Governance is not a separate activity but an inherent part of any organization. It refers to the processes by which organizations are operated, guided and held to account. Governance involves authority, accountability, leadership, direction and control in an organisation. Governance keeps our organizations and communities functioning soundly and democratically.
There are two main components of governance, Performance and Compliance. Performance is a series of events that starts with planning, goes through a series of reporting and culminates in feedback. Compliance refers to fulfilling requirements of legislation, contracts, taxation, insurance, pension and many more.
Governance alone cannot take care of all needs. The governance has to be ‘GOOD’ in order for it to add value. 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 comprises of various components. Most important of them being, having defined goals, transparency in decision making, sound framework of procedures and policies, defining roles and responsibilities, strategic planning, risk management, legal and statutory responsibilities, review and monitoring of performance, 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. We also need good governance so we can abide by the requirements of the law, and so we can always act, and show we’ve acted. The major benefit of good governance is the organisation remains viable and does not enter the decline stage in the PLC-curve. Good governance offers security to all stakeholders of the organisation like employees, investors, creditors, clients, public etc.
Therefore, governance and good governance in an organization will bear fruits in the long run and prove beneficial across all domains.Add to favorites