Home > Topics > Business Ethics and Corporate Governance > Governance vs Good Corporate Governance
← PreviousNext →

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).
VS

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.
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
← PreviousNext →