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: and implement the decision.
Good governance is not only important for corporations, it’s important for Government is one of the actors in governance. Other actors involved in
society. To begin with, good corporate governance improves the public’s faith and governance vary depending on the level of government that is under discussion. In
confidence in its corporate leaders. Legislative processes were designed to protect rural areas, for example, other actors may include influential land lords, associations
societies from known threats and to keep problems from occurring or reoccurring. of peasant farmers, cooperatives, NGOs, research institutes, religious leaders,
Recent corporate scandals shed light on the effect that corporations have on social finance institutions, political parties, the military etc. The situation in urban areas is
responsibility. The new focus on corporate social responsibility increases much more complex. Figure 1 provides the interconnections between actors involved
corporations’ responsibility and accountability to their stakeholders. As a result, we’re in urban governance. At the national level, in addition to the above actors, media,
seeing corporations increasingly place pressure on themselves to improve best lobbyists, international donors, multinational corporations, etc. may play a role in
practices for corporate governance with the goal of enhancing their relationships with decision-making or in influencing the decision-making process.
stakeholders. The largest attraction for corporations to direct some of their attention All actors other than government and the military are grouped together as
on sustainability is that it ultimately improves corporations’ ability to thrive and part of the "civil society." In some countries in addition to the civil society, organized
prosper. (Price, 2018) crime syndicates also influence decision-making, particularly in urban areas and at
the national level.
Lesson Proper: Similarly formal government structures are one means by which decisions are
WHAT IS GOOD GOVERNANCE? arrived at and implemented. At the national level, informal decision-making
Recently the terms "governance" and "good governance" are being structures, such as "kitchen cabinets" or informal advisors may exist. In urban areas,
increasingly used in development literature. Bad governance is being increasingly organized crime syndicates such as the "land Mafia" may influence decision-making.
regarded as one of the root causes of all evil within our societies. Major donors and In some rural areas locally, powerful families may make or influence decision-
international financial institutions are increasingly basing their aid and loans on the making. Such informal decision-making is often the result of corrupt practices or
condition that reforms that ensure "good governance" are undertaken. leads to corrupt practices.

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
Figure 1: Urban actors Participation
Participation by both men and women is a key cornerstone of good
GOOD GOVERNANCE governance. Participation could be either direct or through legitimate intermediate
Good governance has 8 major characteristics. It is participatory, consensus institutions or representatives. It is important to point out that representative
oriented, accountable, transparent, responsive, effective and efficient, equitable and democracy does not necessarily mean that the concerns of the most vulnerable in
inclusive and follows the rule of law. It assures that corruption is minimized, the society would be taken into consideration in decision making. Participation needs to
views of minorities are taken into account and that the voices of the most vulnerable be informed and organized. This means freedom of association and expression on
in society are heard in decision-making. It is also responsive to the present and the one hand and an organized civil society on the other hand.
future needs of society.
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. Equity and inclusiveness
A society’s well-being depends on ensuring that all its members feel that they
Transparency have a stake in it and do not feel excluded from the mainstream of society. This
- means that decisions taken and their enforcement are done in a manner that requires all groups, but particularly the most vulnerable, have opportunities to
follows rules and regulations. improve or maintain their well being.
- also means that information is freely available and directly accessible to
those who will be affected by such decisions and their enforcement. Effectiveness and efficiency
- also means that enough information is provided and that it is provided in Good governance means that processes and institutions produce results that
easily understandable forms and media. meet the needs of society while making the best use of resources at their disposal.
- an important aspect of good governance, and transparent decision making is The concept of efficiency in the context of good governance also covers the
critical for the private sector to make sound decisions and investments. sustainable use of natural resources and the protection of the environment.
- Accountability and the rule of law require openness and good information so
higher levels of administration, external reviewers and the general public can Accountability
verify performance and compliance to law. Accountability is a key requirement of good governance. Not only
Governments have access to a vast amount of important information. Dissemination governmental institutions but also the private sector and civil society organizations
of this information through transparency and open information systems can provide must be accountable to the public and to their institutional stakeholders. Who is
specific information that firms and individuals need to have to be able to make good accountable to whom varies depending on whether decisions or actions taken are
decisions. Capital markets depend for example on information openness. 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.
Responsiveness Accountability cannot be enforced without transparency and the rule of law.
Good governance requires that institutions and processes try to serve all
stakeholders within a reasonable timeframe. CONCLUSION
From the above discussion it should be clear that good governance is an
Consensus oriented ideal which is difficult to achieve in its totality. Very few countries and societies have
There are several actors and as many viewpoints in a given society. Good come close to achieving good governance in its totality. However, to ensure
governance requires mediation of the different interests in society to reach a broad sustainable human development, actions must be taken to work towards this ideal
consensus in society on what is in the best interest of the whole community and how with the aim of making it a reality.
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 Lesson 2: Ethics
development. This can only result from an understanding of the historical, cultural Introduction:
and social contexts of a given society or community.
 Ethics is considered the moral standards by which people judge behavior. corporate accountability, corporate giving, corporate governance, and whistle
Ethics is often summed up in what is considered the “golden rule”—do unto others blowing. dictionary.bnet.com
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 Ethics sets standards as to what is good or bad in conduct and decision making.
when an ethical dilemma arises among these different interests can be extremely Ethics deals with internal values that are a part of corporate culture and shapes
tricky and as such business ethics as a field is complex and multi-faceted. decisions concerning social responsibility with respect to the external environment.

