Inclusiveness and transparency are critical to good governance.
Lack of governance is like a ship without a rudder
Governance continues to evolve and is becoming more critical in building financially stable and sustainable businesses and non-profit organisations. Good governance requires you to strive for and maintain the highest standards of ethical conduct, with accuracy inclusiveness and transparency.
Good governance is the responsibility of your Board of Directors and the Management Team and refers, in brief, to the following:
- Quality Decision-Making.
- Financial management
- Following the Rules and Laws of the country.
Defining governance roles and responsibilities
An organisation’s legal structure operating framework and Board structure should address the following.
- The role of the chairperson.
- The role of the secretary.
- The role of the treasurer.
- The role of each director.
- The role of the CEO.
- The role of sub-committees.
Board functions and responsibilities
There is no right or wrong size, but recent trends show that large boards (over 10 members) appear to be falling out of favour. Such large boards tend to be run by executive committees that become cliques, with power concentrated in the hands of a few. The boards of small and mid-size businesses and non-profit organisations tend to range from 5 to 10 people.
Board members and management should all have a responsibility to be well informed about the organisation and more importantly the parts that require fixing. In doing this good governance will require you to focus on such things as:
- Hiring and managing the CEO.
- Planning vision, objectives and overarching
- Finding the necessary resources.
- Financial competence.
- Ensuring there is adequate working capital.
- Ensuring the organisation is ‘Partner/Investor Ready’.
- Inclusiveness and stakeholder communications
- Effectiveness and efficiency.
- Establishing best practices.
- Risk management.
- Action orientation.
- Dedicated to the cause.
- Focused on a good culture.
- Responsible for policies and procedures framework.
- Appointment of professional services.
- Networking with the community.
- Representing and negotiating with partnerships and governments.
- Attend the organisation’s functions and events.
- Monitoring and reviewing overall performance.
“Governance and leadership are the yin and the yang of successful organisations. If you have leadership without governance you risk tyranny, fraud and personal fiefdoms. If you have governance without leadership you risk atrophy, bureaucracy and indifference”. Mark Goyder
Improving the Board’s effectiveness
Choose your directors carefully as too many strong personalities and your vision will eventually clash. You will find a mix of skills and temperaments will be very beneficial.
- Board meeting agenda and timing.
- Board papers.
- Conduct of Board meetings.
- Board evaluation.
- Board member evaluation.
- A mix of skills and temperaments.
- Selection of board members.
- Induction of new board members.
- Committee selection.
- Training and development of board members.
- Meeting attendance.
- Director remuneration.
If two directors have exactly the same skills, then one of them is probably redundant.
Board of Director’s issues
Optimising the size of the board. It should be large enough to provide the oversight needed, but not so small that they become cosy clubs nor so large that they become social clubs where the true charge of governance is lost.
- Who picks board and committee members?
- The range in the number of members who will sit on the board
- The length and number of terms of board members.
- The titles and roles of board officers.
- How is leadership addressed?
- Are necessary skills and knowledge represented?
- How are decisions made and implemented?
- How are members of the board rotated or replaced?
- What constitutes a quorum for doing business.
- Voting procedures.
- The frequency of board meetings.
- Resignations, removal from office, and filling vacancies.
If you have personal interests that might conflict with your duty as a director, you must generally disclose these at a director’s meeting.
The successful management of a non-profit should be supported by the board of directors and a range of policies and procedures to follow regarding the day-to-day operations.
- Managing staff, contractors and volunteers.
- Managing resources.
- Sub-committee management.
- Marketing the organisation’s products and services.
- Learning about the problems involved, in order that there is not a recurrence.
- Implementing best practices.
- Maintaining required technology.
- Having all the organisations records up to date.
- Keeping score and preparing board reports.
- Keeping the organisation Partner Ready.
- Maintaining the organisation’s knowledge database.
- Ensuring that the organisation is government compliant.
- Operating within the law.
- Ensuring necessary skills and knowledge are represented with staff and volunteers.?
- Taking extra care with other people’s money.
- Ensuring that your organisation can pay its debts on time.
- Keeping up-to-date with the industry.
- Being honest in all your dealings.
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Businesses, as well as the non-profit sector and its unique institutions, have, in recent times, faced rising public expectations for an improved model of governance. The insistence to be transparent is derived from the perception that they appear and function parallel to accepted standards and expectations by customers and the general public.
An examination of many larger businesses and non-profit organisations will reveal organisational structures that resemble that of a large businesses or corporation. Despite possessing their status, the organisations undertake long-term strategic planning and utilise marketing and publicity strategies to raise awareness.