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Governance vs Good Corporate Governance

Every company has "Governance" (a way it is run). Even a dictatorship or a mafia has governance. Good Governance is about quality—is it democratic, fair, and efficient?

Governance

The act of governing. It relates to decisions that define expectations, grant power, or verify performance.
Example: North Korea has governance. (It has rules and rulers).

Good Governance

Focuses on the outcomes and the process.
According to the United Nations, Good Governance has 8 characteristics:
1. Participatory
2. Consensus Oriented
3. Accountable
4. Transparent
5. Responsive
6. Effective & Efficient
7. Equitable & Inclusive
8. Follows Rule of Law

Governance vs Good Governance

Governance (Structure)

Focus: Having rules.
Result: Decisions are made.
Example: Reporting financial numbers (even if late).

Good Governance (Quality)

Focus: Having FAIR and EFFICIENT rules.
Result: Value is created and trust is earned.
Example: Reporting accurate numbers ON TIME with clarity.

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Note

The Satyam Example: Satyam Computers had "Governance" (Board meetings, auditors). But it lacked "Good Governance" (The auditors were asleep, the Board was blind).

Test Your Knowledge

Question 1 of 5

1. Does every organization have Governance?

Yes, every organization has some system of decision making/control

No, only public companies

No, only governments

Only bankrupt companies

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