Good governance is essential to organizational stability and sustainability. Governance refers to the processes by which organizations are operated, guided and held to account. Good governance applies authority, leadership, direction and control in an organization and holds itself accountable. Good governance keeps our community, our associations, our local, state and national governments functioning soundly, inclusively, equitably, and sustainably.
There are two main components of governance, (1) measurement of the organization’s benefits to its members, advisors, customers and suppliers (stakeholders), and (2) planning improvements to the effectiveness and relevance to stakeholders. Measurement requires oversight of the conformance to the corporations Declarations and Bylaws, the performance of contractors, value of insurance, and the effectiveness of the investment of resources. Planning is a cyclical process that uses measurement, benchmarking, innovation and culminates in plan adjustments.
Governance itself adds no value. The governance has to be ‘GOOD’ in order for it to be beneficial to its stakeholders. Good governance requires both efficiency and effectiveness. Effective means doing the right things. Efficiency means doing things the right way. The complexity of governance procedures and practices varies according to the size and function of the organisation. However the principles of good governance are essential for the long term viability of the organization.
Good governance requires, (1) having defined goals, (2) transparency in decision making, (3) sound framework of procedures and policies, (4) defining roles and responsibilities, (5) strategic planning, (6) risk management, (7) legal and statutory responsibilities, (8) review and monitoring of performance, and (9) ethical standards and codes of conduct.
Good governance is very important as any organization functions in a society and good governance means giving back to society in whatever means possible (value added performance, including the intangibles). We need good governance to act well within the requirements of law, act and demonstrate that we’ve acted for the benefit of members and stakeholders. The major benefit of good governance is the organization remains viable and sustainable and does not enter the decline stage in the PLC-curve. Good governance offers security to all stakeholders.