Agribusiness Governance - Finding the Green Zone
- Corporate governance has grown in prominence in recent decades to the point that it is promoted as a default business practice. This has more recently translated to a belief that all businesses should embrace good governance. In other words, corporate failure is often closely associated with poor governance, resulting in the widespread assumption that good governance is therefore a pre-requisite of corporate success.
- Traditional corporate governance represents an ecosystem of rules, tools, influences and activities that collectively operate to direct and control an organisation.
- While there is no single accepted theoretical base for corporate governance, one - Agency Theory - which seeks to address the risks arising from a separation of ownership and management - overwhelmingly dominates practice and education. However, the governance needs of the bulk of our SME agribusinesses are not satisfied by an Agency Theory approach: a. Governance as a means of Control: Strike one! SME-Agribusinesses are generally owned and operated by the same people or group, often a family, where Agency theory adds little or no real value, resulting in “management processes on steroids masquerading as governance.” b. Governance as a driver of Strategy: Strike two! “Culture eats Strategy for breakfast.”
- Green-Zone Governance – the role of Service: An opportunity to re-calibrate the approach to Agri-SME governance based on Resource Theory, which seeks to bolster the capability, networks, outlook and expertise of the business and business owner as a whole.
- In a family business, genuinely fair outcomes are realistically few and far between – which is why a commitment to a fair process is so important, and why Service-focussed governance can help.
- Green Zone governance assumes you already have control over your own organisation, and that you have the culture you need to win. If you have neither, introducing a formal system of governance is the least of your problems. But project governance might help get you on track.
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