Lesson 1: Introduction to Good Governance made and the formal and informal structures that have been set
l structures that have been set in place to arrive at
Introduction:
Good governance is not only important for corporations, it’s important for
society. To begin with, good corporate governance improves the public’s faith and
confidence in its corporate leaders. Legislative processes were designed to protect
societies from known threats and to keep problems from occurring or reoccurring.
Recent corporate scandals shed light on the effect that corporations have on social
responsibility. The new focus on corporate social responsibility increases
corporations’ responsibility and accountability to their stakeholders. As a result, we’re
seeing corporations increasingly place pressure on themselves to improve best
practices for corporate governance with the goal of enhancing their relationships with
stakeholders. The largest attraction for corporations to direct some of their attention
on sustainability is that it ultimately improves corporations’ ability to thrive and
prosper. (Price, 2018)
Lesson Proper:
WHAT IS GOOD GOVERNANCE?
Recently the terms "governance" and "good governance" are being
increasingly used in development literature. Bad governance is being increasingly
regarded as one of the root causes of all evil within our societies. Major donors and
international financial institutions are increasingly basing their aid and loans on the
condition that reforms that ensure "good governance" are undertaken.
GOVERNANCE
The concept of "governance" is not new. It is as old as human civilization.
Simply put "governance" means: the process of decision-making and the process by
which decisions are implemented (or not implemented). Governance can be used in
several contexts such as corporate governance, international governance, national
governance and local governance.
Since governance is the process of decision-making and the process by
which decisions are implemented, an analysis of governance focuses on the formal
and informal actors involved in decision-making and implementing the decisions
and implement the decision.
Government is one of the actors in governance. Other actors involved in
governance vary depending on the level of government that is under discussion. In
rural areas, for example, other actors may include influential land lords, associations
of peasant farmers, cooperatives, NGOs, research institutes, religious leaders,
finance institutions, political parties, the military etc. The situation in urban areas is
much more complex. Figure 1 provides the interconnections between actors involved
in urban governance. At the national level, in addition to the above actors, media,
lobbyists, international donors, multinational corporations, etc. may play a role in
decision-making or in influencing the decision-making process.
All actors other than government and the military are grouped together as
part of the "civil society." In some countries in addition to the civil society, organized
crime syndicates also influence decision-making, particularly in urban areas and at
the national level.
Similarly formal government structures are one means by which decisions are
arrived at and implemented. At the national level, informal decision-making
structures, such as "kitchen cabinets" or informal advisors may exist. In urban areas,
organized crime syndicates such as the "land Mafia" may influence decision-making.
In some rural areas locally, powerful families may make or influence decision-
making. Such informal decision-making is often the result of corrupt practices or
leads to corrupt practices.
Figure 1: Urban actors
GOOD GOVERNANCE
Good governance has 8 major characteristics. It is participatory, consensus
oriented, accountable, transparent, responsive, effective and efficient, equitable and
inclusive and follows the rule of law. It assures that corruption is minimized, the
views of minorities are taken into account and that the voices of the most vulnerable
in society are heard in decision-making. It is also responsive to the present and
future needs of society.
Participation
Participation by both men and women is a key cornerstone of good
governance. Participation could be either direct or through legitimate intermediate
institutions or representatives. It is important to point out that representative
democracy does not necessarily mean that the concerns of the most vulnerable in
society would be taken into consideration in decision making. Participation needs to
be informed and organized. This means freedom of association and expression on
the one hand and an organized civil society on the other hand.
Rule of law
The rule of law refers to the institutional process of setting, interpreting and
implementing laws and other regulations. It means that decisions taken by the
government must be founded in law and that private firms and individuals are
protected from arbitrary decisions.
Good governance requires fair legal frameworks that are enforced impartially. It also
requires full protection of human rights, particularly those of minorities. Impartial
enforcement of laws requires an independent judiciary and an impartial and
incorruptible police force.
