In the recent past, several reputed corporate houses in India (I prefer not to mention individual names) reported governance challenges. We went through intense discussions in Print Media and Electronic Media. Promoters and Board and supporters of these groups were busy in pointing fingers at each other by making strong pitch for Good Governance. If everyone is interested in true Governance, where is the issue?
As a person who is passionate of Governance topic, I believe it is not the principle that should be debated, but the spirit. There is a failure of spirit of Governance in spite of strong board and articulated governance structure. A corporate can have highly qualified and accomplished board. It may give them edge from business networking. But it will not guarantee good governance if the board fails to embed the spirit of Governance in the culture of the organization.
Taking a narrow definition of corporate governance by the Promoters/ Board have time and again proven ineffective in preventing corporate failures and erosion of value for the stakeholders. The key issue is not whether companies comply with the various provisions of regulations but whether board and top management embraced the spirit of governance, i.e. managing the organization in the most effective way. This is the spirit that supported the principle in the setting up of the Cadbury Committee in 1992.
The goal of corporate governance is to achieve corporate excellence. A careful interpretation of various definitions of corporate governance truly substantiates this perspective. Good corporate governance in the changing business environment has emerged as a powerful tool for both competitiveness and sustainability. Global competition in the market requires the best planning and management, innovative ideas, compliance with laws, and good relations between directors, shareholders, employees, and customers.
Good governance is the qualitative state of excellence in decision-making.