Governance

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The term governance deals with the processes and systems by which an organization or society operate. Frequently a government is established to administer these processes and systems.

The word derives from Latin origins that suggest the notion of 'steering'. This sense of 'steering' a society can be contrasted with the traditional 'top-down' approach of governments 'driving' society or the distinction between 'power to' in contrast to governments 'power over'.

Contents

1 Meanings
2 Corporate governance
3 Project governance
4 Global governance
5 See also
6 External links

Meanings

The World Bank defines governance as

the exercise of political authority and the use of institutional resources to manage society's problems and affairs.

An alternate definition suggests that governance is

the use of institutions, structures of authority and even collaboration to allocate resources and coordinate or control activity in society or the economy.

English-speakers sometimes erroneously confuse the term governance with the term government.

Some suggest that there should be a clear distinction between the concepts of governance and politics. Politics involves processes by which a group of people with initially divergent opinions or interests reach collective decisions generally regarded as binding on the group, and enforced as common policy. Governance, on the other hand, conveys the administrative and process-oriented elements of governing rather than its antagonistic ones. Such an argument continues to assume the possibility of the traditional separation between 'politics' and 'administration'. This distinction is sometimes questioned in contemporary governance practice and theory, under the premise that both 'governance' and 'politics' involve aspects of power.

In general terms governance occurs in three broad ways:

through top-down methods that primarily involve governments and the state bureaucracy,
the use of market mechanisms where market principles of competition are employed to allocate resources while operating under government regulation and
through networks involving public-private partnerships (PPP) or with the collaboration of community organisations.

These modes of governance are often presented in terms of hierarchy, markets, and networks.

Corporate organizations often use the word governance to describe the manner in which boards or their like direct a corporation, and laws and customs applying to that direction.

The term governance also occurs in industry—especially in the information technology (IT) sector—to describe the processes to follow in a successful department, team or project.

A fair governance implies that these mechanisms function in a way that allows the executives (the "agents") to respect the rights and interests of the stakeholders (the "principals"), in a spirit of democracy.

Global governance refers to a system-wide structure that both allows and constrains the behavior of actors in interdependent relationships in the absence of an overarching political authority. The global international system offers the best example of this.

Corporate governance

See the main article at corporate governance.

The fundamental concerns of corporate governance include:

* ensuring that conditions apply whereby a firm's directors and managers act in the interests of the firm and of its shareholders and even of its workers

* ensuring the means exist to hold managers accountable to investors and employees for the use of assets

Corporate governance specifies the relationships between, and the distribution of rights and responsibilities among, the main groups of participants:

* the board of directors

* the managers (if any)

* the workers

* the shareholders or owners

* the regulators

* the customers

* the community (people affected by the actions of the organisation)

* the suppliers

The individuals within the above groups transact with the firm for their own individual purposes, so as the entire group can achieve more mutual benefit than any individual can alone. For instance, directors, workers and management receive salaries, benefits and reputation; whilst shareholders receive capital return. Customers receive goods and services; and suppliers receive compensation for their goods or services. In return, these individuals provide the time, labour, expertise, capital, goods, services, consent, etc required for the organisation to pursue its purpose.

The edifice of corporate governance includes:

* the national/regional laws governing the formation of corporate bodies

* the bylaws established by the corporate body itself

* the organisational structure of the corporate body

Corporate governance aims to:

* align the actions of the individual parts of an organisation toward aggregate mutual benefit

* provide the means by which each individual part of the organisation can trust that the other parts each make their contribution to the mutual benefit of the organisation and that none gain unfairly at the expense of others

* provide a means by which information can quickly flow between the various stakeholders to ensure that the changing nature of both the stakeholder needs and desires and the environment in which the organisation operates get effectively factored into decision processes

Project governance

See Main article Project governance.

The term governance as used in industry (especially in the information technology (IT) sector) describes the processes that need to exist for a successful project.

Global governance

see the main article at Global governance for a more detailed explanation.

In contrast to the traditional meaning of governance some authors like James Rosenau ^{[#endnote_Rosenau]} have used "global governance" to denote the regulation of interdependent relations in the absence of an overarching political authority. The best example of this in the international system or relationships between independent states. The term can however be applied wherever a group of free equals need to form a regular relationship.

External links

[Development Gateway Governance Community]
[The Encyclopaedia about Corporate Governance]
[A Whitepaper on IT Governance]
[The Inspector General - A Governance Legacy]
[Governance Focus] issues in governance worldwide, in English & Español
Theories of Governance by [Renate Mayntz], [R.A.W Rhodes], [J. Kooiman]

[A Whitepaper on Sarbanes Governance]

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