This article was originally published online on the Social Labor Convergence Programme website on January 3rd 2018.

Written By: Pamela Ravasio.

Governance can be a rather dry subject. Spending hours thinking in-depth about the intricate ins and out of the process of how decisions are made, can be tedious, theoretical and oftentimes also political. Yet for me, governance has always been a most fascinating subject.

The quality of governance is one of the key ingredients why projects, companies, and even governments fail in their tasks. It is also the key ingredient to achieve results, buy-in and participation.

In my view, not a single discipline expresses the values, ethics, and character of an organisation (government, business, not-for-profit, or ad-hoc project) better than its governance implementation.

It is for this very reason that good governance was seen early on as one of the fundamental success factors for the Social Labor Convergence Project (SLCP).

But before I talk a bit more about governance within the SLCP context, please allow me to step back and define a handful of terms that are relevant in this context.

Part I: Governance Theory

The Business Dictionary defines ‘Governance’ as the “Establishment of policies, and continuous monitoring of their proper implementation, by the members of the governing body of an organization. It includes the mechanisms required to balance the powers of the members (with the associated accountability), and their primary duty of enhancing the prosperity and viability of the organization.”

However, in the context of the SLCP, the term ‘Corporate Governance’ is closer to what we are trying to achieve: “The framework of rules and practices by which a board of directors ensures accountability, fairness, and transparency in a company’s relationship with its all stakeholders (financiers, customers, management, employees, government, and the community).

The corporate governance framework consists of
(1) explicit and implicit contracts between the company and
the stakeholders for distribution of responsibilities, rights, and rewards,
(2) procedures for reconciling the sometimes conflicting interests of stakeholders in accordance with their duties, privileges, and roles, and
(3) procedures for proper supervision, control, and information-flows to serve as a system of checks-and-balances.”

Similar to the manufacturing discipline that knows Best Available Techniques/Technologies (BATs), the governance discipline also has a set of ‘Best Available Approaches’. The most SLCP-relevant of those are outlined hereafter.

In my opinion, the most stringent definition within governance is ‘Fair Process Leadership’.

Fair Process Leadership (FPL), is a way of leading by asking questions, rather than by telling people what to do. FPL is based on a 5-step approach that requires the leadership team members be engaged in an open, transparent and honest discussion:

1. Alternative ways are suggested – as many as can be envisioned.
   Thereafter and more importantly, they are genuinely considered, and discussed to get to the best available option. It is at this stage that the Consensus Principle is of chief importance (see next section) to come to a decision.
2. The final decision is explained to all those concerned.
   The chosen path needs to be justified, as well as its implications to those involved.
3. All efforts are focused on the full implementation of what has been decided.
4. The outcome is evaluated, mistakes are identified, and the process and implementation are improved upon.
5. Back to #1.

Decisions in groups, such as the SLCP’s Steering Committee, at some point or another have to be officiated, finalised, published and executed upon. Traditionally, and often required by law, such decisions in organisations with a corporate board of directors, must be taken by voting.

However, coming to decisions by majority vote has its drawbacks: the majority could be viewed as the “winners”, and the minority perspectives could be lost.

Negotiating a decision by consensus principle is in my view a more inclusive approach –especially for multi-stakeholder environments such as the SLCP. It is admittedly not an easy approach, and can be extremely time-consuming, which is a challenge if time-sensitive issues have to be decided upon.

But what is the Consensus Principle? In accordance to what is also outlined in SLCP Governance Document “Consensus is defined as, at a minimum, “no objections” or as being able to “live
with” an outcome, perhaps in light of how it fits into a larger whole. One person or entity may not prevent the larger group from achieving agreement by simply objecting. When a party in a conversation disagrees with a consensus proposal, this party is expected to justify their interest-based objection and obliged to work constructively to ensure that their interests are met while also allowing the proposal to realize its potential as intended by its proponents.”

In other words: consensus decision-making is a group-decision process in which group members develop and agree to support a decision in the best interest of the whole. Consensus may be defined as an acceptable resolution, one that can be supported, even if it is not the “favourite” of each single individual.

As can be read from the above, the consensus principle requires parties to continue working with each other until they have found a solution that is equally acceptable by all.

