HANDOUT01
Stakeholders of Good Governance
MGT00 – Good Governance and Social Responsibility
Prepared by: Marynelle A. Salinas, LLB
I. INTRODUCTION TO GOOD GOVERNANCE
A. Definition of Good Governance
Good governance is about the processes of
making and implementing decisions. It’s not about
making correct decisions, but about the best possible
process for making those decisions.
One of the major errors in many people’s
concepts of governance is confusing ‘good
management’ with governance. Governance ≠
good management! Governance is firstly focused
on creating the environment in which ‘good
management’ can flourish and then on ensuring
the organisation’s management is ‘good’. (Dr Lynda
Bourne PMP, FAIM)
Good governance can be everywhere. As long
as there is leadership, good governance should be
observed. If there is good relationship, there is good
leadership and good governance will automatically
follow.
Good governance is a necessary precondition
for development.
B.
 Employees: There is widespread agreement
that they are a prime stakeholder
 Shareholders: Some would say that
shareholders are the first stakeholder
 Management: Controversial, but some
believe that managers are stakeholders For
example, Evan and Freeman argue that
managers have an additional duty -- that of
maintaining the health of the company by
keeping stakeholder demands balanced--
which makes them stakeholders
 Creditors: Creditors’ rights are often
protected under contract and backed by
collateral so they are seldom treated as
“owners” as the shareholders are
 Trade unions: Some argue that this group is
redundant with the employee group
 Customers: Most stakeholder models
include customers •Suppliers: Often
considered a stakeholder
 The local community: Broader definitions
of stakeholders widen the concept to
include responsibilities to local communities
and, more generally, civil society
 Future generations: Sustainable
development is at the center of the
stakeholder debate and this suggests a
responsibility to future generations --those
who will one day be reliant upon the
physical environment-- as a stakeholder
group.https://www.oecd.org/daf/ca/corporate
governanceprinciples/1930657.pdf
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C. Roles of Stakeholders
The only reason organizations exist is to meet
the needs of stakeholders. Sometimes this can be a
very limited group of stakeholders such as the
executive management group, or the
shareholders/owners. Sometimes a much wider group
of stakeholders that includes, employees, suppliers
and the wider community, as well as the organization’s
management and shareholders or owners. Since the
publication of Ed Freeman’s Stakeholder Theory in
1984, the pendulum has been steadily swinging
towards his wider view of stakeholders.
However, applying Stakeholder Theory is not
easy, each of the stakeholder groups has competing
needs and a desire to maximize their share of the
organization’s outputs, but all of the stakeholders
benefit from cooperating and balancing their needs
against the greater benefits for all that can be gained
by making the organization successful. These
relationships are interdependent and require balanced
decision making:
 The organization will not be profitable unless its
employees and suppliers work together
constructively to make goods or services the
customers are prepared to buy.
 The organization has to pay sufficient money
and create a culture that attracts the right type
of employee, but if employees take too much
out of the organization in the form of excessive
pay, the organization becomes uncompetitive
and the employees lose their jobs.
 Organizations are expected to be good citizens
– not to expose the community to
unreasonable hazards in the form of pollution,
toxic waste or substandard goods or services.
But the community benefits from consuming
the goods and services and it is impossible to
create things without some pollution.
The art of managing within stakeholder theory
is to find ways to minimize the damage and maximize
the benefits accrued by each of the stakeholder
groups. This is a creative process and management
teams that do it best create the most successful
organizations with sustained growth and profitability.
The problem is the management team itself is a
powerful stakeholder in the organization and without
effective governance can easily focus on maximizing its
share of the benefits at the expense of other
stakeholders. The on-going scandals in the finance and
banking sector, world-wide, show what happens when
management lose sight of the ‘larger picture’ and focus
on short term gains.
The way the stakeholders working within the
organizations projects are treated is determined by the
overall approach to stakeholder management
implemented by the organization, which is a
governance decision, implemented through
management.
In turn, the way the projects and programs
engage with their stakeholders will be largely shaped
by the organizations overall approach to stakeholder
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 engagement. It is very difficult for a project manager to
attempt to develop an effective stakeholder
engagement culture within a project if this is contrary
to the organizations way of working.
Many studies have clearly demonstrated that
successful projects, programs and organizations work
with their stakeholders to create shared benefits. The
challenge facing most organizations is creating the
culture and capabilities that allow this to occur. From a
project and programmed perspective, this means
developing the management capabilities needed for
the management of projects and creating a culture in
which stakeholders matter. Both of these start at the
governance level.
