Governance

Strong governance will help your organisation to operate well

Governance is the way your organisation is managed, directed and held accountable for achieving its goals. Governance arrangements include the structures, systems and process that control how your organisation operates. This can include your board, constitution, sub-committees and policies.

Good governance is critical to the success of your organisation. Strong governance arrangements help you to:

  • deliver valuable client services

  • manage risk

  • make sure accountability mechanisms are set up

  • manage issues as they come up.

It is important that your organisation is familiar with the pillars of good governance because they will help you put governance arrangements in place. To work well, governance arrangements need to be part of the day-to-day operations of your organisation.

The pillars of good governance

Good governance helps organisations in different ways. It:

  • makes roles and decision making clear

  • nurtures effective relationships with executives and other stakeholders at the board level

  • sets the direction for your organisation’s vision, strategy and culture

  • keeps your organisation honest and reliable (integrity)

  • makes sure there is accountability.

The pillars of good governance are explained more in the diagram over the page.

Common governance problems

Every organisation can experience governance problems that could harm its success. Your organisation will be better at meeting its goals if you can find and solve problems early on.

Some common problems for team-based governance structures (such as boards or councils) include: 

  • inattention to results – teams lose focus and individuals put their own goals ahead of those of the organisation

  • avoidance of – important deadlines and deliverables are missed and service standards are not consistent

  • financial mismanagement – can become hard to discover and fix

  • lack of – directions and priorities are not clear and decision-making is not productive

  • fear of – controversial or new topics are ignored in favour of safe solutions

  • lack of trust – mistakes and weaknesses are hidden and teams are unable to have open, passionate debate.

Pillars of good governance

Roles and decisions
Making roles clear:
• It is clear who is responsible for what in governance arrangements (including board, management and individuals).
• Governance roles don’t overlap or conflict with other roles.
• Governance roles provide the most benefit for the whole organisation.
Decision making and rights:
• It is clear what governance decisions can be made, by who and where.
• Decisions are made by the people who understand the information the best.
• There is a good balance between central control and local responsiveness.

Effective relationships
Governance teams:
• Governance culture and relationships are trusting, open, honest, strong, accountable and inventive.
• The board and CEO have performance reviews that lead to skills development.
• There are good policies for how the board will recruit new members. 
Stakeholder engagement:
• The organisation engages with stakeholders who matter through the governance system.
• The rights of stakeholders are clear and protected in governance processes.
• Governance information is made available to stakeholders.

Setting direction
Direction setting:
• There is a clear direction for the organisation’s mission and strategy.
• There is equal effort across the organisation towards the agreed direction.
Culture and values
• Values that reflect the organisation’s purpose are decided on.

Integrity
Board integrity:
• Board Directors carry out their duty of care and diligence.
• The board obeys the organisation’s code of conduct.
• Conflicts of interest are managed well.
Managing governance breaches:
• Governance breaches at any level can be discovered.
• Governance breaches are recorded and reported.
• Action is taken to deal with any governance breaches.
• The organisation positions itself as having best governance practices.

Accountability
Internal:
• It is clear what the CEO is accountable for.
• Risk control and supervision is carried out regularly (strategic and operational).
External:
• Business performance goals are met.
• Reporting and transparency goals are met.
• External compliance obligations are well managed.

How to manage governance problems

Evaluating your organisation’s governance will help you to find problems and create ways to fix them. Evaluations can be done regularly (for example, once a year) or when specific issues come up.

It may be worthwhile to ask someone outside of your organisation to evaluate your governance arrangements. This will give you independent advice on your organisation’s operations.

Common steps in governance evaluation include:

  • board self-assessment evaluation – make sure individual responses are anonymous, so that board members feel they can be honest about any concerns they have.

  • 360 degree feedback of individual board members – involves getting feedback from people who interact with the board member, including executive staff, other board members and external stakeholders.

  • summary report and board debrief – gives the board a clear picture of the information collected through the evaluation process and will help to plan any changes to governance arrangements.

  • changes to governance structures and policies – based on the results of the evaluation, you may update any documents that set out your governance arrangements, such as your constitution and policies.

  • get expert advice – including legal and financial advice to improve your governance arrangements.