The Governance governs… without any obligation of a Sound Management!
On the contrary, if we are entitled to take offence at something, it should be related to the fact that we are paying for the astronomical amounts received by the high managers who didn’t succeed to generate the expected profits, who took huge risks and caused job losses, who misspent or stole our savings, or who ran away with the cashbox. And besides, who would be entitled to golden parachutes? This is when we can and have to require the compliance with the Sound Management model.
Ever since the blog was created on the site of the Institute, several persons have asked us to clarify the difference between Governance and Sound Management. What could the Sound Management concept add to the speech about ethics and governance? Here is a short explanation.
Governance or Sound Management?
In fact, if we exclude the omnipotent expectation of some, governance and management are synonyms. We’ll therefore emphasize the word “Sound”.
There are basically two ways of approaching this field that aims at the supervision, monitoring, and audit of the management. The first way is the legalistic approach, which allows us to hide behind the expression «a rule of law society» where law and rules prevail. Generally speaking, the supporters of governance claim to adhere to this theory. In fact, why would they do more than what it’s stipulated by the legislator? Moreover, the role of the legal consultants often consists of finding a way to get around these rules.
The second way, a managerial one, aims at enriching the management by adding the qualifier “sound” consisting of a referential of principles and norms called the Generally Accepted Sound Management Principles (GASMP).
Therefore, the GASMP are centered on the managerial functions (Plan, Organise, Direct, Control, and Coordinate) and on the six fundamental principles of Sound management: Transparency, Continuity, Efficiency, Balance, Fairness, and Abnegation. This combination results in a 41-cell matrix serving as a tool for the compliance audit.
Based on this system, a model was born allowing a real accountability cell by cell. Compliant or non compliant. The materiality of every noncompliance will be determined depending on the organization’s mission and stakes. This method allows a self-diagnosis and the implementation of a management framework suggesting the actions to be taken by managers for each of the 41 cells.
The GASMP are for managers what the GAAP (generally accepted accounting principles) are for accountants. These principles aren’t part of a law but the law regularly makes reference to them in order to express the good accounting practice. Similarly, the GASMP could very well play this role in order to define the meaning of a sound management. Could we have avoided such scandals such as Norbourg, Jones and Enron? I’ll prove it to you sometime later this spring.
3 comments
> Aurions-nous pu éviter les scandales à la Norbourg, Jones et
> Enron ? Je vous en ferai la démonstration un peu plus tard ce printemps.
À quand la démonstration?
Je suis à préparer le texte qui fera partie de la prochaine édition d’exercer la Saine Gestion. Sur le site de l’ISG je pourrais procéder par feuilleton, c’est-à-dire par un article où s’ajouteraient de nouveaux textes à toutes les deux ou trois semaines. Je m’interroge, qu’en pensez-vous ?
Ça dépendra peut-être de la demande et de l’intérêt ?
Bonne idée! On ne manquera pas de suivre le “feuilleton” alors.