(https://www.apm.org.uk/blog/governance-and-
stakeholders/)
D. Characteristics of Good Governance
1. Participation
All men and women should have a voice in
decision-making, either directly or through
legitimate intermediate institutions that
represent their interests. Such broad
participation is built on freedom of association
and speech, as well as capacities to participate
constructively.
2. Rule of Law
Legal frameworks should be fair and enforced
impartially, particularly laws on human rights.
3. 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.
4. Responsiveness
Institutions and processes try to serve all
stakeholders.
5. Consensus Orientation
Good governance mediates differing interests
to reach a broad consensus on what is in the
best interests of the group and where possible,
on policies and procedures.
6. Equity
All men and women have opportunities to
improve or maintain their well-being.
7. Effectiveness and Efficiency
Processes and institutions produce results that
make the best use of resources.
8. Accountability
Decision-makers in government and civil
society organizations are accountable to the
public, as well as to the institutional
stakeholders. This accountability differs
depending on the organization and whether the
decision is internal or external to an
organization.
9. Strategic Vision
Leaders and the public have a broad and long-
term perspective on good governance and
human development, along with a sense of
their rights and duties. There is also an
understanding of the historical, cultural and
social complexities in which that perspective is
grounded.
E. Effects/Benefits of Good Governance
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 The following five points highlight the value
that good governance can create for private
companies:
INCREASES TRUST - Businesses do not exist in a
vacuum. Organizations that are cognizant of the role
they play in wider society will typically seek to behave
in a transparent manner by providing clear and
accurate information to their stakeholders on a regular
basis. When all stakeholders feel able to rely upon the
data provided by companies this leads to increased
levels of trust and organizations are able to develop
stronger, longstanding relationships with their
stakeholders. The benefits that can be reaped are
numerous and varied - from favorable credit terms to
repeat business.  to borrow funds at a lower rate than those with no, or
ENHANCES SUSTAINABILITY - A company
committed to good governance is able to quickly
identify and resolve any systemic issues thus reducing
the likelihood of costly corporate crises and
scandals. Of course, matters may arise which an
organization is unable to anticipate but with a
governance system in place that is geared to manage
such eventualities, an organization can respond quickly
in order to safeguard its reputation and future.
ENCOURAGES POSITIVE
BEHAVIOURS - Significant focus has been placed on
the role that culture plays in the success of an
organization. Having clearly delineated policies and
processes and a board of directors and executive
managers who take an interest and responsibility for
such matters can help to prevent future failures whilst
setting the organizations cultural expectations. It is
said that ‘the tone of an organization is set at the top’
meaning that the chairman and CEO are protagonists
of the organizational culture. It is therefore imperative
that all board members take an active interest in the
activities of the company and ensure clear lines of
communication and responsiveness to dealing with any
move away from the positive culture that they seek to
imbue throughout the organization.
LOWERS THE COST OF CAPITAL - In today’s volatile
environment, the implementation of good governance
practices may lead to a reduction in a company’s cost
of capital. An organization that is seen to be stable,
reliable and able to mitigate potential risks will be able
weak governance systems. Companies with debt or
equity investors may find that their investors pay a
premium for the comfort they obtain in knowing that
the company has a sound governance framework. 
MINIMISES WASTE, RISKS, CORRUPTION AND
MISMANAGEMENT - Companies committed to
implementing and maintaining good governance
practices will likely find that certain risks are drastically
minimized. This is because strong governance practices
typically increase levels of transparency, trust and
integrity, all of which create an environment conducive
to reducing risks, opportunities for corruption and any
source of mismanagement.
https://www.linkedin.com/pulse/five-benefits-good-
governance-monique-legair
The role of governance in every organization is
to balance these competing objectives to the benefit of
all stakeholder interests. To paraphrase Sir Adrian
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Cadbury’s 2002 definition: “Governance is holding the
balance between economic and social goals and
between individual and communal goals. The
governance framework is there to encourage the
efficient use of resources and equally to require
accountability for the stewardship of those resources.
The aim is to align as nearly as possible the interests of
individuals, the organization and society”.
The functions of governance include:
 Determining the objectives of the organization;
 Determining the ethics of the organization;
 Creating the culture of the organization;
 Designing and implementing the governance
framework for the organization;
 Ensuring accountability by management
 Ensuring compliance by the organization;
Once the ‘governing body’ has determined the
organization’s objectives, ethics and culture,
the role of management is to achieve the
objectives working within the organizations
ethical and cultural framework; and the
governing body’s role is to ensure this happens
appropriately.
