Consensus on what constitutes good governance, and particularly good corporate governance, is emerging around the world. Rooted in honesty and transparency, its discipline is designed to assure stakeholders that organisations are being run effectively and efficiently, with due care, respect for the law and the people these organisations affect. 

Failure to adhere to the practices of good governance means stakeholders increasingly demand accountability. Mass action and strikes are organised in protest as citizens begin to lose faith in the ability or willingness of their elected officials. Political instability increases. Investment declines. The sale of shares by investors decreases the value and rating of companies. Their regulators can deny them licences, a stock exchange listing or the ability to sell products and services. Other organisations refuse to do business with them. And donors or economic organisations grant fewer loans or aid to nations whose governance is murky.

Following the practices of good governance enables organisations to attract and retain good employees, enjoy a solid reputation, enhance their sustainability and deliver effective service.

Adherence to good governance creates an environment where corruption struggles to flourish.

Key principles

• Honest – Organisations are the sum of their parts. Employees and managers who operate in good faith, with integrity and no conflicts of interest, will underpin the governance cornerstone of honesty and elicit trust from stakeholders.

• Transparent – Decisions made, action taken and how it is reported to stakeholders must be communicated clearly and made easily available for those affected by the organisation.

• Responsive – Listening to stakeholders, taking action or reporting transparently should be done within a reasonable time of a request, complaint or concern.

• Management independent of governing body – There must be a separation of powers and chain of accountability. Friends and family members, or suspected conflicts of interests cannot overlap between layers of management and directors, boards or senior politicians. Independence ensures better judgement, assessment of risk and optimum performance.

• Rule of law – Institutions must comply with the laws, codes, guidelines and regulations of the nations in which they operate.

• Effective and efficient – Good governance is also delivering to mandates, meeting the needs of stakeholders, curtailing expenditure, streamlining decision-making and action, and making the best use of available resources.

• Fair – Good governance entrenches the principle of fairness, and treating stakeholders equally.

• Just – Justice and governance concerns the moral responsibility and integrity of individuals within an organisation and the behaviour of the organisation itself.

• Accountable – Ensuring that public and private institutions, corporations and individuals entrusted with public resources and civil society are held to account, means they are answerable to their stakeholders.