Governance

The Multiplier Effect of Better Governance

Whether your organisation is a not-for-profit, SME or a large public company, it will benefit from the multiplier effect of better governance. Getting governance right makes for a healthy, effective and responsible Board. It ensures that a clear message is delivered to all stakeholders, and that employees are engaged, which leads to higher productivity and lower employee turnover. This article will outline the attributes of good governance and how they can lead to benefits for an organisation, as well as explain how you can test your governance system.

What Does Good Governance Look Like?

The definition of Good Governance is akin to the definition of hard-core pornography offered by Justice Potter Stewart1 - we cannot define it, but we ‘know it when we see it’. The high levels of governance and accountability required of both the private and public sectors in Australia are now being demanded in the not-for-profit (NFP) sector. While there does exist a view that governance standards in the NFP sector are not at the same standard as required in the commercial sector, this is far from the truth.

What Makes An Effective Board Member?

The job of an effective board (with the CEO) is to set strategic direction and determine goals for the organisation. Their job is also to ensure that the organisation is run according to its constitution, complies with relevant law and is managed in a financially prudent way. Big Picture Thinking Think about your reason for becoming a board member. Many board members of not for profit organisations get onto the board because there is something about the work of the organisation that they want to influence.

Governance Training for Non-Profit Boards

Governance is a leadership process, and to function effectively, individual board members and boards as a whole, should have a clear understanding not only of their governance roles and responsibilities but also how to practically and correctly apply them within a leadership framework or context. Thus regular governance training is essential for non-profit boards. Taking on a role as a board or committee member can sound relatively straight forward, but it could be interesting to note how many members of your board can clearly and concisely describe their actual governance roles and responsibilities.

Management vs Governance – It’s Not That Easy

During our education on governance and directorship we are taught that “directors govern and managers manage”. The analogy of steering versus rowing is often used to describe the delineation of roles between directors and managers. Most directors are well aware of this. It seems that many boards are challenged with the task of getting the ‘right’ balance between governance and management. Why is this so? Experienced directors are aware that every board is different in terms of the way they implement their governance role.