Good Governance and Social Responsibility

Governance can be defined as:

“The system by w hich entities are directed and controlled. I t is concerned w ith structure and
processes for decision-m aking, accountability, control, and behavior at the top of an entity.
Governance influences how an organization’s objectives are set and achieved, how risk is
m onitored and addressed, and how perform ance is optim ized”.

Governance is a system and process , not a single activity, and therefore successful
implementation of a good governance strategy requires a systematic approach that
incorporates strategic planning, risk management, and performance management.

W hy is Good Governance im portant?

 To preserve and strengthen stakeholders’ confidence.

 To provide the foundation for a high-performing organization.
 To ensure the organization is well-placed to respond to a changing external
environment.

Governance encompasses the processes by which organizations are directed, controlled

and held to account. It includes the authority, accountability, leadership, direction, and
control exercised in an organization.

Good Governance is measured by these eight factors

Participation

Citizen participation is a key element of a good governance system. It provides private

individuals and groups the opportunity to inform, influence, monitor, and evaluate
public decisions, processes, and actions.

Rule of Law

A cornerstone of good governance is adherence to the rule of law, that is, the
impersonal and impartial application of stable and predictable laws, statutes, rules, and
regulations, without regard for social status or political considerations.

Transparency

Transparency is the principle of allowing those affected by administrative decisions to

know about the resulting facts and figures and about the process that resulted in those
decisions.
Responsiveness

Objectives, rules, structures, and procedures are adapted to the legitimate expectations
and needs of citizens. Public services are delivered and requested and complaints are
responded to within a reasonable timeframe.

Consensus orientation

Ensures that the existing systems serve the best interests of society. This may be one
of the most difficult principles, as any action or policy is likely to affect different groups
in society in different and often opposing ways. Therefore, different viewpoints must be
taken into account.

Equity and Inclusiveness

This means that all members of society, especially the most vulnerable, are taken into
consideration in policy-making, and no one feels alienated, disenfranchised, or left
behind. Good governance demands that preferential attention be given to the plight of
the poor, marginalized, and needy.

Effectiveness and efficiency

Effective and efficient governance is critical to the well-being of any country.

Effectiveness refers to fulfilling the required task rightfully, and efficiency is fulfilling
these tasks in the most economical way in terms of resources and time.

Accountability

Accountability, in terms of ethics and governance, is equated with answerability,

culpability, liability, and the expectation of account-giving. As an aspect of governance,
it has been central to discussions related to problems in the public sector, nonprofit,
private, and individual contexts.
 The 12 Principles and Related Tools for Good Governance and Social Responsibility

Principle 1 – Fair Conduct of Elections, Representation and Participation

Principle 2 – Responsiveness
Principle 3 – Efficiency and Effectiveness
Principle 4 – Openness and Transparency
Principle 5 – Rule of Law
Principle 6 – Ethical Conduct
Principle 7 – Competence and Capacity
Principle 8 – Innovation and Openness to Change
Principle 9 – Sustainability and Long-term Orientation
Principle 10 – Sound Financial Management
Principle 11 – Human Rights, Cultural Diversity and Social Cohesion
Principle 12 – Accountability

Understanding the organizational environment

Organizations are the structural framework of duties and responsibilities required of

personnel in performing various functions with a view to achieving business goals
through organization.

It is a complex adaptive system that uses people, tasks and technologies to achieve
specified goals and objectives. Structuring the organization represents the division and
distribution of work among members of the organization, and the coordination of their
activities in such a way that they are directed toward achieving the declared goals and
objectives of the organization.

Organizational Theory

Scientifically speaking – organizational theory is the sociological study of the structures

and operations of social organizations, including companies and bureaucratic
institutions. The organizational theory includes the analysis of the productivity and
performance of organizations and the actions of the employees and groups within
them.

Peter Drucker suggests three criteria for effective organization:

 They must be organized for business performance.

 Their structure should contain the least number of management levels.
 Organizational structure should facilitate training and testing for future
organization leaders.
Five basic categories of organizational structure:
1. Simple structure - basic organizational design structure with low departmentalization, little work specialization, wide span of
control, centralized authority (typically the owner has most of the power) and little formalization or rules that govern operation.

2. Machine Bureaucracy - is a formalized management structure with a high degree of specialization. Senior management make decisions, which manager and employees at lower level carry out.

3. Professional Bureaucracy - where the operating core and standardization of skills dominate the organization.
4. Divisionalized form - where the middle line and standardization of outputs dominate the organization.
5. Adhocracy - where the support staff and mutual adjustment dominate the organization.
Organizational Structure

Organizational structure is the pattern of relationships among positions in the

organization among members of the organization. The purpose of structure is the
division of work among the members of the organization, and the coordination of their
activities so that they are directed towards achieving the same goals and objectives of
the organization. Structures define tasks and responsibilities, work roles and
relationships and channels of communication.

Types of Organizational Structure

This is essentially the process by which the organization’s mission is divided into
discrete roles and tasks of individuals within the organization. There are different ways
of doing this. All essentially by grouping key activities in the organization and then
allocating roles/tasks to individuals.

This can fall into the following categories:

Functional

Grouping of major functions e.g., contracting, information, finance, personnel, and

public health in health authorities.

Advantage:
 Increases utilization and coordination of groups of people with
technical/specialized expertise.
 Increase development and career opportunities for people in departments.

Disadvantage:
 Encourage sectional interest conflicts
 Difficult for organizations to adapt to product/service diversification.

Product/Service

Grouping by service/product. e.g., in a hospital, into orthopedic, surgical, psychiatric

rather than medical, nursing, paramedical, or hotel services.

Advantage:
 Increase diversification
 Adaptability increased if service/product requires technical knowledge or large
equipment
Disadvantage:
 Encourages service conflicts.

Geographical

A national service develops regions, areas, or district authorities.

Advantage:
 More responsive and local/regional issues and different cultures, national/local
laws.

Disadvantage:
 This can lead to localities/regions conflicting with each other.

Divisional

In a divisional structure, people are grouped together based on the product or service
they provide, not the work they do.

Advantage:
 Suitable for international companies who are highly diversified, working in more
than one country.
 Corporate strategic control with production and marketing independence at
divisions.

Matrix

Grouping of projects and functions. A combination of two or more types of

organizational structures. It is a way of arranging your business so that you set up
reporting relationships as a grid or a matrix.

Advantage:
 Combines vertical and lateral lines of communication and authority
 Stability and efficiency (of mechanistic structure) with flexibility and informality
(of inorganic structure)
 Emphasizes that all project aims are all-important

Disadvantage:
 Potential conflict between project leader and functional leader regarding
resources
 The project may be jeopardized if project members, as well as leaders, enter the
conflict on opposite sides.
 Does not tolerate diversification well.