These ideas are from Governance, Accountability and Sustainable Development, by Niel A. Shepherd. It’s like a textbook on governance. The main idea seems to be that governance, which has been practised for centuries, has worked, but must continue to evolve. The meaning of “good governance” hasn’t changed, but the context, the world around, is changing. There is a higher expectation than in the past decades, that governance be transparent, responsive and support sustainable development.
It is vital to identify the various stakeholder groups. In a corporation, this would include shareholders, employees, suppliers and partners and customers. In a government organization, it would include citizens, employees, government and partners and suppliers. It is necessary to determine what the needs of these stakeholder groups are, likely prioritizing them, and what their rights and protections are. A key issue is to what degree each stakeholder group will be involved in governance, in setting the principles and values of the organization and communicating its goals and objectives. The final piece is to decide how those responsible for execution will plan, perform and report on their accountability.
Normally, the board, in conjunction with shareholders and possibly the input of a client or advisory group, will determine the values and objectives of the organization. They will lay out the vision and mission, as well as setting medium to long-term goals and medium to short-term measurable objectives. They then pass the responsibility to management or the administration to set a strategy, put in place operational plans and take action.
In the economic view of a for-profit corporation, success has traditionally been measured by financial outcomes. That is shifting, as society expects companies to be more socially responsible and engaged in the communities where they exist. Even more than socially-minded corporations, government organizations need to find a way other than financially to guage their outcomes. A “balanced scorecard” might include categories such as: Financial View (traditional financials, process-based costing, balance sheets, income statements, earnings, etc.); Process View (process measures, quality, time, quantity, process capital, structural capital, innovation capital); Client/Customer View (known satisfiers, strength of relationship, partnership, customer capital); Human View (stability, capability, competencies, learning capacity, intellectual capital, innovation capital).
Good governance, in this view, can be summed up as deciding why the organization exists, who it is meant to serve and how it serves them, deciding which aspects of that mission are most important, finding management to put it into action and making sure that management is successful. Not a small task.