A business is not run by one person only but by a group of individuals contributing their expertise for a common goal. When different individuals group together, it is natural for the group to establish a government amongst themselves, followed by the rise of a leader.
Only afterward can we tell if such governance is good or bad. However, naturally, we can say that the government is good if it successfully achieves its people’s or organization’s goals and can unite its people.
Here are some of the core principles of good governance.
Fairness
Fairness simply refers to the equal treatment of all shareholders. However, when we look into this deeply, ‘equal treatment’ really means giving equal consideration to all shareholders. These considerations include opportunities, security, treatments, and democracy.
Fairness can also be seen as giving appropriate shares of business profits to shareholders with its investments, giving bonuses to employees who exerted more effort and produced more outcomes than others, or even observing proper hiring, promoting, and firing processes.
Accountability
Business accountability refers to the obligation and responsibility to give an explanation or reason for the business’s actions and conduct. The management must be able to take responsibility for its actions regardless of the outcome.
Good management fulfills its obligations to all its stakeholders and its responsibilities to the organization, community, and people (customers). Good management can admit its mistakes and take appropriate actions to correct them. It communicates everyone’s roles in the organization and knows who is responsible for this and that.
Transparency
Good governance places great emphasis on transparency to its stakeholders. This mainly includes implementing effective information systems and proper communication practices. Being transparent means openness and willingness to provide clear information to the stakeholders about the organization’s plans, risks, activities, and results.
Hence, transparency is the government’s greatest tool in establishing trust and confidence in the decision-making and management processes of the business.
Success can only be achieved if the one leading is leading with the best intentions (principle of fairness), capabilities (capable of becoming accountable), and trustworthiness (transparent).
