Governance, Both Political and Corporate

The word “governance” (as in, “corporate governance”) is obviously quite similar to the word “government.” And just as obviously, that’s no coincidence. The two words share the same roots. In the abstract, the word “governance” just refers to the act of governing something. But it’s not just the meaning of the words that overlaps — it’s the people doing the work. At the highest levels, people often move from the world of business into the world of politics, and vice versa.

A few quick points about this.

1) The fact that there’s some flow back-and-forth between government and the corporate world is not at all surprising. After all, there’s considerable overlap in the skill-sets required in leadership positions in both domains. For example, I recently heard a top expert on corporate governance say that ex-politicians actually make very good corporate directors (and that was said based entirely on their skill-set — not, as you might guess, based on their political connections).

2) Some people do question the extent to which one world is good training for the other. See, for example, this recent story about former EBay CEO, Meg Whitman, who is currently in the running to become governor of California: Is EBay a proper primer for a governor? (by Stuart Pfeifer for the LA Times). Here’s one relevant bit:

Some former employees and Silicon Valley observers question whether a forceful corporate executive used to getting her way would be capable of the compromise needed in government.

“You certainly have many more freedoms as a CEO than you do as an elected official,” said Larry Gerston, a political science professor at San Jose State. “We don’t elect kings.”

3) It’s also noteworthy when a major politician acts in a way more common in the corporate world. In this regard, see the review (by Jordan Timm) in this week’s Canadian Business magazine (unfortunately not online yet) of Lawrence Martin’s Harperland, a book about Canadian Prime Minister, Stephen Harper. According to the review,

…this Prime Minister’s office has enjoyed privilege and authority more in the style of the corporate C-suite than the executive branch of a traditional Westminster government. That approach has been responsible for many of the Harper government’s successes, but it has also been at fault for many of its blunders and setbacks. And though the business and political worlds feature very different rules and accountabilities, executives can learn many lessons, both constructive and cautionary from Stephen Harper’s Ottawa.

4) In both kinds of governance (political and corporate) the main challenge lies in turning the will (and values) of the many (votes in one case, shareholders in the other) into decisions by a few (politicians in one case, executives and directors in the other) to be implemented by an in-between number (of civil servants in one case, and of corporate employees in the other). And in both cases, effective leadership seems to require that the leader engage in a combination of a) listening to their constituents, and b) exercising independent judgment.

I don’t have a grand point to make on this topic. But can anyone recommend essential reading on the intersection between corporate and political governance and/or leadership?

4 comments so far

  1. […] 2) Some people do question the extent to which one world is good training for the other. (continue reading… ) […]

  2. arfur on

    While both may require similar skill sets, each operates under different governance principles. One reading that comes to mind is “Corruption, Fraud, and Corporate Governance: A Report on Enron” by Paul Windolf. I can’t say how essential of a reading it is, but it certainly helped illuminate, for me, the concept of corruption (muddling of governance among the corporate, political, etc. spheres).

  3. Steven Mintz on

    It’s often been said that politics is the “art of compromise.” Our elected officials seek to reach an agreement that all constituents can live with. This requires some degree of sacrifice of what some legislators believe is the right thing to do in a particular instance. The recent health care reform debate and resulting act is a good example. The skill set needed to be a “successful” legislator differs from that of a CEO. Under Agency Theory, the CEO (agent) seeks to act in the best interests of the company and its shareholders (principal). This trumps all else although social responsibility plays a role as well. CEOs like Meg Whitman are used to getting their way so the art of compromise is not in their DNA. That’s why being a CEO is not necessarily a good training ground for becoming a good politician.

  4. Dan Wheeler on

    Interesting topic. I’m really ejoying the blog!

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