In one way of looking at it, governance is all about making decisions and implementing them – the decisions on how best to lead, manage and run, sometimes in a complex framework of many layers and levels where decision processes are handled. Perhaps it will help if we try to understand the processes by asking, who makes decisions and what governs decision making? To manage the answers properly, let us narrow down our focus on two basic units of the social structure – one at the nucleus of the structure – the family, and the other at the periphery – the Government.
There is a third unit however, which may appear separate from the other two, but in reality closely knitted with them. This important unit is the Business Organization (BO). The importance of this unit can hardly be overemphasized simply because of the fact that people spend most of their adult life working for the BOs – be it commercial, industrial, non-profit or state. However there is a distinct difference in the three units – in a sense how they take initiatives. The commercial and industrial BOs initiate actions by asking what makes money, in contrast to the families and Governments, who start by asking what makes sense.
All the three units are integrated together in the collective welfare, stability and growth of a society (a metaphorical image, credit: anon). Problems start to creep in when mistrusts develop among the units, sometimes because of the differences in the types of stresses on them, and how they are handled. In addition, Governments and BOs maintain what seems like a fighting posture with the help of paid lawyers and security apparatus – a family, on the other hand is mostly focused on the welfare of its members. All the three units should understand these aspects to the fact that the pursuit of the social equilibrium is impossible if the three units do not function coherently. The Government as a tax collector and overseer of things is entrusted by people to do just that. If the Government’s actions hinge toward BOs at the cost of family matters, the nucleus is crumbled jeopardizing the social equilibrium.
The relationship between the Government and people is a matter of public scrutiny. But the same between the BO and the Government is mostly conducted and managed behind the scenes in private. Both the parties go to public however, but only through press releases – with materials they want public to know – not what the public want to know. Most of the times the approach works out well, but when people’s interests are sacrificed by such actions then the purpose of democracy envisioned by Abraham Lincoln (1809 – 1865) is defeated.
When one thinks about who makes decisions, one would soon realize that the governance is both an individual responsibility and a collective one. The individual responsibilities are discussed in The Wheel of Life and the Social Order blogs. It is not only the individual’s actions and reactions, but also his or her thought processes that could sway governance in one way or another. Competence, maturity and the motivational discipline to accommodate diverse spectrum of people and opinions, are some of the factors required of an individual for good governance.
Moving on, let us try to briefly revisit some of the concepts that define each of the three units. Who makes decisions in a family? There was a time, when people used to call the able male elder the master of the family. The rationale for such a notion is long gone from most cultures. Now husband, wife and sometimes other members of the family join to make decisions on family matters. It is a good thing, because authoritarianism has yielded to the democratic concept of managing family affairs. But democracy comes with a great responsibility. In an aggressive framework of social order, this responsibility could get masked because one could easily be tempted to pick fights and quarrels to assert his or her cause, instead of listening to and accommodating the other.
Who makes decisions in a business organization? In a BO, the responsibility is entrusted to an executive team headed by the CEO, who is overseen by board members. Small businesses have structures similar like a family, but things become complex as they grow to a corporate structure. In a corporation, there appear various levels and layers of assistants who influence decision making. This does not mean however that all of them are privy to confidential information, inner knowledge, core strategy or policy. Unlike a family, businesses perform within cloaks of confidentiality and secrecy as a strategic approach to protect business interests and reputation, and also to allow the executives to make arbitrary decisions when needed. BOs’ primary obligations are to the shareholders, but they also communicate through press releases to build and reinforce public confidence.
Who makes decisions in a Government? Well, we all know the answer. Unlike professionals running a corporation, it is the elected people in a democracy – the country’s President or Prime Minister’s team – and at other levels provincial and local governments’ teams. The result is that the political executives heading the departments become highly dependent on the advice and guidance of top bureaucrats. The arrogance associated with a bureaucrat’s long tenure, privilege and expertise sometimes appear overwhelming to a non-tenured inexperienced political leader. Even the bests of political executives have very little choice other than to accommodate the bureaucrat’s reasoning, which may or may not be compatible with the political party’s visions. In addition, in some layers and levels of public affairs decisions are made by bureaucrats, not by the elected political leaders. Therefore it is impossible to have good governance unless bureaucrats are sincere and committed to the causes of the three units. Unlike the BOs, Governments walk on a thin line between transparency and secrecy. While some secrecy is unavoidable, unscrupulous elements within the administration could take advantage of secrecy to erode the much needed trusts among the units.
On what governs decision making, let us focus our discussion on three important common denominators – finance, stability, and growth. Proper management of these three factors is very important for good governance of family, business and Government. Let us not forget however that at project management levels, decision making is governed by the efforts to balance cost, schedule and quality within a given scope.
The first factor, and probably the most important one is finance or cash flow. Lack of, or high fluctuation in cash flow rips a family apart – many tragedies happen everyday across cultures. Technological advances and cost cutting measures across the board are only likely to aggravate the situation even further in times to come.
