Governance

Circle GovernanceGovernance is how a business or organization is governed. Governance is the structure, relationships and processes of authority, responsibility and accountability in a business or organization.

Governance.pdf

When you look at the relationships between the various governance elements, Ownership, Board of Directors, CEO, Staff, they are relationships of delegation. The Owners delegate responsibility for organizational direction and oversight to the Board of Directors, the Board of Directors delegates operational management responsibility to the CEO. The CEO delegates components of operations to various staff or contractors. The difference between Good Governance and Bad Governance is whether delegation is effective and accountable, or not.

Good governance, at its essence, is effective, accountable delegation.

 

Each element in an organization or business, Ownership, Board of Directors, CEO, Staff, has a role and responsibilities. Each governance element is distinct but not separate from each of the other governance elements because they depend on each other. This is why Governance is a structure, and as any structure is weaker if any of its materials or components is weak, a business or organization’s governance is weaker if any of its governance elements is weak. Each element, and the business or organization as a whole, depends on the quality of performance of all of the other elements, like a chain that is only as strong as its weakest link.