BANK of Zambia (BoZ) governor, Michael Gondwe’s advice to business houses that they have a duty to prudently run their operations by adhering to tenets of good corporate governance for economic expansion is highly related to the purpose of effective PR in an organisation and to national development processes.
Undoubtedly, Good corporate governance leads to national economic development.
It is not only politicians and the government of the day who promote national development processes in a country but also each organisation has a role to play in socio-economic development drive of a country.
The current high unemployment and high poverty levels speak volumes about how most organisations practice corporate governance.
In this article, the words ‘organisation’ and ‘business’ will mean the same thing.
Speaking during a meeting for corporate governance and finance which Zambia Institute of Chartered Accountants (ZICA) and the Institute of Directors of Zambia recently organised in Lusaka, Dr Gondwe said the focus of businesses should be on changing behaviour and building capacities of stakeholders to get the best out of organisations they own or run (Saturday Post: 6/12/2014; 5).
The BoZ governor said the three important elements of corporate governance that can lead to business expansion and national development were strengthening market disciplines, building board competencies and installing right values in the running of a business.
Do you see such tenets of good corporate governance in most organisations? One can argue that they are rare in most organisations.
Dr Gondwe said strengthening market disciplines includes stakeholders applying effective checks and balances on an organisation.
Stakeholders are PR publics who determine the success or failure of an organisation. To achieve this, the BoZ governor said because the stakeholders have the right to know what is happening in an organisation, meaningful disclosures from top management about what is happening in an organisation is critical.
Do you know of any organisation that makes deliberate efforts to reveal to stakeholders; including employees, board members and customers all the details of what is happening in that organisation?
Dr Gondwe argued that some boards do not have capacity or expertise to deal with the affairs of a respective organisation despite some of the challenges respective organisations might be facing.
One can agree with Dr Gondwe that if most respective boards had capacity or expertise, most of the challenges some organisations face would have been addressed; leading to high productivity, business expansion and more job opportunities in each organisation.
But the Central bank governor added that installation of right values in the operation of an organisation is another critical tenet of good corporate governance that can contribute to national development processes; adding that in the recent past, Zambia experienced failures in risk management, accounting scandals and many other forms of fraud as a result of not having right values in corporate governance.
As if this is not enough, one also learns that Zambia’s education quality indicators are very poor (ZNBC News: 8-12/12/2014: p.2).
One can agree with such reports when one considers inadequate educational materials in many learning institutions; from primary to tertiary levels. From primary to secondary education levels, reports that the teacher to pupil ratio is too high to facilitate effective learning negatively affects learning.
While education specialists state that the recommended teacher to pupil ratio is about 1: 40; the current situation in most urban government schools, such a ratio reaches as far as 1:80 or 1:120 in some cases.
Such a negative facilitator to beneficiary ratio is also common in health, agricultural and environment related sectors. This means that good corporate governance is not only applicable to the private sector but it is also applicable to the public sector.
Could poor quality of education system and standards our country has been experiencing in the past two or so decades now be negatively affecting corporate governance in most organisations?
It is failure of most organisations to adhere to tenets of good corporate governance as Dr Gondwe articulated that we have high unemployment and high poverty levels in our country.
Weak corporate governance structures cause failure of organisations; adding that failure of organisations leads to undesirable consequences to businesses and households that include the erosion of public trust that might take years restore.
It is against this background that, referring to high unemployment and high poverty levels in Zambia, Economic Development Consultant, Robert Liebenthal in an interview with ZNBC News said there is need to raise productivity in existing sectors to improve the living standards of the people.
With high unemployment and high poverty levels and poor education system and many other challenges this country is experiencing, one can conclude that market disciplines are low, board capacities or expertise are far from being inadequate and right values in most organisations are rare.
What is interesting is such revelations and discussions is that Dr Gondwe’s and Mr Liebenthal’s views are in tandem with the purpose of effective PR in an organisation.
Dr Gondwe talks about strengthening market disciplines through meaningful disclosures for stakeholders to provide effective checks and balances on what is happening in an organisation.
Firstly, meaningful disclosures in corporate governance are in line with one of the PR definitions that it is a communication function of management. This means that top management in organisations should provide two-way communication process between an organisation and its stakeholders.
Secondly, Dr Gondwe’s understanding of importance of good corporate governance also supports British Institute of Public Relations’ definition of PR that it is a deliberate, planned effort to establish and maintain mutual understanding and goodwill between an organisation and its publics (As revised in 1987).
With deliberate efforts to provide adequate information on what is happening in an organisation, respective workers, board members, respective government institutions, customers, etc(if they have capacities and expertise) can provide effective checks and balances and support to ensure that an organisation is run according to its strategic plan to achieve the desired objectives in a given time.
This is possible if an organisation has right values. Right values include honesty, objectivity, fairness, professionalism, morality, integrity and many other values that relate to professional code of conduct and business ethical practice.
But instead of strengthening market disciplines, developing competences in boards and installing right values, one sees most organisations manipulating stakeholders to serve personal or selfish motives at the expense of good corporate governance that promotes public interest.
Such an approach to business management does not only negatively affect productivity and profitability of a respective organisation but it also erodes public trust in that organisation.
Therefore, good corporate governance like effective PR doesn’t start and end on profitability of a business’ operations. In fact, it is another immoral thing to have high profits when workers, customers and many other stakeholders are manipulated and disadvantaged just because top management officials want to maximise egocentric interests or top management wants to increase business’ profit maximisation motives.
Although some people in corporate governance and PR seem to be two worlds apart, technically and in purpose, they are one and share the same concepts. Both aim at attracting stakeholders to an organisation; and ensuring that such stakeholders advice and support a respective organisation through necessary checks and balances for an organisation to adhere to and promote right values that can lead to high productivity, high profitability and expansion of a respective organisation.
In this analysis, contributing to and practicing good corporate governance is part of being patriotic to one’s country.
Consequently, if each organisation can have good corporate governance (effective PR practice), the country can have more decent job creation opportunities which can contribute to poverty alleviation in our country.
The author is a PR Trainer and Consultant.
For comments and ideas, contact:
Cell: 0967/0977 450151
E-mail:sycoraxtndhlovu@yahoo.co.uk