Governance: Why it matters

A question that keeps coming back concerning governance is, “why bother”? It is a relevant question, in part because governance is viewed through two dark-colored glasses. The first, that it is an imposition from the more advanced economies, whose rules are alien to our culture. The second, that it is precisely a set of rules and practices, which are costly and time-consuming to comply with, to a point that in many instances it has become an exercise in filling up the blanks and ticking off questionnaire boxes.

Indeed, why bother? To give a proper answer, we need to be clear about what governance really is.

Governance, shorn of its complex rules and its long list of what one must do, is rather simple and straightforward. It is about how anyone—whether it is an enterprise, a family, or an individual person—decides and acts. In this regard, it asks a few basic questions:

What core values do you live and work by? Are you clear and committed to a basic purpose, which then shapes your life and work?

In pursuing your basic purpose, do you have a clear idea of what you would like to become over a properly defined horizon, which is long enough to enable you to think and dream in a big way?

Do you have a focus on a few priorities, which you have chosen after taking a close and balanced look at all the important dimensions associated with your life and work?

Have you set concrete, quantitative targets of performance you aim to achieve upon reaching a milestone in the course of your journey toward realizing the idea of what you wish to become after a few years?

Do you take the time and exert the effort to assess actual performance, which is then set beside the original targets that you adopted? Do you learn from such an assessment, and then resolve on specific steps to take so as to perform always better in the course of your journey?

These five basic questions that governance asks are ordinary; they are to be expected of anyone who means well, lives well, and works well. They give us a guide on what we should give due importance to if we are to do well.

In light of these basic questions that governance poses, we should now be able to give answers to the original question of why it matters. The answers are straightforward and may be difficult to argue against. They are:

Core values are fundamental if along with the core purpose of our life and work we take them as the basic references for what we decide and do. They shape our identity. At bottom, they help define who we are.

The long-term horizon against which we frame our work and our life enables us to aim for “big, hairy, audacious goals.” It pushes us to aim for the moon and the stars. It gives us a clear sense of direction.

Moreover, our long-term ambition or dream (of what we wish to become) is never left up in the clouds. Instead, it leads us to make a few strategic choices of the priorities we should be giving a lot of importance to, if we are to put ourselves in striking distance of our ambitious goal.

In choosing the key, fundamental priorities, we take into account the imperative of making all facets of our life and work support each other in view of their basic inter-connectedness. In addition, we set targets of performance for each of the strategic priorities we have chosen.

Finally, targets set are meant to be met; and the real secret of why governance delivers actual performance lies in this: That at the end of the day, it is mainly about learning from the periodic, regular assessment we make of how we are coming along in terms of actual performance vis-a-vis the targets we had set.

The above look like long-winded answers to the question of why governance matters. However, if we are to come up with much shorter answers, we would end up with these generic words: Integrity; direction; focus; commitment (to meet targets); assessment (of performance, and this has to be periodic and regular). These are the exact same words that are associated with moving forward, attaining progress, and succeeding. And most certainly, these three do matter!

Moving forward, making progress, and succeeding do matter at all levels: They matter for our country as a whole; for corporations in business; for enterprises in government and civil society; for families; and for individuals as well. Thus, governance is well worth adopting at the national and corporate levels, and also at the level of enterprises, families, and individual persons.

We would do well to throw away those dark-colored glasses. For what is so foreign about governance; and why focus on the rules and best practices when there is much substance and real benefit that governance has to offer?

—contributed

Dr. Estanislao, chair emeritus of the Institute of Corporate Directors, has served in academe, government and the private business sector. A former Economic Planning Secretary and later Secretary of Finance, he was chair and CEO of the Development Bank of the Philippines and also the founding president of the University of Asia & the Pacific. He holds a Ph.D. in Economics from Harvard University, and an M.A. in Economics from Fordham University.