Projects and programs are an important part of
this overall construct:
 The organization grows and adapts by
implementing projects and programs;
 The effective ‘management of projects’
requires a supportive management culture;
 People working within the projects and
programs are stakeholders;
 Projects and programs affect many other
stakeholders;
(https://www.apm.org.uk/blog/governance-and-
stakeholders/)
II. BUSINESS ETHICS
A. Definition of Ethics
At its simplest, ethics is a system of moral
principles. They affect how people make decisions and lead
their lives.
Ethics is concerned with what is good for individuals
and society and is also described as moral philosophy.
The term is derived from the Greek
word ethos which can mean custom, habit, character or
disposition.
Ethics covers the following dilemmas:
 how to live a good life
 our rights and responsibilities
 the language of right and wrong
 moral decisions - what is good and bad?
Our concepts of ethics have been derived from
religions, philosophies and cultures. They infuse debates on
topics like abortion, human rights and professional conduct.
B. Philosophical Background of Ethics
Where does ethics come from? Philosophers
have several answers to this question:
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  God and religion
 Human conscience and intuition
 a rational moral cost-benefit analysis of
actions and their effects
 the example of good human beings
 a desire for the best for people in each
unique situation
 political power
Philosophers nowadays tend to divide ethical
theories into three areas: meta-ethics, normative ethics and
applied ethics:
 Meta-ethics deals with the nature of moral
judgment. It looks at the origins and
meaning of ethical principles.
 Normative ethics is concerned with the
content of moral judgments and the criteria
for what is right or wrong.
 Applied ethics looks at controversial topics
like war, animal rights and capital
punishment
http://www.bbc.co.uk/ethics/introduction/
intro_1.shtml
C. Business ethics and its role in management
The system of moral and ethical beliefs that guides
the values, behaviours, and decisions of a business
organization and the individuals within that organization is
known as business ethics. Some ethical requirements for
businesses are codified into law; environmental
regulations, the minimum wage, and restrictions against
insider trading and collusion are all examples of the
government setting forth minimum standards for business
ethics. What qualifies as business ethics in history has
changed over time and the different areas of ethics are
important to every business. Business Ethics includes:
1. Ethics in Leadership - The management team sets the
tone for how the entire company runs on a day-to-day
basis. When the prevailing management philosophy is
based on ethical practices and behavior, leaders within
an organization can direct employees by example and
guide them in making decisions that are not only
beneficial to them as individuals, but also to the
organization as a whole. Building on a foundation of
ethical behavior helps create long-lasting positive
effects for a company, including the ability to attract
and retain highly talented individuals, and building and
maintaining a positive reputation within the
community. Running a business in an ethical manner
from the top down builds a stronger bond between
individuals on the management team, further creating
stability within the company.
2. Employee Ethics - When management is leading an
organization in an ethical manner, employees follow in
those footsteps. Employees make better decisions in
less time with business ethics as a guiding principle;
this increases productivity and overall employee
morale. When employees complete work in a way that
is based on honesty and integrity, the whole
organization benefits. Employees who work for a
corporation that demands a high standard of business
ethics in all facets of operations are more likely to
perform their job duties at a higher level and are also
more inclined to stay loyal to that organization.
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3. Ethics Vary by Industry - Business ethics differ from With consistent ethical behavior comes
an increasingly positive public image, and there are
industry to industry, and nation to nation. The nature
few other considerations as important to potential
of a business's operations has a major influence on the
investors and current shareholders. To retain a positive
ethical issues with which it must contend. For example,
image, businesses must be committed to operating on
an ethical quandary arises for an
an ethical foundation as it relates to the treatment of
investment brokerage when the best decision for a
employees, respecting the surrounding environment,
client and their money does not coincide with what
and fair market practices in terms of price and
pays the brokerage the highest commission. A media
consumer treatment.
company that produces TV content aimed at children
https://www.investopedia.com/ask/answers/040815/wh
may feel an ethical obligation to promote good values
y-are-business-ethics-important.asp
and eschew off-color material in its programming.