But maybe most importantly, it demands that no one just walks out because their demands are not met, but instead insists that an objecting party is obliged to bring forward a new proposal that must satisfy both their own demands as well as those of the other members that are part
of the discussion.

Of course, all of the above is theory if people – committees, working groups, individuals – are not held accountable for the results and outcomes.

This brings us to the last of such definitions: Accountability is defined on Wikipedia as “In ethics and governance, accountability is answerability, blameworthiness, liability, and the expectation of account-giving.” It is about answering openly, honestly and transparently on the processes that have been followed to make decisions.

In summary: Governance entails a mechanism of continuous monitoring, which results in the accountability for successes, failures, gains and losses by groups, committees and individuals in accordance to the governance processes.

Part II: Governance in the SLCP – From Theory to Practise

By now I have definitely shown how governance is dry. Hopefully, also why it is important. Now let me have a go at making the case for why good governance is so important for the SLCP.

The SLCP is a unique, and often difficult, project in several ways:

• There are lots of players engaged that have very evident vested interests in either the success, or the failure, of the SLCP – and they all have huge concerns as to how this Project is going to affect their bottom lines.
• At the same time, there are many individuals working hard within the different working groups and committees to genuinely make the world a slightly better place through the SLCP and its deliverables.
• The real-life power imbalance among signatories is significant. Here I am not talking about the traditional manufacturer vs brand relationship, but rather between large and small, well connected and less connected companies.
• The sheer number of signatories is a challenge to manage: How to engage best? How can we drive consensus contributions?
• While there are several individual and small case studies that relate to what the SLCP is trying to achieve, the SLCP’s approach is new and unique. Paving the path is never easy.
• There are several types of cultures represented among signatories: national cultures, corporate cultures, political cultures, social cultures and traditions. Actively listening and finding understanding can be challenging.
• Change is hard. What the SLCP is aiming to achieve could trigger a major shift in the social audits landscape.
• Expectations are high! We cannot do it all, now, and perfectly. How can we manage so many so demanding expectations?

All of the above points are, in principle, manageable through good and fair governance processes. It does not mean that everyone will be happy all the time, but it will mean that everyone knows how and why progress is made and how their needs have been taken into account.

Governance is the play book that allows us to ensure that key values are and will remain part of the SLCP’s heart: multi-stakeholder engagement and inclusiveness of a diverse constitution.

The SLCP governance document spells out who is represented on committees and why. It also articulates how decisions are taken and how elections are run. The Steering Committee represents the signatory constituency of the SLCP to ensure adequate representation.

The overall project structure ensures that relevant outside stakeholders (standard holders, unions, etc.,) have opportunities to provide feedback and engagement on project outputs.

And the existence of an independent chair acknowledges the fact that a neutral person will be needed precisely because of the very diverse constituency the SLCP has, and the equally diverse needs these have.

Despite the SLCP having a governance document in place, there are times where we have faulted. As mentioned above, the SLCP approach is new. We are learning along the way. For example, when the governance rules were written, there was no practical knowledge of how the project would actually unfold; the challenges we would encounter; and how engagement with stakeholders and signatories would in reality work.

As a consequence, our learnings were steep:

• Language matters. We learned that any such document must be written without leeway for interpretation. Because differing interpretations can lead to differing expectations. Clear expectations to which we can live up to are critical.
• Just because everyone plays by the rules, does not mean it is always fair play. Managing such hurdles will always be difficult.
• Consensus means that everyone has to give in some. This can be tough. How do you deal with ‘my way or the high way?’
• Legal context always matters. The SLCP is Netherlands-based, predominantly European financed, and hosted by a 3rd organisation (the SAC, based out of the US). According to which jurisdiction does our governance need to comply?
• Efficiency and good governance can, on occasion, be a pair of fighting twins vying for a single parent’s attention and time. How can this circle be squared best?

These are just some of the challenges we’ve encountered in the last two and a half years.

Needless to say, that as we head towards the SLCP’s next phase (2019+), we take every single learning out of its proverbial drawer, revisit it, and think about how we can embed what we learned in the refreshed governance as well as the 5-year strategic plan the Steering Committee is currently working on.