Transparency
- means that decisions taken and their enforcement are done in a manner that
follows rules and regulations.
- also means that information is freely available and directly accessible to
those who will be affected by such decisions and their enforcement.
- also means that enough information is provided and that it is provided in
easily understandable forms and media.
- an important aspect of good governance, and transparent decision making is
critical for the private sector to make sound decisions and investments.
- Accountability and the rule of law require openness and good information so
higher levels of administration, external reviewers and the general public can
verify performance and compliance to law.
Governments have access to a vast amount of important information. Dissemination
of this information through transparency and open information systems can provide
specific information that firms and individuals need to have to be able to make good
decisions. Capital markets depend for example on information openness.
Responsiveness
Good governance requires that institutions and processes try to serve all
stakeholders within a reasonable timeframe.
Consensus oriented
There are several actors and as many viewpoints in a given society. Good
governance requires mediation of the different interests in society to reach a broad
consensus in society on what is in the best interest of the whole community and how
this can be achieved. It also requires a broad and long-term perspective on what is
needed for sustainable human development and how to achieve the goals of such
development. This can only result from an understanding of the historical, cultural
and social contexts of a given society or community.
Equity and inclusiveness
A society’s well-being depends on ensuring that all its members feel that they
have a stake in it and do not feel excluded from the mainstream of society. This
requires all groups, but particularly the most vulnerable, have opportunities to
improve or maintain their well being.
Effectiveness and efficiency
Good governance means that processes and institutions produce results that
meet the needs of society while making the best use of resources at their disposal.
The concept of efficiency in the context of good governance also covers the
sustainable use of natural resources and the protection of the environment.
Accountability
Accountability is a key requirement of good governance. Not only
governmental institutions but also the private sector and civil society organizations
must be accountable to the public and to their institutional stakeholders. Who is
accountable to whom varies depending on whether decisions or actions taken are
internal or external to an organization or institution? In general, an organization or an
institution is accountable to those who will be affected by its decisions or actions.
Accountability cannot be enforced without transparency and the rule of law.
CONCLUSION
From the above discussion it should be clear that good governance is an
ideal which is difficult to achieve in its totality. Very few countries and societies have
come close to achieving good governance in its totality. However, to ensure
sustainable human development, actions must be taken to work towards this ideal
with the aim of making it a reality.
Lesson 2: Ethics
Introduction:
 Ethics is considered the moral standards by which people judge behavior.
Ethics is often summed up in what is considered the “golden rule”—do unto others
as you would have them do unto you. In business, there are many different people
you have to answer to: customers, shareholders and clients. Determining what to do
when an ethical dilemma arises among these different interests can be extremely
tricky and as such business ethics as a field is complex and multi-faceted.
Lesson Proper:
Business ethics can be defined as written and unwritten codes of principles
and values that govern decisions and actions within a company. Companies and
businesspeople who wish to thrive long-term must adopt sound ethical decision-
making practices. Companies and people who behave in a socially responsible
manner are much more likely to enjoy ultimate success than those whose actions are
motivated solely by profits. In many cases, doing the right thing often leads to the
greatest financial, social, and personal rewards in the long run. (White, Mary
Gormandy, Sundblad, Donna and Finely, Amy)
It is a form of applied ethics that examines ethical rules, theories and
principles in business context. Generally, speaking is a normative discipline, whereby
particular ethical standards are advocated and then applied. It makes specific
judgments about what is right or wrong, which is to say, it teaches what ought to be
done and what ought to be done, (De George, 1999).
