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Governance

Submitted by admin on Wed, 06/03/2009 - 22:36
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SUMMARY:

Governance may one of the most talked about concepts of the decade and it is a staple of the business media, but what, exactly, is it? When I was writing “Chairs and Tables” a definition proved elusive – so I wrote one.
 
Writing a book is one of those wonderful events that reveal challenges in a progressive sequence, most of them totally unexpected. So it was with “Chairs and Tables: Corporate Governance for Small Business”, my most recent book, which was humbling in its revelations about what I knew, or thought that I knew, versus the truth of the matter. One of the first issues was the discovery that, although many had personal views and opinions, a generally accepted definition of corporate governance simply did not exist. I did a literature search, not of a scholarly quality but thorough enough to include all the majors, such as “Where Were the Directors”, also known as the Dey Report, commissioned by the Toronto Stock Exchange and delivered in December 1994. I read its sequel, “Five Years to the Dey”, written in 1999, and a batch of books by gurus. For the most part none provide a definition, although in 1997 David Leighton and Donald Thain proclaimed in “Making Boards Work” that “corporate governance is the political science of business”. I tried Wikipedia and found a few definitions but they pertained only to public companies. Agreement was scarce. As more and more opinions and general descriptions were compared a consensus emerged and it reads like this:

Governance is the amalgam of legal authority and collaborative process that allocates an organization’s resources and directs its affairs to the attainment of those purposes for which it exists.

This statement is inclusive, it is focused and it is strategic rather than operational. It is a satisfactory description of governance as a tenet extending to small, medium or large, public or private, businesses, government agencies or not-for-profit organizations. Viewed in this light governance is seen as fundamental to growth, prosperity and the effective use of economic inputs. Thus it is crucial to the health of the economy and of the components from which it is formed.

Why, you might ask, all this fuss over a definition? Well, aside from producing one when the occasion demands it, one might wonder if at least part of the problems and scandals of the past decade or so could have been avoided if everyone agreed about what they were supposed to do. Further, if there is an inclusive definition of governance there is a common, underlying body of knowledge and a set of requisite competencies gained through experience and learning. Together, they might be called “Governance DNA.”

These pages will explore this concept, while applying it to all the issues facing those who wish to join a board, who already sit on a board or who are responsible for operating a board, with all the issues that they must face.