Governance
What
is governance?
"Governance
is the process by which a governing body (the board, management
committee, council of management or whatever it is called) ensures
that an organisation is effectively and properly run."
"Governance
is not necessarily about doing; it is about ensuring things are
done. In a small organisation, it is almost inevitable that board
members will be involved not only in making decisions and monitoring
work, but in doing some (or all) of that work. But as an organisation
grows the board becomes less involved in day-to-day activities,
delegating to staff responsibility for most tasks.
Decision-making
may also be delegated to staff, on condition that all decisions
are within policy frameworks agreed by the board."
From The
Good Governance Action Plan, by Sandy Adirondack, NCVO, 2000
"The management
committee (or trustee group) is the governing body of a voluntary
organisation. It is where the decisions are made and it is the body
which is held to account for all the activities of the organisation.
And it is the group responsible for ensuring that the organisation
operates properly and effectively."
From The
Charity Trustee’s Handbook, Mike Eastwood, Directory of Social
Change / CAF, 2001
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Is
Governance New?
The word
comes from the Latin and means to steer or guide. Its use
in an organisational context goes back to the 16th or 17tth
Century.
How
is Governance Seen Now?
The following
quotations are from a conference, Board Games, run in September
2002 by Governance Works, a new organisation dedicated to
improving the understanding and quality of governance amongst
not for profit organisations mainly in the North East of England
and Scotland. See their website www.governance-works.org.uk
Quotations
from Board Games
"Governance
is a work on everyone’s lips"
Rhona Haworth: director and co-founder of Governance Works
"Governance
– is it just another bit of management jargon, dreamt
up to make consultants money?"
Rhona Haworth: director and co-founder of Governance Works
"Governance
– is not simply a management process – it goes way
beyond that."
Rhona Haworth: director and co-founder of Governance Works
"Governance
is essential, and also enjoyable."
Richard Fries: Researcher at LSE, and formerly Chief Charity
Commissioner
"Governance is unavoidable – if you’ve got
an organisation – then you have got governance as well
as management."
Richard Fries: Researcher at LSE, and formerly Chief Charity
Commissioner
"If you neglect governance, then disaster follows."
Richard Fries: Researcher at LSE, and formerly Chief Charity
Commissioner
"You cannot leave governance to take care of itself."
Richard Fries: Researcher at LSE, and formerly Chief Charity
Commissioner
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Three
Perspectives on Governance
"A market
perspective on governance – the agency or stewardship model.
From this perspective, the main function of the board is to control
the behaviour of managers. This suggests that directors of companies
should be independent of management, and their primary role is one
of stewardship – to make sure that the resources of the organisation
are safeguarded and to monitor and, if necessary, control the behaviour
of managers."
"A managerial
perspective – a partnership model
A governing body or board of directors can be regarded as the apex
of a management hierarchy. It is not surprising in this context
that ideas and practices from management should be applied to governance
– for example, that board members should be selected on the
basis of their expertise and contacts so that they are in a position
to add value to the organisation’s decisions rather than just
select, monitor and control management: that boards like managers,
will require careful induction and training; that they will need
to know how to operate effectively as a team…
The prime function
of the board, and major shareholders, are seen as partners in management,
and the prime function of the board is to add value to the organisation
by improving its top decision-making…
Boards should
focus on new strategies and policies, not just reviewing past performance."
"A democratic
perspective – a political model
Key ideas and practices include open elections on the basis of one
person one vote: pluralism ie that representatives will represent
different interests; accountability to the electorate; the separation
of elected members, who make policy, from the executive, who implement
policy decisions…
Many voluntary
and non-profit bodies are established as membership associations,
where it is enshrined in the organisation’s constitution that
the governing body should be elected by and represent the membership
in some way. The constitution of many organisations also allows
that some other stakeholders, such as funders or users, may be represented
on the board.
A
democratic perspective on governance suggests that the role of the
board is to represent the interests of one or more stakeholder groups
in the organisation. This leads to a political model of the role
of boards: a means of expressing, resolving and choosing between
the interests of different stakeholders and setting the overall
policy of the organisation, which can then be implemented by the
staff. Central to this view is that anyone can put themselves forward
for election as a board member. Expertise is not a central requirement,
as it is in the managerial perspective."
The
authors suggest that elements of all three models are present in
many boards.
From
Good Governance, by C Cornforth and C Edwards, CIMA, 1998
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