Governance Best Practices and CSR Policies

Introduction

Governance is the set of mechanisms, processes, and rules through which an organization, public or private, operates, regardless of its corporate purpose. Governance must be efficient, especially in times of economic and social crisis, which sound results lead to greater multilateral cooperation between governments, the private sector, and civil society. This chapter provides insight into policies conceived to achieve good governance through developing strategies focused on avoiding corruption and impelling organizational efficiency through corporate ethics, best practices, corporate social responsibility (CSR) practices, and transparency at a global level.

As a result, public and private organizations today face the challenge of generating sustainable value by obtaining financial, social, and environmental value as top performance indicators. Consequently, it is mandatory to implement a series of work methods, processes, policies, and procedures applied in VUCA (volatility, uncertainty, complexity, ambiguity) environments to create this value in the organization. Public sector enterprises are not exempt from achieving business success measured and publicly controlled by social impact. For this reason, in the organizational plans of both public and private companies, human talent is required to have highly developed skills to promote leadership that recognizes the merits of the human team involved in achieving the KPIs (Key Performance Indicators).

Human talent is the principal asset of organizations, regardless of their cash flow and profit generation, size, and location. When the directors and managers (top and middle) of an organization know how to motivate their teams, the organizations maximize their growth rates, consolidate their leadership position in the sector, or at least encourage them to reach leadership and benefit the stakeholders. However, this fact does not occur in all organizations, which causes organizations to enter into a crisis that, if not resolved in time, becomes structural.

The arrival and spread of COVID-19 and its variants have caused structural changes in economies worldwide, especially when these structural problems emerge. Before COVID-19 dissemination, the transition to a digital economy was occurring slowly, and the crisis caused by the pandemic accelerated digitalization, opening new business opportunities for digital innovation (Modgil et al., 2022). The return to pre-pandemic economic levels will create higher costs in substantial business restructuring, especially in the services sector, and structural changes in the industry, by strengthening industrial digitization. As a result, specialized training and LLL (long-life learning) in the industrial and services sectors are increasingly important. Type of instruction facilitated with online education and the acceptance of glocalization to compete and continue growing GDP (gross domestic product) and employment.

Economic and business disruptions (endogenous and exogenous) simultaneously affect people and organizations. Given the weaker financial and business structures in emerging and developing countries, unforeseen and exogenous crises have a more significant impact on companies and the internal and external balances of Public Administrations, leading to a general impoverishment of the population. To alleviate this severe socio-economic problem, it is suitable and desirable that the Public Administration supports aid programs by increasing business financing options for entrepreneurs conducting their efforts. This strategy would not involve increasing public debt or taxes to avoid financial suffocation through tax and public debt increases for future generations. Still, it should be based on constructive competition for funds for entrepreneurs.

Unlike private firms, having problems financing, public sector enterprises have access to capital since the Public Administration (supranational, national, regional, and local) provides it. As a result, it can focus its efforts on maximizing the social impact in those places where it operates, an objective achieved by integrating high-performance teams and measuring results through creating sustainable societal value and an extensive middle class.

Especially in developing countries, public firms should be more focused on achieving sustainable development of the territory and promoting social change. Without social change, economic growth is impossible to be completed. Then, the public sector enterprise’s responsibility is even more remarkable when the private firms do not exist. Within this changing process, CSR policies are of fundamental importance due to their strong impact on social groups and stakeholders.