Clarifying Leadership, Governance and Management

For the past three months since May 2012, a series of seminars on leadership and governance were conducted for officers of microfinance institutions in Vietnam. The course was aimed at helping the participants clarify governance, leadership and management functions and be able to delineate roles of various positions in the structure of their institutions.

At the start of the seminar, most of the participants admitted during the discussions that the concepts of leadership, governance and management were confusing for them. The confusion usually stemmed from their practice of having positions with multiple functions. This practice was traced at the time when an organization, starting small, has to have people assuming multiple roles. As the organization grows, the functions of these people became ingrained and cannot be segregated anymore. Forcing the segregation would involve emotional and reputational concerns that may affect the smooth operation of the organization. This apparent confusion was evident not only among the participants to the training but also to other microfinance institutions as well. It may even be true to other non-government organizations in the country.

One of the sessions emphasized two main qualities inherent and distinct to a leader. The first is the ability to express and share a vision; and second, the ability to inspire the people to work towards the attainment of that vision. An exercise was done where each participant was asked to identify a person whom they think has the qualities of a leader, a sort of their model leader. The responses placed on top of the list Ho Chi Minh with four leaders considering him the ultimate model of a leader. Following closely after Uncle Ho were responses pointing to the director of the MFI as the other model of leadership. These responses were mostly from the participants who are senior leaders of the MFIs. The fact that MFIs in Vietnam are part of the Women’s Union explains the tendency to look at leaders of mass organizations as the epitome of leadership. Steve Jobs, Mohamad Yunus and Jesus followed after Uncle Ho and the MFI leaders.

Governance on the other hand, refers to the decision-making structure of an institution. This function is usually the mandate of the board of directors of an institution. The board that represents the general assembly of a membership-based organization or the investors of a company provides policy directions to the management team of the institution.

Finally, the implementation of the policies approved by the board is given to the management team. The team is composed of the executive director and his team who makes sure that the policies are translated into work plan and budget designed to attain the long-term vision and the immediate operation of the institution.

The confusion is mostly in not knowing the difference between policy-making and implementation. There are instances where some members of the board who are more knowledgeable than the executive director tend to micro-manage and even do the implementation themselves. There are also instances where the executive director is dominant and the board has degenerated into a mere rubber stamp. The ideal situation therefore is the capacity of the people in the institution to maintain a balance between the two functions.

Leave a comment