Benefits of Business Ethics
III. CONCEPT OF HUMAN RIGHTS
The importance of business ethics reaches far
A. Relationship of Good Governance with Human Rights
beyond employee loyalty and morale or the strength of
a management team bond. As with all business
Good governance and human rights are mutually
initiatives, the ethical operation of a company is
reinforcing. Human rights principles provide a set of values
directly related to profitability in both the short and
to guide the work of governments and other political and
long term.
social actors. They also provide a set of performance
standards against which these actors can be held
The reputation of a business in the surrounding
accountable. Moreover, human rights principles inform
community, other businesses, and individual investors
the content of good governance efforts: they may inform
is paramount in determining whether a company is a
the development of legislative frameworks, policies,
worthwhile investment. If a company is perceived
programs, budgetary allocations and other measures.
to not operate ethically, investors are less inclined to
buy stock or otherwise support its operations.
On the other hand, without good governance,
human rights cannot be respected and protected in a
Companies have more and more of an incentive
sustainable manner. The implementation of human rights
to be ethical as the area of socially
relies on a conducive and enabling environment. This
responsible and ethical investing keeps growing. The
includes appropriate legal frameworks and institutions as
increasing number of investors seeking out ethically
well as political, managerial and administrative processes
operating companies to invest in is driving more firms
responsible for responding to the rights and needs of the
to take this issue more seriously.
population.

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The links between good governance and human rights can
be organized around four areas:
 Democratic institutions
When led by human rights values, good
governance reforms of democratic institutions create
avenues for the public to participate in policymaking
either through formal institutions or informal
consultations. They also establish mechanisms for the
inclusion of multiple social groups in decision-making
processes, especially locally. Finally, they may
encourage civil society and local communities to
formulate and express their positions on issues of
importance to them.
 Service delivery
In the realm of delivering state services to the
public, good governance reforms advance human
rights when they improve the state’s capacity to fulfil
its responsibility to provide public goods which are
essential for the protection of a number of human
rights, such as the right to education, health and food.
Reform initiatives may include mechanisms of
accountability and transparency, culturally sensitive
policy tools to ensure that services are accessible and
acceptable to all, and paths for public participation in
decision-making.
 Rule of law
When it comes to the rule of law, human rights-
sensitive good governance initiatives reform legislation
and assist institutions ranging from penal systems to
courts and parliaments to better implement that
legislation. Good governance initiatives may include
advocacy for legal reform, public awareness-raising on
the national and international legal framework, and
capacity-building or reform of institutions.
 Anti-Corruption
In fighting corruption, good governance efforts
rely on principles such as accountability, transparency
and participation to shape anti-corruption measures.
Initiatives may include establishing institutions such as
anti-corruption commissions, creating mechanisms of
information sharing, and monitoring governments’ use
of public funds and implementation of policies.
https://www.ohchr.org/EN/Issues/Development/
GoodGovernance/Pages/GoodGovernanceIndex.aspx
B. Sources of Human Rights
The primary sources of Human rights are the
United Nations Universal Declaration of Human Rights
and the various human rights documents in each
countries and including treaties entered into by the
states. In the Philippines, human rights are embodied
in the Constitution which is the fundamental law of the
land.
C. Types and Components of Human Rights
The human rights includes at the very least:
1. the right to life
This comprises: 
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  the obligation of States to strengthen pe
ace as the essential element of
the right to life  This comprises:
  the right to safety (1), to the security of
one’s person
 the right to the
minimum level of subsistence
2. the right to dignity
This comprises:
 the right to live “protected from violenc
e and fear”
 the right to be protected from all
discrimination
 the right to the prevention of conflicts 
 the right to the prevention of violence
and the heavy use of
force, including that by police
and institutions, in a deterrent way.
3. the right to peace and
order allowing the
full outcome of rights.
This comprises:
 the right to order, allowing the
full outcome of rights  an education which respects human righ
 the “right to live in conditions
of peace and security”
 the right to “a just, viable and
sustainable peace”
These three rights are an integral part of the
Universal Declaration of Human Rights of 1948.
Other rights comprised in the human right to life
1.
The right to political measures that strengthen peace
 the promotion of
dialogue, mediation, cooperation and
a non-military approach to security 
 the right to disarmament and
the reassignment of resources 
 the right to a sustainable
environment (as a basis for peace)
 the right to an effective recourse in case
of violation of one’s human rights
(access to justice and truth, reparation)
 the right to require public
institutions to account for their 
progress towards peace and to provide
judicial control of the use of force (5,6).  
2. The right to peace education and peace culture
education
This comprises:
 the right to
peace education and access to conflict
resolution techniques (5,6)
 the right to
ts
 the promotion
of research in favour of peace and huma
n rights .
