“Governance is a journey it is not a destination”
Professor Mervyn King
I was recently invited to the Life Time Awards evening for Professor Mervyn King at Regenesys. A committed South African, dedicated campaigner for justice and fairness, an accessible and selfless man, Mervyn King has consulted, advised and spoken on legal, business and corporate governance issues in 39 countries. He has chaired and been a director of several companies listed on the JSE and is probably best known as the Chairman of the King Committee on Corporate Governance At 81, he is highly energetic and is extremely passionate about ethics in business.
Generally, societies find comfort in categorising certain values of common connection to solidify their sense of community. These values, beliefs or ethics form a certain shared understanding amongst a certain community. Specific to the business world, is the integration and understanding of business ethics, that is, those that are specific to an organisation as per their values and those that form part of an internal culture.
In his talk, Professor King differentiates between economic imperatives and moral imperatives in business where it is often necessary to conduct business “unusual”. This is especially with regard to “how we leave an earth to the future generations”. He emphasises that there must be a shift from one of self-concern and self-interest to concern for risks that involve and affect society. In my perspective, these should be general values upheld by society at large.
Professor King adds that: “one of the corporate tools for today’s business is integrated thinking”. This extends strategy and daily management beyond the pure financial to encompass the social and environmental factors that deeply affect a company’s future viability in the 21st century. Integrated thinking leads to another tool – the integrated report. An integrated report tells the company’s story of how it creates value and how it can create value in the future.
Here are some questions that I would like to leave you with:
- So what can you do to make sure that your business is taken seriously?
- How can you show that you will provide value to your stakeholders, such as investors, shareholders, employees, customers, suppliers, and the community around you?
- How can you show that you aren’t just a fly-by-night company that will walk away with an investor’s money or provide an inferior product or service to your customers?
One of the ways that small businesses can communicate their legitimacy is by following the principles of good corporate governance. Here is a summary that I hope will help you:
- Ethical culture: The golden rule for being ethical is to treat others in a way you would like to be treated yourself.
- Good performance: This includes sustainable economic growth, which means that the company should aim to make decent profits each year, and also build a sustainable business that can meet their future needs.
- Effective control: To manage a business effectively, directors should aim to use as little resources as possible while maximising their results. To do this, management should consider the internal and external risks of the business and work out a strategy to steer the business in the right direction so that it can achieve its goals. Directors should also have the necessary skills, experience, and knowledge between them to manage all areas of the business successfully.
- Legitimacy: For a business to be seen as legitimate, management must show that they are competent and serious about making their business a success. Legitimate companies are trustworthy and they develop a good reputation.