Introducing Effective Governance and Leadership Good Governance and Leadership
Leadership in governance isthe willingness and ability to take ownership in a part of an organisation and to continually do what is best for the organisation. Effective corporate leaders stand on a foundation of solid governance principles.The concept of governance and leadership are intertwined. Good governance and leadership iscritical for the achievement of results. … When citizens are allowed to choose their leaders, leaders would in turn have a sense of responsibility that they owe the people good governance.
What Are the Key Differences between a Governor and a Leader?
Governance provides strategic direction for leaders, helps them to foster commitment, shared aims and shall hold people to account. Governors define the rules, provide advisory functions and enforce the rules.
Leadership contributes to effective governance by promoting interagency collaboration, shared understanding and clear roles and responsibilities. Leaders will make things happen and put strategy into practice.
A leader without competence may not be effective and efficient in leading an organisation. When we see, in light of Good Governance, efficiency and effectiveness in giving services to the public,the utilisation of resources both human and materialis among the key principle of Good Governance.
Non-profitorganisations in the small to medium size range generally do not have access todiverse and well-developed organisation structures to deliver their strategicand operational plans.Resources are scarce, supply and demand rarely meetand employment conditions do not always attract the “best and brightest” (thisis by no means a criticism of those who work in the sector, rather a reflectionof the funding available to deliver these services).
Within this context, under a traditionalform of governance, boards practice two modes, namely fiduciary and strategic; Accordingto Mark Schultz, the approach of both can be described as:
Thefiduciary mode:abasic and fundamental requirement of good governance – protect the assets ofthe business, ensure resources are deployed efficiently and effectively and foreveryone, both the board and management, to always act in the best interests ofthe organisation. Nothing unusual here and sound principles upon which to builda sustainable organisation; and
Thestrategic mode:the board and management think together to identify strategic priorities and drivers; the external as well as the internal environment is reviewed and assessed; enquiring minds are encouraged, strategies and decisions are open to challenge based on thoughtful consideration and the focus is on the “ends” rather than the “means”.
Both these modes ofgovernance are fundamental to maintaining relevance and a sustainable businessmodel. However, there is another, thegenerative mode(Governance asLeadership, Chait, Ryan & Taylor; Boardsource) that can take governance andleadership to another level, all within the confines of the existing board andmanagement structure.
In agenerative mode,the board’s work is more creative, challenges the norms, applies a robust deliberative process and plays a key role in the framing of issues and the development of strategic options and plans. That is, the board gets involved sooner rather than later and becomes a valuable part of the solution.
Under a traditional form of governance, management frames the issue and develops strategic options and plans; the board does not get involved during the formative stage and is generally presented with options for consideration and a preferred option recommended by management. Only then is the board given the opportunity to be involved in the discussion. However, is this too late? Does this approach take advantage of the collective wisdom sitting around the board table? Given the scarce resources that non-profits are confronted with, is this the best approach?
A new way of thinking aboutgovernance as leadershipis that there is a better way; one that does not conflict with the principles of good governance but does take advantage of the intellectual capacity that is able to be contributed by members of the board. The organisation utilises the multiple levels of board capital, i.e. intellectual, reputational, political and social and applies these to the whole decision-making process that is the formative, deliberative and challenging stages. So instead of sitting back and waiting for a “paper to be presented by management” the board participates in the actual development of “the paper”
This approach transforms the way organisations utilise the capability that sits around a board table. It re-enforces a requirement for a skills based and diverse board and provides a means, within the guidelines of good governance, for that board to make a more meaningful contribution to the strategic management of the business. By being involved in the actual framing of the question and the development of strategic options, the board is providing leadership at a governance level and one that, given the resources the board can individually and collectively contribute to this process, should produce a better outcome for the organisation.
Is the role of Governor/ Trustee paid or unpaid? This depends on the type of social business but in some cases such as companies limited by guarantee, the role is only paid for specific tasks or paid a salary – it is not possible to be paid by share dividends, as the directors/ trustees/ governors would not normally hold shares.
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