3. The right to expression
This comprises:
 the right to freedom of expression
(freedom of thought, conscience,
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 religion, association and peaceful
assembly)
 the right to participation
in activities that defend and
promote the human right to peace  1. Absolute rights should never be interfered with,
 the right to resist and oppose
cruelty (wars, acts of  aggression,
crimes against  humanity, genocide)
 the right to oppose
war propaganda, incitements to
violence and violations of
the human right to peace  into account
 the right to conscientious objection
 the right of vulnerable groups to particip
ate in the formulation of measures of
protection against the
violence they are subjected to (women,
minorities…)
 the right to demand that peace
actually be achieved.
4. The right to reside and participate
This comprises:
 the right to the status of refugee 
 the right to emigrate,
to settle peacefully and to participate 
 the right to development (the right of p
ersons and populations to take part in it.
(Universal Declaration of Human Rights
of 1948)
D. Practice of Human Rights
There are 4 general rules relating to how human
rights are applied in practice:
limited or balanced against other considerations. They
must be fully guaranteed in all circumstances. 
 
2. Where the rights of children are affected by an issue
or piece of work, the ‘best interest of the child’ is
paramount and decisions should be made taking this
 
 
3. All rights should be enjoyed equally by everyone
without discrimination. This means particular attention
should be given to the different groups of people that
may be affected by NICS work and positive action
taken to ensure that all can access their human rights
on an equal basis 
 
4. Most human rights can be limited or qualified in
order to address competing interests. The NICS has a
responsibility to ensure that a fair balance is struck in
accordance with the law and that restriction on rights
is necessary and proportionate
E. Victims & Perpetrators of Human Rights
In human rights discourse, victims and
perpetrators are usually referred to as two completely
separate and homogenous sets of people. This article
challenges this discrete and binary approach to these
concepts. More often than not, within the group of
victims, not all victims are the same. Similarly, within
the group of perpetrators, not all perpetrators are the
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 same; and the two groups are rarely separate and
distinct: some individuals are both victims and
perpetrators.
F. What is Corruption/Kleptocracy
Kleptocracy is a government with corrupt leaders
(kleptocrats) that use their power to exploit the people
and natural resources of their own territory in order to
extend their personal wealth and political powers.
Typically, this system involves embezzlement of funds at
the expense of the wider population.
Kleptocracy is different from a plutocracy (society
that is ruled or controlled by people of great wealth or
income) and oligarchy (a form of power structure in which
power rests with a small number of people distinguished
by wealth, education, religious status etc.). A kleptocracy is
a government ruled by corrupt politicians who use their
political power to receive kickbacks, bribes, and special
favors at the expense of the populace, or simply direct
state resources to themselves, relatives or associates.
Kleptocrats may use political leverage to pass laws that
enrich them or their constituents and they usually
circumvent the rule of law.
The effects of a kleptocratic regime or government
on a nation are typically adverse in regards to the welfare
of the state's economy, political affairs, and civil rights.
Kleptocratic governance typically ruins prospects of
foreign investment and drastically weakens the domestic
market and cross-border trade. As kleptocracies often
embezzle money from their citizens by misusing funds
derived from tax payments, or engage heavily in money
laundering schemes, they tend to heavily degrade quality
of life for citizens.[30]
In addition, the money that kleptocrats steal is
diverted from funds earmarked for public amenities such
as the building of hospitals, schools, roads, parks – having
further adverse effects on the quality of life of citizens.
[31]
 The informal oligarchy that results from a kleptocratic
elite subverts democracy (or any other political format).
https://en.wikipedia.org/wiki/Kleptocracy
G. How to Eradicate Corruption
1. Set your personal objectives, pursue honesty
and reject evil in your own life.
2. Clean your own heart and mind.
3. Unite with other citizens adopting a systematic,
practical and integral approach in the fight
against corruption.
4. Declare permanent war against corruption
using all available weapons, especially including
technology.
5. Teach integrity and honesty by your own
actions. Illustrate it by the way you act in your
daily life.
Integrity – telling myself what is true or right
Honesty – telling others the truth
“Rather fail with honor than succeed by fraud.”
- Sophocles
“A person is not given integrity. It results from the
relentless pursuit of honesty at all times.”
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 -Anonymous

“Choose good reputation over great riches, being held

in high esteem is better than silver or gold.”
-Prov. 22:1

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