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14.11.2002 Feature Article

GOVERNANCE: Concepts, Principles and Applications.

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Apparently, 'governance' has emerged from obscurity into being a mainstream topic – just like the commonly known buzz words like accountability, transparency, integration, commitment, leadership and integrity. Prior to providing some definitions of 'governance', it must be emphasised that the fundamental elements of governance are well known throughout both the private and public sectors of developed and developing countries. However and very interestingly, it is the practice and application of the elements therein in the two respective economies that differ. These differences have come about as a result of some factors (mainly negative) that militate against achieving the desired goals (future articles will elaborate on these factors). It should be pointed out, at this juncture, that the said debilitating factors are systemic - right from top management (strategic) to middle management (tactical) through to frontline workers (operatives). As it is well known, to be able to formulate and implement a policy, one has to define and articulate one's objectives and goals accompanied by their assumptions and constraints. Additionally, one has to be cognisant of the strengths, weaknesses (internal) and opportunities and threats (external) inherent in such policies; and importantly, the impact the policy outcomes/outputs (results) will have on the economy and the community. Enmeshed into this 'policy formulation and advice theory' is the concept of 'governance'.

There are many definitions of governance. Included here is a selection of those available, to provide a basic understanding of the concept.

At the highest level, governance is taken to mean 'the way in which socio-economic power is exercised in managing affairs within a community' (eg the Executive). The community of interest can vary from international to national, regional or local.

At the level of organisation (eg government agency/corporate entity), governance deals not so much what organisations do as with how and why they do it.

Corporate governance in both the public and private sectors is concerned with the way in which organisations are structured and managed in pursuit of effective performance in terms of achieving desired outcomes and satisfying shareholders.

Governance can be defined in terms of structures and processes, of direction and control, and of managing the multiple internal and external relationships, or in terms of substantive elements such as performance, compliance, and accountability (financial and non-financial). The government and its advisers, corporate entities, educational institutions, hospitals, the unions, inter alia, all fit in this definition.

Viewed from a 'performance' perspective, good governance 'sets the direction and ensures that progress is being towards long term goals' From a 'conformance' perspective, good governance encompasses the 'structures and processes for decision- making, with controls and behaviour within organisations that support effective accountability for performance measures.

It is reassuring to note that one would not doubt the importance of good corporate governance. The recent collapses of Enron in the USA, HIH and One Tel in Australia, our (Ghana's) own GIHOC subsidiaries and other state-owned enterprises have stimulated considerable debate about importance of corporate governance in both the public and private sectors. This also includes arriving at a more appropriate balance between 'conformance and performance', rather than simply reflecting any perceived 'box'ticking' approach to corporate governance.

For efficient and effective operations, all agencies be it public or private should endeavour to adhere to the above concepts to achieve the required outcomes. Their entire structures (strategic, tactical and operations) should be guided by these concepts to achieve outputs/outcomes in a timely manner, within budget whilst meeting all the required quality requirements. In summary these endeavours by the respective entities should be backed by effective government policies in the areas of auditing, performance measurements, showing key performance indicators (KPIs), financial management and reporting and related accountability and transparency principles. Charles Agyeman Manu Assistant Director Professional Development Australian Public Service. Member of National Institute for Governance. Canberra, Australia.

Charles Agyeman Manu
Charles Agyeman Manu, © 2002

The author has 14 publications published on Modern Ghana. Column Page: CharlesAgyemanManu

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