What is governance for?

Wouldn’t it be wonderful if whenever you asked someone to do something, they just did it? And of course, on the other hand, that they didn’t do things which they had not been asked to do? Oh for perfect control!

But wait a moment. Midas asked that everything he touched should turn to gold – and look where that got him. Perhaps we had better be careful what we wish for. How often have you said “No, that’s not what I meant!”? Or “I’d have thought it was obvious that that needed doing!”?

Let’s face it, most of us are not that great at giving really good instructions about what we need, and we certainly don’t have time to include every detail. At the same time, the people we ask are intelligent and creative. We get better outcomes, and they enjoy the work more and so are more motivated, when we expect them to use those abilities to interpret our needs sensibly and come up with the best solutions, even when we didn’t think to ask.

In summary, then, we have specific outcomes we require, but it is neither practical nor desirable for us to be completely prescriptive about how they should be delivered. Governance provides a framework within which the desires for control of outcomes and for flexibility over means can be reconciled with the minimum of effort.

Such a framework is fundamentally about good behaviours. Most of us want to behave well, but doing things the way we know would be best often takes more time and effort (at least in the short term), and time is one thing that is always in short supply. Formal governance arrangements help to stop us taking the short cuts which may be unhelpful in the long run. They ensure that we communicate what we are doing – so that changes can be made if required – and may force us to plan a bit further ahead.

Being able to see good governance in place reassures stakeholders that the organisation is behaving transparently. It gives Government bodies and Regulators confidence that the organisation is complying with legislation and other requirements. And it allows Boards and managers to delegate authority while retaining sufficient control. Good governance means that we not only behave honestly and competently, but are seen to be doing so, which builds trust. In short, it is the rock on which a well-managed organisation is built.

What good governance is NOT about is bureaucracy, box-ticking and delays. It requires finding balances – between control and practical delivery; between the risks of delegation and the cost of control; between wide ownership of decisions and strong accountability for them; between a simple structure and efficient decision-making; between minimum overhead and an effective audit trail – which provide the optimum basis for success. Every organisation has different arrangements because the optimum trade-offs depend on the context.

This is the first of a series of articles will set out the main issues to be considered in designing an internal governance system and the principles which should underlie it.