And how good governance can help.
When creating your company, not-for-profit, or organization, the one thing you need to consider is how you will run it as it grows. This is where a good board can come in. If the board is running well, this leads to good board governance.
Questions on most people lips at this moment is, what exactly is good board governance? What is the role of the board? What responsibilities does a board have?
What is Good Governance?
When it comes to the board and good governances, there is a general checklist that all successful boards seem to follow. When you go to set board governance processes, you want to keep the following in mind:
How can the board be run efficiently?
How will the board be held accountable?
How will the board create transparency? What can be put in place to make the board responsive?
How can the organisational environment help to create a consensus-oriented board?
How can the board encourage participation from within the organisation?
How can the board encourage inclusiveness in the board and organisation?
What are the rules of law for the board to follow?
If you are asking yourself these questions and you are finding that you can’t answer some of them positively, then these are the areas you should be focusing on as you build the board.
The role of the Board?
So, you have a board all setup and that’s it, right? Unfortunately, that was only the beginning. There is in an important role that the board plays in the organisation, they are in charge of the overall strategic plan of the organisation. Without a guiding hand (or in a boards case, hands), the organisation can quickly decline in resources and staff, and eventually collapse.
The board is also there to make sure the overall mission of the company/organisation is followed. This is especially true in not-for-profits who need to align the organisation’s day-to-day operations and strategic plan with its mission. Although for-profits don’t necessarily need to do this, it does increase the overall effectiveness of the organisation.
The responsibilities of the Board?
When it comes to running the entire organisation efficiently, the board plays an important role. This comes down to the board’s adherence to its responsibilities. The board’s responsibilities tend to align with the checklist above, but most can be grouped into categories.
An open and responsive board has been shown to increase member/volunteer/employee numbers and overall productivity within the organisation. This means that the board is responsible for actively translating their decisions to its members and stakeholders. Some companies have gone as far as to have full open communication, from the front-line to the chairman of the board.
An important responsibility the board has is to itself. Without proper internal processes, unproductiveness can quickly lead to an ineffective and confused board.
This is why so many boards practice good governance and many directors don’t believe a board can function without it. This is not to say that you can’t get by without it, but it can lead to constant stress and headaches. That’s why so many successful boards understand the process of good governance and practice it.