Corporate governance is a complex beast. Even those of us who have built their careers in fields where governance is a necessity might not fully understand everything it encompasses.
That’s why many governance experts break it down into four simple words: People, Purpose, Process,and Performance.
These are the Four Ps of Corporate Governance, the guiding philosophies behind why governance exists and how it operates. Let’s have a look at exactly what each of the Ps means.
People come first in the Four Ps because people exist on every side of the business equation. They are the founders, the board, the stakeholder and consumer and impartial observer.
People are the organisers who determine a purpose to work towards, develop a consistent process to achieve it, evaluate their performance outcomes, and use those outcomes to grow themselves and others as people.
It’s cyclical, yes, but it has to start with people.
Purpose is the next step. Every piece of governance exists for a purpose and to achieve a purpose. The ‘for’ is the guiding principles of the organisation. Their mission statement. Every one of their policies and projects should exist to further this agenda.
The ‘achieve’ is the small step on the road to completing that large goal. It might seem pointless to type up minutes for a meeting that felt irrelevant, but those minutes and all the other governance from that meeting contribute to making the business effective at achieving it’s stated purpose.
Governance is the process by which people achieve their company’s purpose, and that process is developed by analysing performance. Processes are refined over time in order to consistently achieve their purpose, and it’s always smart to take a critical eye to your governance processes.
Can they be streamlined? Are they efficiently achieving their purpose? It takes work to make your processes function, but once they do you will quickly see how they can help your company grow.
Performance analysis is a key skill in any industry. The ability to look at the results of a process and determine whether it was successful (or successful enough), and then apply those findings to the rest of your organisation, is one of the primary functions of the governance process.
Using these results to develop personal skills, both your own and your coworkers’, is how the Four Ps cycle revolves endlessly. So take a critical eye to your governance: is it performing?