Corporate governance involves the reconciliation of the interests of stakeholders. Attention has tended, historically, to be focused upon the role of shareholders and managers. However, stakeholders can also include editorial and production staff, customers, suppliers and communities.Governance is how society or groups within it, organise to make decisions
UNESCO defines governance as: ‘structures and processes that are designed to ensure accountability, transparency, responsiveness, rule of law, stability, equity and inclusiveness, empowerment, and broad-based participation. Governance also represents the norms, values and rules of the game through which public affairs are managed in a manner that is transparent, participatory, inclusive and responsive. Governance therefore can be subtle and may not be easily observable. In a broad sense, governance is about the culture and institutional environment in which citizens and stakeholders interact among themselves and participate in public affairs. It is more than the organs of the government.’
Values and ethics are crucial for all organisations
Many people argue that companies are not just about profit maximisation, they have a social duty to their employees and the communities they serve. The economic debate focuses around the prime responsibility of a business; between Monetarist and Keynesian economic theory.
Do you think the prime purpose of a business is to create shareholder value?
Simply put, the difference between these theories is that monetarist economics ( typified by Milton Friedman) involves the control of money in the economy, while Keynesian economics involves government expenditures. Monetarists believe in controlling the supply of money that flows into the economy while allowing the rest of the market to fix itself. In contrast, Keynesian economists believe that a troubled economy continues in a downward spiral unless an intervention drives consumers to buy more goods and services. Companies and those who work in them have various motivations, how these are marshalled within the industrial landscape is part of an organisations corporate governance. Organisations have obligations to a wide variety of stakeholders, not just their shareholders or proprietors. They are embedded within wider social, political, cultural and ethical contexts. Therefore, firms face ethical dilemmas every day.
A starting point of reflection:
- What is your moral or ethical or framework?
- How do you judge what is right or wrong, good or bad?
- Is there a role for ethical behaviour in business, beyond to o maximise profits?
- What do you understand by Corporate & Social Responsibility?
- Does the end justify the means?
And, therefore:
- Do we need codes of ethics within all firms?
- What principles inform the development of ethical codes?
- Are they meaningful?
- Is it useful or practical to talk about universal codes of business ethics?
- Should we differentiate between professional codes and corporate codes of practice?
This is a complex matter
It is difficult to disentangle the cultural and ethical aims of an organisation from its commercial objectives. For some organisations an ethical and campaigning stance is an intrinsic component of the company’s success.
Some organisations will disavow, to some degree at least, any explicit link between ethical and cultural imperatives and their organisation’s activities. Some may argue that the one objective is to serve the market and the audience and by doing that (and serving the needs of those who want challenging and high quality programmes) one will fulfil public service objectives.
In the most extreme version of this argument, some argue that a company’s only duty is to maximise profit and, working within the constraints of regulation, maximise the return to shareholders.
Ethics and values inform the scope of the organisation, its aims and the ways in which it pursues its aims.
If you want to know more about this matter study the learning module on Corporate Governance.