Previously, good governance was not considered to be central when forecasting the organization’s success. This trend has changed since the 2010s as the companies realize how good governance has numerous advantages such as mitigating risks, boosting the confidence of investors and consumers in the company, and also opening paths to becoming financially stronger, giving them an edge over their competitors.
Good governance has become even more important for non-listed companies in order to differentiate themselves from the competitors and ensure to remain in business as the demographics change and simultaneously the attitude of consumers and employees. Companies are now required to be more transparent with their operations and values, be it in buying raw materials, how ethically the stakeholders they associate themselves with operate, or the biodegradability of the products.
Even after ESG and Sustainability became some of the central objectives for many companies, governance always took a backseat due to the belief that the decisions taken around governance are confined to the board members. Today, the millennials and Gen-Z are breaking the status quo, one day at a time, as they recognize the potential that good governance holds to eradicate the evils from the society such as inequity, discrimination, corruption, and non-accountability of companies when it comes to utilizing public fundsor in the actions that adversely affect the environment or society.
As per Deloitte Global 2021 Millennial and Gen Z Survey, less than half of both generations combined see business as good for society. The reason cited by most of them is that companies do not see beyond their personal agendas (i.e maximizing profits). As per the survey, there has been a correlation between the increase in skepticism about the company’s intentions for the well-being of society and a decrease in the loyalty of employees and consumers. This shift in preferences will continue to be prevalent as individuals and economies come out of the after-effects of the pandemic.
It has been witnessed by many multinationals that good governance makes decision-making more effective by making it informed as the unnecessary bureaucracy is removed. The right people have the say in the area they are experts in, reducing wrong decisions and costs. Good governance also means that diverse people in terms of community, departments, and demographics can pitch in their views, ensuring that there is no blindspot, and saving the company from conflicts of interest.
The Org conducted a survey and found that millennials are increasingly questioning the intent of their daily tasks, and are becoming the force to bring about inclusion, diversity, and moral and socially engaged business practices. According to Deloitte’s survey over the last two years “44% of millennials and 49% of Gen Zs said they have made choices over the type of work they are prepared to do and the organizations for which they are willing to work based on their personal ethics.”
The new generations are not going to adhere to the decade-old corporate rigmarole, they are questioning, striving, and looking for a change that serves the larger good. In such a scenario the only way an organization can retain its best talent is to become more conscious in its efforts to serve society through its business and implement policies that bring systematic shifts making the organization more responsible, sustainable, and inclusive through good governance.