Governance is often blamed for delays, poor decision-making or performance failures — but where do you start to ensure that good governance is established in your organisation?
Governance mechanisms can be seen as burdensome, bureaucratic and getting in the way of innovation and flexibility. However, governance is necessary to establish strategy and drive business performance. The Governance Institute of Australia defines governance as the system by which an organisation is controlled and operates, and the mechanisms by which it, and its people, are held to account.
Accountability can be culturally challenging, and many organisations struggle to hold individuals and management to account in a constructive and supportive way. Building a culture where accountability is embraced is difficult, but positive accountability structures can be used to celebrate wins, learn lessons and recover from failure quickly. Effective governance helps your enterprise to:
- Ensure accountability — establishing clear roles, responsibilities and decision-making frameworks to hold leaders and employees accountable for actions and outcomes.
- Manage risk effectively — providing structured processes for identifying, assessing and mitigating risks.
- Support sustainable growth — aligning business strategy with ethical practices and long-term objectives.
- Enhance transparency — promoting open communication and accurate reporting to strengthen trust with stakeholders, regulators and customers.
- Improve decision-making — creating a robust framework for informed, consistent, timely and strategic decisions.
What does this look like in practice?
- Accountability — clear roles and responsibilities documented in terms of reference, comprehensive and effective delegation of power, and the tracking and reporting of actions and outcomes.
- Risk — anchored to your enterprise risk frameworks and assessments, focusing effort on the highest risks and pushing lower risks down to management, with established reporting and escalation pathways.
- Sustainable growth — plans with actions linked to business strategy and a clear line of sight from the corporate plan down to division, branch and section plans, with reliable forecasting of resourcing and achievable timelines.
- Transparency — access to informative, timely reporting against strategy and risk, with committee outcomes communicated to those who need to know. Information is created once and used many times.
- Decision-making — clearly documented tolerances, delegations and strategic direction to guide decision-makers, and governance bodies receiving papers that support decisions with confidence.
As you start to assess your governance arrangements, speaking with key personnel — board and committee members, management and secretariats — will help guide your focus. Some prompting questions:
- Who is accountable for action?
- Where do they report to?
- What do decision-makers need to know, and when?
- Who is told when decisions are made?
Frequently asked questions
How does governance impact culture?
Establishing positive accountability mechanisms creates a culture where lessons are learned and success is celebrated. Poor accountability encourages defensiveness, siloed work areas and hiding mistakes for fear of retribution. A safe environment for accountability improves transparency and builds trust across the workforce, leadership and external stakeholders.
Does strengthening governance mean more reporting for my team?
Strong governance requires useful and timely reporting, and better practice is to integrate reporting into information systems — producing once and using many times. The volume of reporting is not an indicator of quality; shorter, clear and targeted reports are more useful for decision-makers.