Lesson Proper: Criteria of Ethical Decision Making

Business ethics can be defined as written and unwritten codes of principles 1. Utilitarian Approach – It holds that moral behavior produces the greatest
and values that govern decisions and actions within a company. Companies and good for the greatest number. A decision maker is expected to consider the
businesspeople who wish to thrive long-term must adopt sound ethical decision- effect of each decision on all parties and select the one that optimizes the
making practices. Companies and people who behave in a socially responsible satisfaction for the greatest number of people.
manner are much more likely to enjoy ultimate success than those whose actions are 2. Individualism Approach – Contends that acts are moral when they promote
motivated solely by profits. In many cases, doing the right thing often leads to the the individual’s best long-term interests. Individual self-direction is paramount,
greatest financial, social, and personal rewards in the long run. (White, Mary and external forces that restrict self-direction should be severely limited.
Gormandy, Sundblad, Donna and Finely, Amy) 3. Moral – rights Approach – asserts that human beings have fundamental
It is a form of applied ethics that examines ethical rules, theories and rights and liberties that cannot be taken away by an individual’s decision.
principles in business context. Generally, speaking is a normative discipline, whereby Six Moral Rights should be considered during decision making.
particular ethical standards are advocated and then applied. It makes specific - The right of free consent
judgments about what is right or wrong, which is to say, it teaches what ought to be - The right to privacy
done and what ought to be done, (De George, 1999). - The right of freedom of conscience
Some business ethics are imposed by law. For example, the SEC governs - The right of free speech
the way investment bankers and stock brokers do business, and court rules dealing - The right to due process
with attorney client privilege dictate some ethical decisions for attorneys. However, - The right to life and safety
there are also business decisions that do not fall within the guidelines of the law, in 4. Justice Approach – Holds that moral decisions must be based on standards
which ethical or moral judgments must be made. www.yourdictionary.com of equity, fairness, and impartiality.

An ethical approach is becoming necessary both for corporate success and a Three Types of Justice
positive corporate image. Following pressure from consumers for more ethical and 1. Distributive justice – requires that different treatment of people not be
responsible business practices, many organizations are choosing to make a public based on arbitrary characteristics.
commitment to ethical business by formulating codes of conduct and operating 2. Procedural justice – requires that rules be administered fairly.
principles. In doing so, they must translate into action the concepts of personal and
 3. Compensatory justice – argues that individuals should be compensated for on sustainability is that it ultimately improves corporations’ ability to thrive and
the cost of their injuries by the party responsible. prosper. (Price, 2018)

Some Reasons for Unethical Behavior Lesson Proper:

a. Moral Relativism – claims that morality is relative to some personal, social, Corporate social responsibility (CSR), also known as corporate responsibility,
or cultural standard and that there is no method for deciding whether one corporate citizenship, responsible business, sustainable responsible business (SRB),
decision is better than the other. or corporate social performance, is a form of corporate self-regulation integrated into
b. Kohlberg’s Levels of Moral Development – a person’s ethical behavior is a business model. Ideally, CSR policy would function as a built-in, self-regulating
affected by his level of moral development, certain personality variables, and mechanism whereby business would monitor and ensure its adherence to law,
such situational factors as the job itself, the supervisor, and the organizational ethical standards, and international norms. Business would embrace responsibility
culture. for the impact of their activities on the environment, consumers, employees,
communities, stakeholders and all other members of the public sphere. Furthermore,
Kohlberg’s Three Levels of Moral Development business would proactively promote the public interest by encouraging community
1. The pre-conventional level – is characterized by a concern for self. growth and development, and voluntarily eliminating practices that harm the public
2. The conventional level – is characterized by considerations of society’s sphere, regardless of legality. Essentially, CSR is the deliberate inclusion of public
laws and norms. interest into corporate decision making, and the honoring of a triple bottom line:
3. The principled level – is characterized by a person’s adherence to an People, Planet, and Profit. (Wikipedia)
internal moral code.
Corporate social responsibility (CSR) can be defined as the "economic, legal,
Lesson 3: Corporate Social Responsibility ethical, and discretionary expectations that society has of organizations at a given
Introduction: point in time" (Carroll and Buchholtz 2003, p. 36). (www.uitp.com)
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 Corporate social responsibility is related to, but not identical with, business ethics.
confidence in its corporate leaders. Legislative processes were designed to protect While CSR encompasses the economic, legal, ethical, and discretionary
societies from known threats and to keep problems from occurring or reoccurring. responsibilities of organizations, business ethics usually focuses on the moral
Recent corporate scandals shed light on the effect that corporations have on social judgments and behavior of individuals and groups within organizations. Thus, the
responsibility. The new focus on corporate social responsibility increases study of business ethics may be regarded as a component of the larger study of
corporations’ responsibility and accountability to their stakeholders. As a result, we’re corporate social responsibility. (www.uitp.com)
seeing corporations increasingly place pressure on themselves to improve best
practices for corporate governance with the goal of enhancing their relationships with CSR is often used to promote voluntary corporate initiatives, as an alternative to
stakeholders. The largest attraction for corporations to direct some of their attention 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.