Having observed many organizations and discussed with numerous individuals, I am still amazed at how little is understood about governance and the need for transparency and openness with stakeholders. Given that it is potentially the most important area focusing on the Governing Body, it should be understood and effectively used. Particularly for SMEs who are being increasingly recognized as the new drivers of a future strengthened economy. They may have limited resources and feel that governance is simply an additional burden rather than an enabler to future sustainability, but it is a crucial part of their growth. By using a standard approach, good governance can be easy to implement and very beneficial in developing and sustaining an organization.
One common problem can be seen by the blurring of lines and understanding of the difference between governance and management. Put simply, management is about getting the work done , whereas governance is about ensuring that the right purpose is pursued in the right way and that the organization continuously develops overall.
It is interesting to see that generally organizations focus very much on training and developing managers and yet little attention is given to the training and development of members of the board or governing body. These are the people whos task it is to direct the managers, potentially resulting in managers going in the wrong direction to that of the organizations purpose.
Then we have the area of transparency and openness. This is certainly a good thing and something that should be practiced, but where do you draw the line What should you be open about and what should be kept behind closed doors
So, what is governance The word governance is derived from the Greek verb to steer and is an apt metaphor for BS 13500, the recently published first British Standard in effective governance. The key model is drawn in the shape of a steering wheel and the front cover depicts a ships wheel, steering a course that may often find choppy waters while navigating towards and within the overall purpose of the organization.
The three spokes (principles of Governance) within the wheel identify accountability, direction and control, with the wheel itself acting as the system bringing the three principles together into a whole for effective governance to be realized. Within the centre of the wheel is the Governing Body surrounded by leadership, together with purpose and values.
Providing strong leadership against the purpose and values set by the organization is a key to success. However, you can sometimes find an ivory tower approach whereby the Governing Body sets the values of the organization and believes that all staff know, understand and live the values, but in practice, they are simply not bought in to the process. It is therefore important that openness and transparency are used internally as well as externally and that communication channels are two way, so that information can be passed back to the Governing Body on what is felt by all levels of the staff from board room to store room and back again.
Michael Faber is Technical Committee Chair of BS 13500 Governance standard