GOOD GOVERNANCE MEANS TO LEAD BY EXAMPLE

I am really pleased that we seem to be doing something right, well at least on the face of it! What's disturbing however, is that according to another set of statistics (and remember we are supposed to believe the conclusion that statistics reach) we have the highest 'white collar' crime in the world.

Now the question obviously is, are we the highest achievers in 'white collar' crime because they have been found out, due to the fact that our Corporate Governance is correctly in place or is the Corporate Governance thing not having any kind of effect which is why we have the highest 'white collar' crime in the world.

I for one would be interested to hear the answer, if there is one, to this.

Good governance means to lead by example
Ntokozo Ndlovu

09 October 2006 at 06h00

According to the Institute of International Finance (IIF), a global association for financial firms, South Africa rates among the best performers in corporate governance in emerging markets. Yet there is need to create awareness and an understanding of the importance of good governance to allow all parties in corporations to engage in this practice.

The King Report, which provides a set of codes of corporate practices and conduct, makes a series of recommendations on corporate governance in South Africa. The King Report advocates transparency in all business dealings, and serves as a minimum standard of codes of good corporate practices and conduct. It outlines the importance of corporate governance in achieving financial objective and in fulfilling corporate responsibilities."Corporate governance ought to be impregnated first within education, and developed in the work environment to allow for well-informed and ethical leadership" says Professor Katherine Munro of Wits University.

The key elements of corporate governance are discipline, independence, accountability, responsibility, fairness, and corporate values. Most employers prefer to do business with those business enterprises that uphold the key elements of corporate governance, and companies should comply with relevant governance codes to create viability in the market and to attract investors, and to sustain the good image of our corporate governance status in the international market.

Corporate governance therefore is the guiding principles on good business conduct and gives guidelines on risk management and the potential consequences of mismanagement. Munro notes that texts such as the King 1 and 2 reports are meant to teach scholars and influential company figures how to become good practitioners of good business practice.

Identifying and managing risk, monitoring and reporting, transparency, efficiency and disclosure of information are some of the most important aspects of good corporate governance. There is need for companies to outline and adopt clear governance structures and to demonstrate integrity and commitment in their dealings. "Corporate governance provides codes of acceptable ways in which companies must behave, and this needs a complete buy-in from all players within an organisation," says Munro. She says that in order for this practice to effectively work, there is need for everyone with the organisation to subscribe to good codes of corporate governance, and for management to ensure that they lead by example.

Corporate governance in turn is essential in building good reputation for companies and in creating viable and internationally recognised corporations. Munro advises that anybody with the responsibility for ensuring that a company functions efficiently must acquire some knowledge of corporate governance. "It is not how you do things in an organisation, it is why things are done in an organisation that differentiates those in good practice from the rest," she says. "And everyone in the workplace is responsible for everyone, it is each person's responsibility to ensure good governance, honesty, transparency, efficiency and ethical conduct," she says. Therefore it is of value for both employers and employees to understand and apply the principles of good practice in business conduct.

It must be understood that good corporate governance is not only for employers but for employees as well. Equal participation from parties involved will allow for the building of a good reputation for companies. "Employers should be equally responsible to employees and communities in which they operate, not only as a matter of law, but as a matter of good practice," concludes Monroe