The BOs, on the other hand, are used to the ups and downs in cash flow. Credit lines and cash reserves are some of the options they rely on to temporarily handle the lack of adequate cash flow. Continuous monitoring of the situation, together with the evaluation of growth forecasts propels them to initiate further actions – that could include bailout requests to the Government. Most ruthless and embarrassing cases appear when BOs slash jobs as a cost cutting measure while at the same time reward the executives with bonus packages. Why do they do it? Well, executive pay packages are designed to share profits and resources within a close circle, and they are highly inflated and sealed by lucrative contracts. During the times of crisis, sometimes BOs try to avoid getting rid of the executives to evade paying high severance payments to them. But a measure of slashing jobs affecting mostly the employees in the marginal communities, sadly trickle down to the nucleus of the social structure – the families.
For the Government, balancing the budget does not carry the same meaning as the other two. Unlike the other two units, Governments across cultures have the unpopular option of reaching the pockets of its citizens and BOs to raise money, or print money in extreme circumstances. The main problem with such an approach is that people and BOs have to balance their own budgets too; therefore sometimes taxation becomes monsters of repression when the taxpayer pocket is reached deeply. A significant fraction of incomes of a state or a local Government is also generated by consumer taxes – Governments taking a bite from each pie of business transactions. Instead of cutting or reducing expenditures or becoming more efficient, some Governments are very innovative in tax collection and behave irresponsibly to impose taxes in one form or another. When things happen like this, people are led to ask how a democratically elected Government is different from a totalitarian one.
Let us now turn our attention to the stability. The stability of each of the units depends on how the stresses or forces are handled individually and collectively. The problems with cash flow, mistrusts and in-fighting between members are the main stresses a family faces. Families also need to watch carefully that money-matters do not harm relationships. This is because money has both healing and disruptive powers.
For the BOs, the threatening forces of concerns are competitions, Government regulations or over-regulations, and the last but not the least is the in-fighting between different departments within the organization.
For a Government, the forces that threaten stability are inefficiency and corruption within the administration, erosion of people’s confidence in the Government, external aggression, and internal disturbances. Some of these threats could originate from the Government’s own mismanagement of affairs. When a Government handles such threats through the principles of Niccolo Machiavelli (1469 - 1527), the problems only worsen further.
Why growth is also important? As we have discussed in the NATURE page, the characteristic signature of nature is dynamic equilibrium, meaning that stagnation is unnatural. Let us try to think of financial and economic growths. If we consider the nucleus of the social structure, we will find that on a personal level, a person’s education, skill and experience lead him or her to grow in income levels if things are favorable. But a person’s growth has a peak depending on age and capability, after which it declines. The achieved personal growth should translate to growth or as a stimulus to growth of children and family. If this does not happen, a family’s livelihood and future are ruined.
Unlike a person or family, a BO or Government cannot afford to reach peak and decline. It must continue to grow by diversification – if peaks are reached in some sectors, it must innovate to initiate growth in others. Growth is also important to stimulate and sustain people’s confidence. But expectation of a constant level of growth is unrealistic. Developing societies have poor infrastructure – therefore, their economy grows fast if planned correctly. Unlike developed countries, their growth is driven by infrastructure development. But once developed in this sector, they will face similar problems like the developed countries to maintain the same growth rate.
In conclusion, perhaps it is crucial to point out that the discussed questions can be elaborated and expanded further to include: how the decisions are made? And what are the consequences of decisions coming into actions? Each of these two questions together with the ones discussed earlier needs careful scrutiny. Decision making process is prompted by some perceived realities and necessities. On what basis and how the decision process is initiated – lead one to examine whether or not – the process is ill- or well-informed, well- or callously-analyzed, ill- or well-conceived. As one can imagine – the consequences of following one or the other can have widely differing consequences.
Before finishing, I like to touch one more aspect – and this is known as bubble growth. For an enterprise to be successful, it needs to feel confident in the quality of its products and services. This confidence should ideally be based on substance, but sometimes enterprises resort to marketing tactics to substantiate and defend fake claims. The practice is like creating a bubble that is likely to bust at some time. When the bubble busts, it creates ripple effects across boundaries causing substantial damage. We hear about such busts and uncertainty in the financial and stock exchange markets, which mostly rely on speculative forecasts. Because of their extensive damaging effects, Government interventions may often become necessary to oversee and prevent bubble growths.
Here is an anecdote to ponder:
The disciple said, “Sir, I will work hard to become a powerful person someday.”
The master smiled, “Good. No surprise there! Everybody wants to be powerful, some with their own money, others with someone else’s money. Perhaps you could try to join the Government career service to become what the Chinese calls a scholar and the rest of the world call a bureaucrat.”
“Why so? If I may ask, Sir.”
The master looked at him and said, “Well, think like this. You will be part of an elitist life-time job holder that rightly gets better and better on way to seniority. You will enjoy the privilege, benefit and the power of an aristocrat in control, while your colleagues in the private sector paying your salary, will go through the hellish experience of continuous worries – of uncertainty and instability.”
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- by Dr. Dilip K. Barua, 23 June 2016