Governance — can you have too much of a good thing?

You may recall that in July this year Governance Institute partnered with LexisNexis to conduct a survey of Institute members to capture their views on how governance is perceived in their organisations. The survey explored if governance is perceived as a drain on productivity or as a productivity enabler.

The results suggest that governance is now seen as central to business effectiveness and performance. It is not viewed as a ‘cost centre’ or inhibitor of performance, although sometimes there is a blurring of the line between what is perceived as compliance and what is recognised as governance. They also suggest that whole-of-organisation governance is not yet seen as essential practice for responsible performance.

To explore these issues further, Governance Institute and LexisNexis held a roundtable in August with industry experts to explore the results in greater detail. The aim was to better understand the implications of the responses and determine what needs to be done to ensure that governance is unequivocally perceived as a productivity enabler.

Participants broadly agreed that governance does not stop at the boardroom but must cascade through the entire organisation to enable performance. There was agreement that the disconnect between governance being a ‘board-only issue’ and the need for a whole-of-organisation approach to governance is where best practice in governance operates.

What clearly emerged from the roundtable was that when it comes to good governance, we are well beyond the ‘set and forget’ processes and structures of the early years and have moved to facilitating a governance framework that supports the desired culture to drive ethical, efficient and effective decision-making. There was recognition that whole-of-organisation governance is a means of embedding the culture set from the top of the organisation and is a key feature of successful organisations in the 21st century.

Participants agreed that governance and risk professionals have a real role in developing and implementing a whole-of-organisation governance framework in their organisation. They believed that their skills, expertise, relationships and influence put them in a unique position to work with the board and leadership team to nurture and embed this whole-of-organisation approach.

They strongly recommended that governance and risk professionals work with the board and management to ensure that the actions and decisions of all individuals within the organisation are directed at common goals. The point was also made that the whole-of-organisation governance framework must link roles, authorities and accountabilities with strategic objectives to empower good decision-making, while clarifying which matters are ‘off-limits’. There was universal agreement these actions would cause greater effectiveness and ‘on-strategy’ achievement, better-quality decision making and reduced risks. Whole-of organisation governance is a performance enabler and governance and risk professionals are encouraged to champion this cause.

The Governance — can you have too much of a good thing? whitepaper explores largely uncharted territory and is a must read for every governance and risk professional. It can be accessed here.

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