Some business ethics are imposed by law. For example, the SEC governs
the way investment bankers and stock brokers do business, and court rules dealing
with attorney client privilege dictate some ethical decisions for attorneys. However,
there are also business decisions that do not fall within the guidelines of the law, in
which ethical or moral judgments must be made. www.yourdictionary.com
An ethical approach is becoming necessary both for corporate success and a
positive corporate image. Following pressure from consumers for more ethical and
responsible business practices, many organizations are choosing to make a public
commitment to ethical business by formulating codes of conduct and operating
principles. In doing so, they must translate into action the concepts of personal and
corporate accountability, corporate giving, corporate governance, and whistle
blowing. dictionary.bnet.com
Ethics sets standards as to what is good or bad in conduct and decision making.
Ethics deals with internal values that are a part of corporate culture and shapes
decisions concerning social responsibility with respect to the external environment.
Criteria of Ethical Decision Making
1. Utilitarian Approach – It holds that moral behavior produces the greatest
good for the greatest number. A decision maker is expected to consider the
effect of each decision on all parties and select the one that optimizes the
satisfaction for the greatest number of people.
2. Individualism Approach – Contends that acts are moral when they promote
the individual’s best long-term interests. Individual self-direction is paramount,
and external forces that restrict self-direction should be severely limited.
3. Moral – rights Approach – asserts that human beings have fundamental
rights and liberties that cannot be taken away by an individual’s decision.
Six Moral Rights should be considered during decision making.
- The right of free consent
- The right to privacy
- The right of freedom of conscience
- The right of free speech
- The right to due process
- The right to life and safety
4. Justice Approach – Holds that moral decisions must be based on standards
of equity, fairness, and impartiality.
Three Types of Justice
1. Distributive justice – requires that different treatment of people not be
based on arbitrary characteristics.
2. Procedural justice – requires that rules be administered fairly.
 3. Compensatory justice – argues that individuals should be compensated for
the cost of their injuries by the party responsible.
Some Reasons for Unethical Behavior
a. Moral Relativism – claims that morality is relative to some personal, social,
or cultural standard and that there is no method for deciding whether one
decision is better than the other.
b. Kohlberg’s Levels of Moral Development – a person’s ethical behavior is
affected by his level of moral development, certain personality variables, and
such situational factors as the job itself, the supervisor, and the organizational
culture.
Kohlberg’s Three Levels of Moral Development
1. The pre-conventional level – is characterized by a concern for self.
2. The conventional level – is characterized by considerations of society’s
laws and norms.
3. The principled level – is characterized by a person’s adherence to an
internal moral code.
Lesson 3: Corporate Social Responsibility
Introduction:
Good governance is not only important for corporations, it’s important for
society. To begin with, good corporate governance improves the public’s faith and
confidence in its corporate leaders. Legislative processes were designed to protect
societies from known threats and to keep problems from occurring or reoccurring.
Recent corporate scandals shed light on the effect that corporations have on social
responsibility. The new focus on corporate social responsibility increases
corporations’ responsibility and accountability to their stakeholders. As a result, we’re
seeing corporations increasingly place pressure on themselves to improve best
practices for corporate governance with the goal of enhancing their relationships with
stakeholders. The largest attraction for corporations to direct some of their attention
on sustainability is that it ultimately improves corporations’ ability to thrive and
prosper. (Price, 2018)
Lesson Proper:
Corporate social responsibility (CSR), also known as corporate responsibility,
corporate citizenship, responsible business, sustainable responsible business (SRB),
or corporate social performance, is a form of corporate self-regulation integrated into
a business model. Ideally, CSR policy would function as a built-in, self-regulating
mechanism whereby business would monitor and ensure its adherence to law,
ethical standards, and international norms. Business would embrace responsibility
for the impact of their activities on the environment, consumers, employees,
communities, stakeholders and all other members of the public sphere. Furthermore,
business would proactively promote the public interest by encouraging community
growth and development, and voluntarily eliminating practices that harm the public
sphere, regardless of legality. Essentially, CSR is the deliberate inclusion of public
interest into corporate decision making, and the honoring of a triple bottom line:
People, Planet, and Profit. (Wikipedia)
Corporate social responsibility (CSR) can be defined as the "economic, legal,
ethical, and discretionary expectations that society has of organizations at a given
point in time" (Carroll and Buchholtz 2003, p. 36). (www.uitp.com)
Corporate social responsibility is related to, but not identical with, business ethics.
