Why Does Good Governance Matter?

Governance provides a framework for organisational management, defining who can make decisions, who is authorised to act on behalf of your organisation and who is accountable for how your people perform and behave. Here we look further at the principles of good governance in practice and discover why it should matter in your business.

What is good governance?

The Good Governance Improvement organisation suggests that there are ten ‘themes’ that illustrate the principles of good governance:

1. Clarity of purpose, roles and behaviours
2. Application of principles
3. Leadership and strategic direction
4. Effective external relationships 
5. Effective internal relationships
6. Transparency and public reporting
7. Systems and structures
8. Challenge on delivery of agreed outcomes
9. Risk and compliance and 
10. Organisational effectiveness.
    
    

Governance in practice

Putting all these principles into action can be challenging – it’s a wide-ranging and rapidly changing topic, but it’s important that organisations get it right. 

The rewards of good governance more than outweigh the effort it takes, resulting in  improved business performance, a greater awareness of internal issues which can help you drive stability, increased productivity, and better and more informed decision making. 

Why does it matter?

Good governance matters because ultimately it will improve your organisation’s performance. However, there are other considerations which further highlight its importance. 

• It allows your organisation to focus on ‘the big picture’, i.e. setting the right tone for your corporate values and strategic vision, and enhancing your reputation

• It reduces risk in your organisation, allowing you to understand the risks you currently face, and prepare you for those which you will face in the future. It also helps you establish risk management strategies which reduce the chance of your organisation being exposed to corruption, mismanagement or fraud. It also allows your organisation to learn, in a no-blame manner, from the mistakes and experiences of the past, enabling you to move forward positively. 

• It drives economic, social and environmental sustainability – an important and highly relevant topic at the moment, something which investors and customers increasingly demand, and which also improves recruitment and retention through your employer brand.

• Finally, it will help your organisation stay ahead of the regulatory and compliance aspects of your business, anticipating changes to the law and effectively dealing with new legislation, mitigating the potential for costly and damaging breaches. 

Brighter are experts in helping clients know what good governance should look like, and how to achieve improvements in their governance arrangements. To learn more about how we can support you, contact Simon Davis today.