and other stakeholders.
Cadbury (1993:9) states, "corporate governance is the ability of
Board of Directors to combine leadership with control and effectiveness
with accountability that will primarily determine how well-companies meet
society's expectations of them". Vance (1983), opined that corporate
governance ensures that long-term strategic objectives and plans are established-proper
management structure (organisations, systems and people) is in place to
achieve those objectives, while making sure the structure functions to
maintain the corporation integrity, reputation and responsibility to its
various constituencies.
In my opinion, good corporate governance is the effective roles played primarily by the 'Board of Directors' of a firm, or any body corporate, in controlling, directing and/or monitoring, to ensure long-term survival; honour corporate obligations, and to demonstrate responsible corporate social citizenship in all its business affairs, and comm-unity at large. Corporate governance practices come into question (bad or ineffective corporate governance) where corporations through at least one of its fiduciaries violate acceptable and/or established best practices; laws or operating standards which would ultimate tarnish it reputation and dissipate profit or prosperity.
CONCLUSION
The word 'governance' is much discussed and little understood. Let's all
try to use it contextually. So in politics -- political governance; in
the context of political economy economic governance, or corporate
governance -- the direction, ownership and control issues of private,
non-profit, publicly listed and state-owned entities; and social concerns
and inclusion of the citizenry social/inclusive governance. Misleading
and general terms such as regional governance, public sector governance
and holistic governance should be avoided. For instance, a very informative,
enlightened and worthwhile two-day conference was held at the University
of the West Indies only recently. It was dubbed, 'Regional Governance'.
The entire conference was skewed toward and heavily concentrated on matters
of regional politics. It would be more precise to dub such conference
'Regional Political Governance' instead of the vague terminology of 'Regional
Governance'. All in all, an excellent two days it was! Finally, while
the mandate of political governance rests with the politicians -- very
top of the public sector, corporate governance (governance at the institutional/company
level) has its fulcrum of activities concentrated around, and in the hands
of the Board of Directors.
* Vindel Kerr is a Ph.D. researcher in corporate governance; the author of 'Corporate Governance Beyond the Boardroom': (forthcoming: 2004), and 'Effective Board Governance for State-owned Enterprises': (forthcoming: 2004). He is a leading Trainer of company Directors and senior managers within the Caribbean. E-mail: vkerrl@anngel.com.jm. Call 700-0606.
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