Sydney based consultant Shayne Leslie recently commented on certain clients wanting her services, but qualifying their approach by saying they would prefer not to talk about governance. She was a little concerned about this given that her company is called Integrated Governance.
I’ve heard similar responses from various people in associations, charities and schools, bemoaning the need to consider governance and risk, as if these matters were a distraction from getting on with really important work.
My initial reaction is to liken this resistance to footballers saying, ‘we want to play better football but don’t talk to us about the rules of the game or how to handle the ball’.
At its simplest, ‘governance’ is the work of the board, just as ‘management and administration’ is the work of the organisation’s executives. That’s why boards and councils are called governing bodies.
The Dictionary.com definition of ‘governance’ is:
- government; exercise of authority; control.
- a method or system of government or management.
So, another way of saying boards don’t want to talk about governance is to say ‘we don’t want to improve control over our affairs, and we would prefer anarchy to an ordered system.’
Governance involves making decisions about what to do and what not to do (strategy and risk management), how to allocate scarce resources to achieve organisational objectives (budget control), and the way things should or shouldn’t be done (policy, procedures, and accountability measures).
Making informed decisions about what your organisation should do next is at the heart of the work directors must perform to be effective. If they were simply receiving correspondence and reports so that they were always looking in the rear-view mirror, then nothing new would be attempted, and no progress would be made towards objectives designed to address new and emerging issues. This would be negligent, and widely recognised as ‘bad governance’.
Perhaps those wanting to avoid discussion of governance and risk perceive that such discussions aim to constrain or block rather than enable initiatives, or that the preoccupation is with rules and bureaucracy. The counter-argument is that it would be irresponsible of a governing body to decide on a course of action, or to take no action, without considering the consequences of either approach. Also, without setting up a governance framework with rules, policies, strategy and associated plans, accountability for what is done in the name of the entity, or for its progress, will be poorly addressed.
Issues of ‘process versus substance’ can also be legitimate concerns, with some boards and CEOs so focused on ‘correct’ process (the way we have always done things) that they are missing the opportunity to address vitally important issues requiring action, or to adopt more efficient or effective processes. A stifling culture which is hide-bound, bureaucratic and resistant to change, is demoralising for energetic directors and managers keen to grapple with issues of substance.
Clearly, good governance needs to harness energies within a sound framework, to achieve the most important priorities identified by the board. The board can’t perform that role in isolation from stakeholders, including members, clients, staff and other actors/organisations in their field. A dynamic board cannot be effective (keeping their eye on the ball) without good governance processes and systems, complemented by good management processes and systems.
Rather than resisting discussion of governance and risk, directors and managers always benefit from asking themselves, and their consultants, ‘how can we use governance and risk processes and systems to enhance our performance and achievement of our substantive goals’?