Corporate governance and stakeholders value system (I)

Corporate Governance (CG) is essential for the survival and sustenance of any corporate organization, and its positive impacts in the long run far outweigh whatever could be regarded as its downside when properly implemented.

Corporate Governance (CG) is essential for the survival and sustenance of any corporate organization, and its positive impacts in the long run far outweigh whatever could be regarded as its downside when properly implemented.

There could be many views on the definition of CG, but according to John Kyriazoglou, 2020, Corporate governance, in general terms, refers to the body of guidelines, systems, policies, procedures and practices by which private corporations and public organisations are structured and governed(2). For most institutions of public interest, these elements of CG are clearly documented, and in many cases, huge sum of money is spent in institutionalising them, but the reality on ground shows that good CG practices are far-fetched. Among others, these elements include but not limited to corporate financial policies, information technology policies, information security policies, business continuity, board of directors’ charters, etc.

The key objective of CG is to ensure transparency of financial processes, establish effective balance between key stakeholders such as the shareholders and the regulators, set up limits and boundaries that control the excesses of shareholders and managers, among others.

Having been in the corporate setting for more than 17 years, I can confirm that, although, setting up these structures, policies and controls take time and huge capital outlay; implementing them to the letter is a major hurdle for most institutions. For many, institutionalising CG is a mere academic exercise that is meant to fulfill all righteousness demanded by their regulators or other interested parties.

Many institutions’ owners, managers, etc. either do not understand the controls or flagrantly bypass them for their selfish interests. The aim of this article is to help unravel the factors that may have contributed largely to these defiant behaviours and how they can be mitigated against, at least, by institutions which are genuine about making them work.

Exemplary CG practices are enshrined in the espoused value systems of both the individuals within an institution and the institution itself. Espoused values are the stated and desired values or beliefs of an entity – person or institution. For an institution, for instance, it is enshrined in the written core values statement, mission and vision statements, while for an individual, it is the intrinsic value, i.e. the beliefs of the person that make the person do what he/she does largely.

We also talk about the enacted values of an institution. Enacted value is the real values of an institution as perceived by members of that institution. In other words, enacted values are the real values of that institution and not the stated or espoused values.

For example, when an institution states integrity as one of their core values, yet the internal practices of members of that institution have nothing to do with integrity, CG practices in such an institution will not be anything exceptional. It will be selectively practised suiting the need of the moment. Good CG practices are at the heart of institutions whose espoused values and their enacted values are in congruent.

Allowing the compliance team freedom to operate

Alignment of the espoused values and the enacted values is a bedrock for good CG practices. For many institutions, this is a huge task because talks are cheaper than actions. However, it is doable. The compliance department needs to be allowed to implement measures for this alignment without too many interferences from the executives. Interferences from the executives should be in congruent with the espoused values of the organization, and not just to overrule the compliance initiatives. The standard practice is to allow the head of compliance to report directly to the board of directors. This practice allows check and balances between the executive power and the activities of the compliance unit. Breaching this standard practice may result in weak compliance with policies that promote good CG practices.

Human is the weakest link in any system, especially where issues of security is paramount. Employing the services of people with track record of good value systems, conducting an extensive background check prior to employment is critical. This will not completely guarantee that an employee value system will be in sync with the espoused values of the company; it will, however, confirm an intention in the right direction of hiring people of values. Furthermore, organisations must constantly train and motivate their employees on best practices that align with the corporate values.

Occasional mystery shopping is an added initiative for top management or even the non-executive directors to know how the public views their espoused values and how the employees of the organisation are integrating the organisation’s values into their daily activities. For institutions who claim that customers delight is one of their core values, mystery shopping from an ‘aggrieved’ customer (a top executive, or a hired third party) over a period will show if customer service personnel have personalised or internalised the stated value.   Mystery shopping is a cheap tool that institutions can employ to know how much of their values are being breached or bypassed, and by who.

Measuring corporate values in performance appraisals

It is not uncommon to see that corporate values are hardly integrated into organisations’ performance appraisal systems, especially where profit ‘by all means’ is the focus. A paradigm shift in the process of appraisals for many organisations is required. Institutions should begin to incorporate values appraisal into the entire organisations’ appraisal system. Managers should not only be interested in the financial targets or revenues, but also in how the target was met, and frown at breaching the corporate values in meeting those targets.

Appreciate employees who promote the espoused corporate values

Organisations must make it a priority to constantly and publicly appreciate employees who have been able to effectively integrate the organisations’ values into their day to day activities, even if the employees’ financial targets are not met. Sometimes, financial targets may not be met because of proven refusals to compromise the values of the company. For instance, a bank official who refuses to cut corners or engage in shady deals just to meet a target should also be rewarded for upholding the values of the company, rather than penalising him/her for simply not meeting target without looking at why he/she was not able to meet the target. I believe that in an environment where good CG is promoted, there will come a time when to walk away from a deal, no matter how lucrative it was, would be the ideal thing to do. There are financial institutions who would rather walk away from lucrative deposits just because some seemingly non-essential documents could not be sighted.

In the article ‘Fighting Corruption the Celtel Way: Lessons from the Front Line’, one of Celtel’s corporate values (espoused and enacted) is: “We are open, honest and transparent” (2).  In their own words: “We applied these values at all levels: from the shareholders and the Board to a handbook for every employee (2). One of the ways they enshrined this value into their dealings – especially in Africa where 1 out of every 4 Africans was said to have paid bribe to access a service by a 2020 report, and where about US$145billion is lost annually to corruption (3) – was to ensure that every dime paid to government machineries in any form is discussed and approved by the board and further reported to the donor communities. The outcome of any government ‘frontman’ not agreeing to these transparency clauses is for Celtel to walk away from the deal and it is a case closed! There are many other institutions who have walked away from other lucrative deals simply because they would not compromise their values. This is one major attribute that many foreign investors are looking for before they enter into any partnership.

When institutions in an economy begin to have the right mix between their values and profit making activities, integrate their stated values with their day to day activities, and put active measures in place to narrow the gaps between their espoused values and their enacted values to achieve value congruency, then a solid foundation will be built to accommodate whatever economic boom that may be in the offing – both for the organisations and the economy at large. Good CG practices are not just for the advantage of the companies practising them, but for the good of the public.

In subsequent editions, we will discuss the effects (positive and negative) of enacted or practised values on each of the elements of the CG.


  1. Fighting Corruption the Celtel Way: Lessons from the front line, Worldbank, May 2005
  2. Corporate Governance Controls, John Kyriazoglou, Dec 2020.
  3. BBC NEWS | Africa | The cost of corruption in Africa

Disclaimer: The views expressed are personal views and don’t represent those of the media house or institution with which the writer works.

About the writer

George is the Executive Director, eTranzact Ghana Ltd.

Contact:  [email protected], Cell: +233 244285147

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