Taking governance beyond the board to the entire organisation
For the last decade, the focus of governance has been on the board, on embedding good practices and behaviour at board level so that directors can provide more effective oversight of management and accountability to stakeholders.
Yet we all know that governance is and must be broader than that. For an organisation to perform at its best, its governance framework must take in the entire organisation, from management at all levels, to staff on the front line as well as in the back office.
That’s why Governance Institute has developed new Guidelines: Whole-of-organisation governance aimed at helping organisations to ‘conquer’ this next frontier of governance.
What is it?
In a nutshell, whole-of-organisation governance sets a strong framework for how authority is exercised and controlled below the board.
It enables management and governance professionals to ensure that all actions and decisions made by all individuals within the organisation are ‘on strategy’ and that everyone is working toward common goals.
It does this by linking everyone’s roles, authorities and accountabilities with strategic objectives, and empowering people to make decisions that support those objectives, while clarifying which matters are ‘off limits’. And it provides for clear and effective accountability for the decisions that are taken and the authority that is exercised by each individual. When this occurs, the benefits for the company are without a doubt higher performance, greater effectiveness, better quality decision-making and reduced risk.
Why organisations need it
It’s often said that companies underperform, not because of the quality of their strategies, but their failure to execute them effectively. As a company can only act through its people, it goes without saying that to successfully deliver on strategy, every manager and employee needs to understand how their role and efforts contribute to the ‘big picture’ and what they should and shouldn’t do to help the organisation get there.
Many of us have either worked with or had second-hand experience of managers or staff who ‘spin wheels’ and get caught up in tasks that add no value. Good whole-of-organisation governance can be a solution to these inefficiencies by keeping organisations on track and working productively.
Good organisational governance also creates an environment where everyone can thrive. All employees — including client and customer-facing employees — have the freedom to contribute and be recognised for their best efforts. They are empowered by having clarity about what decisions they can take, while understanding where their authority begins and end. This means the right people can make timely decisions as close to the action as possible. And managers know that all employees can respond to changing circumstances, but be confident that decisions are being made within the risk appetite set by the board. When this comes together in a clear and well deployed whole-of-organisation governance framework, business performance is enabled.
Let us know what you think
To help organisations tap into these benefits, Governance Institute encourages all governance professionals to obtain a copy of our new publication, Guidelines: Whole-of-organisation governance, and consider how they might apply in your organisations. The guidelines have been developed by members with deep knowledge and practical expertise in this area in the hope of continually improving standards of governance in Australian organisations.