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Bhutan to use happiness index principles to assess corporate governance: Dasho Karma Ura

LiveMint logoLiveMint 02-07-2017 Aniek Paul

Kolkata: Bhutan is looking to apply the principles of gross national happiness (GNH) used as a tool to assess the country’s socio-economic growth and effectiveness of its public policies, to evaluate corporate governance under an initiative spearheaded by one of the key proponents of the home-grown development philosophy. It is an alternative to evaluating businesses by headline numbers, according to Dasho Karma Ura, who worked with Bhutan’s ministry of planning for 12 years and was key to implementing the GNH index. Called GNH in businesses, the new model will lead to a “more holistic” appraisal of enterprises, including their social and environmental costs, Ura said in an interview. Edited excerpts:

How are the principles of GNH being adapted for appraisal of enterprises?

In Bhutan, we conduct a survey once every four years with at least 8,000 respondents with the aim of assessing progress through diverse parameters. The ultimate objective is to help policymakers at the time of five-year planning. It is a far more difficult approach than the conventional one of measuring development through numbers.

Now we are looking to apply the same principles to assess corporate governance and the social and environmental costs of running businesses. The approach is the same: we are going to conduct surveys with people who work in an enterprise to assess how it was performing on nine key parameters. The model is still a work in progress and is expected to be ready by early November.

What are these parameters?

These are quite diverse. For instance, we are going to evaluate through surveys the psychological well-being of workers and if they are able to learn on the job. Health and workplace environment are some of the other key parameters. The survey will also assess the social and environmental costs of an enterprise with the ultimate aim of forming an opinion on the standard of corporate governance.

We all know that businesses across the world are quite good at distancing themselves from the social costs, and I see it as a failure of mainstream economic theories. Lately, businesses across the world have started to spend on social causes, but there is hardly any attempt to assess the real value created by such spending and if the social cost of a business has truly been mitigated by such spending. GNH in business will help with these as well.

How is this model different from others such as triple-bottomline?

GNH in businesses is being derived from the principles of GNH Index, which is an evolved model of measuring progress. The surveys we are proposing will follow the same rigorous methodology. Without commenting on any specific methodology of assessing corporate governance, my view is none of the ones known to me follow the same rigorous methodology as the one we are proposing.

Broadly, most surveys ask a person to rate an experience on a scale of 1-10 without asking nuanced questions that help you gain more insight. These surveys are sometimes good at capturing the broad mood, but normally, they fail to capture the nuances such as if the experience is going to be stable. GNH in business will be based on exhaustive surveys and will lead to more holistic appraisal.

Do you expect businesses to support this initiative?

The GNH survey in Bhutan looks at some 60 basic conditions for being happy. These are empirically derived conditions which are necessary to be happy such as a person’s finances, physically condition, hours of sleep and so on. Policymakers in some countries may not agree to assess outcome of public policy through these yardsticks. The same is true for corporate bosses: they may or may not agree to assess businesses by yardsticks such as fulfilment of worker rights and career progression. Some people are happy to set minimum thresholds for compliance; we are trying to lift those thresholds.

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