Does the term 'corporate governance' need a spring clean?

6/1/2016

Have you noticed how 'corporate governance' has pervaded the modern lexicon? The term is used in all manner of contexts nowadays. Some are appropriate and some less so. I wrote about this last year, off the back on a comment made by Rob Campbell. Here's a couple of fresh examples that I've heard used in the last sixty days:

That "more women are needed in governance". The speaker probably meant more women are needed on boards, to govern. The subtlety? Women are people and boards are structures, whereas corporate governance is a mechanism through which and by which boards act. I doubt more women are needed within the mechanism! Rather, more women are needed on the board, to activate the mechanism more effectively, in pursuit of desired performance objectives.
"We'll get governance to look at that", and the variant "That will need governance approval". The two different executives (same forum, I was the facilitator) meant that the matters on the table needed to go to the board for consideration.

Both of these examples might sound a little contrived, but they are not. All three phrases were spoken, spontaneously and in my hearing, by capable and well-intentioned people. The people in the room knew what was meant, I think. However, these three vignettes set me thinking. Is our usage of the term 'corporate governance' starting to change—away from the original intention (describe the functioning of the polity, i.e., the board of directors) to something different, or have we become somewhat lazy in our usage? I'd be interested in your views on this one!

4 Comments

Peter Tunjic

6/1/2016 14:48:52

Hi Peter,

Wrote on this topic last year. Might be of interest. https://www.linkedin.com/pulse/governing-directing-theres-difference-peter-tunjic

Lee Mathias link

6/1/2016 17:07:17

Peter, my research indicated that to locate governance in a particular sector, even corporate, obfuscates the application of the generic principles of governance. In the health sector, for example, leaders are actively discouraging the use of the term "clinical governance " because it usually only deals with aspects of probity, especially quality and safety, and not any of the other foundation principles.

Peter Crow

6/1/2016 18:55:37

Thanks Lee, you make a good point. I'll re-read your findings. Over time, I have moved around a little on this one

At the highest level, the general principles (strategy formulation, providing accountability, policymaking, and monitoring and supervising, as espoused by Tricker) can and I think do stand up across all organisational types. Dropping down one level to entity type, companies are a separate case in law. Also the wealth creation agenda of company shareholders is not present in social, educational or other types of institutions. This has led me to the view that the implementation of governance in companies is, for now, worthy of separate treatment.

Harcourt IGN

7/1/2016 00:35:46

We should stick to the origin of the word - old Greek "kubernetes" = steering the ship = simultaneously orchestrated team effort of setting the direction, controlling ever changing circumstances and adjusting the course of the "ship". However I do agree that term governance doesn't serve the purpose anymore I.e. In family owned businesses we stil use Family governance as term which is generally not recognized nor accepted among owning families. GRC is another awful example of narrow interpretation... We do need broader vocabulary and diversity of terms in order to separate corporate governance from bad influence of her twin sister - political governance.

Does the term 'corporate governance' need a spring clean?

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