While CSR encompasses the economic, legal, ethical, and discretionary
responsibilities of organizations, business ethics usually focuses on the moral
judgments and behavior of individuals and groups within organizations. Thus, the
study of business ethics may be regarded as a component of the larger study of
corporate social responsibility. (www.uitp.com)
CSR is often used to promote voluntary corporate initiatives, as an alternative to
additional or existing mandatory regulations. The International Chamber of
Commerce has aggressively promoted a standards-free concept of "corporate
responsibility" that enables companies to proclaim their "responsibility" without 6. Supplier relations. As stakeholders are becoming increasingly interested in
necessitating companies to meet minimum standards. business affairs, many companies are taking steps to ensure that their
partners conduct themselves in a socially responsible manner. Some are
Corporate social responsibility (CSR) promotes a vision of business accountability introducing codes of conduct for their suppliers, to ensure that other
to a wide range of stakeholders, besides shareholders and investors. Key areas of companies' policies or practices do not tarnish their reputation.
concern are environmental protection and the wellbeing of employees, the
community and civil society in general, both now and in the future. Some of the positive outcomes that can arise when businesses adopt a policy
of social responsibility include:
Some of the drivers pushing business towards CSR include:
1. Company benefits:
1. The shrinking role of government. In the past, governments have relied on - Improved financial performance;
legislation and regulation to deliver social and environmental objectives in the - Lower operating costs;
business sector. Shrinking government resources, coupled with a distrust of - Enhanced brand image and reputation;
regulations, has led to the exploration of voluntary and non-regulatory - Increased sales and customer loyalty;
initiatives instead. - Greater productivity and quality;
2. Demands for greater disclosure. There is a growing demand for corporate - More ability to attract and retain employees;
disclosure from stakeholders, including customers, suppliers, employees, - Reduced regulatory oversight;
communities, investors, and activist organizations. - Access to capital;
3. Increased customer interest. There is evidence that the ethical conduct of - Workforce diversity;
companies exerts a growing influence on the purchasing decisions of - Product safety and decreased liability.
customers. In a recent survey by Environics international, more than one in
five consumers reported having either rewarded or punished companies 2. Benefits to the community and the general public:
based on their perceived social performance. - Charitable contributions;
4. Growing investor pressure. Investors are changing the way they assess - Employee volunteer programs;
companies' performance, and are making decisions based on criteria that - Corporate involvement in community education, employment and
include ethical concerns. homelessness programs;
5. Competitive labor markets. Employees are increasingly looking beyond - Product safety and quality.
paychecks and benefits, and seeking out employers whose philosophies and
operating practices match their own principles. In order to hire and retain 3. Environmental benefits:
skilled employees, companies are being forced to improve working - Greater material recyclability;
conditions. - Better product durability and functionality;
- Greater use of renewable resources;
- Integration of environmental management tools into business plans, including
life-cycle assessment and costing, environmental management standards,
and eco-labeling.

Criteria in Evaluating Corporate Social Responsibility

● Economic Responsibilities – its responsibility is to produce the goods and
services that society wants and to maximize profits for its owners and
shareholders.
● Legal Responsibilities – businesses are expected to fulfill their economic
goals within the legal framework. Legal responsibility defines what society
deems as important with respect to appropriate corporate behavior.
● Ethical Responsibilities – includes behaviors that are not necessarily
codified into law and may not serve the corporation’s direct economic
interests. Organization decision makers should act with equity, fairness, and
impartiality, respect the rights of individuals and provide different treatment of
individuals only when relevant to the organization’s goals and tasks.
● Discretionary Responsibilities – is purely voluntary and is guided by a
company’s desire to make social contributions not mandated by economics,
law or ethics.