Today’s face of Corporate Governance

The face of corporate governance in the world has shifted from traditional habits of complying with rules, regulation and all governance requirements in order to stay out of troubles; to corporate governance which is driven by ethical and effective leadership that enable the organisation to achieve desired outcomes. The new era advocates for a judgment call to a practice, as to why a practice or principle should be applied? What are the end results of implementing such practices? Is the end result, the desired governing outcome? A board of directors as a governing body of an organization must first certain itself on a question of why this practice? As a matter of fact, a mere application of a governing practice doesn’t automatically result in good corporate governance.

King IV Report is one of the governing tools supplementing the Company Act and SOEs Governance Act. The report highlights an outcome based approach as a method that Board directors or Trustees may adopted in selecting governing principles for implementation. Good corporate practice application and results that may be achieved vary from entity to entity. The approach placed a responsibility on the governing body to attain the governing outcomes of an ethical culture, good performance, effective control within the organization and legitimacy, good reputation and trust by the stakeholders.

In Namibia, many Private and Public companies have at certain degrees correctly adopted good corporate governance practices, but failed to deliver on their mandate despite having many practices in place. The board of directors and managers need to indoctrinate a culture of navigating towards the governing outcome in the execution of their primary responsibilities. An organisation can only be said to be good governed if it is performing well, trusted by the shareholders and its controls are effective, and remember the judgment call is not based on the number of practices nor principles in place.

An element to principle of corporate governance that all governing body need to understand is that; not all corporate practices are to be implemented; organisations may only choose some that they think will work for them. It is much better to implement two or three principle that bring about the desired outcomes instead of a cluster practices that jeopardise the governing process. A notion of ‘monkey see monkey do’ should vacate the boardrooms.

A common example; there are entities especially in some SOEs that have implemented a practice of having Risk Officer, Chief Information officer and Compliance Officer in their structure as check and balance icon,  but yet, such entities have no effective controls in place, the opposite may be true. This happens because entities are only mindful of fulfilling what is referred as governance checklist without measuring the value addition by adopting a practice and the end result is not favourable.

“Nothing is wealthier than having sight in our vision”. It is therefore an institutional benefit for a governing body to understand the desired results of corporate governance and the activities that will drives them in achieving the corporate governance outcomes.

By:

Onesmus K Joseph - ACIS/ACFE/BAP/CFIP/PPL

MPHIL Candidate - KNUST (Kumasi; Ghana) 

Governance Practitioner

josephonesmus@yahoo.com