Features of Good Governance
Features of Good Governance
There are some key features of good governance that needs to be considered when assessing the governance of an organisation. These are discussed below:
Strategy Setting and Planning:
Planning is a critical element of good governance. For most disability services, it is appropriate to combine strategic and vocational planning with the business planning process. The important issue is to ensure the overall strategy setting and planning for the organisation is clearly documented and communicated.
Some points for good planning include:
- The Board should establish the goals for the organisation, in conjunction with management, to provide the framework for planning
- The plan should be ‘owned’ by the organisation
- Active involvement of Board members and management is critical
- Consultation with key stakeholders should include employees and consumers. It is also important to consult with funding bodies and key community contacts
- Assistance from a specialist facilitator (this can have great benefits, but care must be taken to ensure that the role is kept to facilitation and that the plan does not become ‘owned’ by the facilitator)
The importance of good planning is that it helps the organisation clearly set the objectives, strategies and actions for a period. It also provides a means to monitor the organisation’s performance. To allow for changing circumstances, the plans should be regularly reviewed and updated.
Risk management is a concept that has gained significant publicity in recent years. It is a very important concept in the management of organisations. The Board should consider whether it has a clear risk management framework that covers the organisation’s operations. Risk should be thought of in terms of what, and how, losses (or gains) may affect the organisation through a wide range of sources.
Whilst the Board does not have a direct responsibility for risk management it does have a responsibility to ensure that managers and staff of the organisation have an appropriate risk management framework in place to mitigate or reduce risks that have been identified.
There needs to be an ongoing process to identify risk, assess its impact and take treatment actions to address and/or monitor risk. There should be a reporting process to the Board by management on the emergence of new risks and the treatment of those risks.
Within a successful disability services organisation, consultation with key stakeholders is an essential feature of good governance. It enables the stakeholders to understand the organization’s objectives and strategies and helps them to work with the organisation in achieving those objectives.
Effective consultation helps to create an environment of mutual respect and trust. Working with the stakeholders as far as practical, rather than against them, maximises the benefits of the relationship.
Who are the Organisation’s Stakeholders?
They may include the funding agencies, local government, and the community within which you operate, businesses you deal with, for example, customers, suppliers or businesses where consumers are placed, staff members, etc.
You should have a policy on how you consult with stakeholders.
This policy should:
- Include a communication strategy;
- Identify who should consult on behalf of the organisation with each stakeholder;
- Establish what Board involvement in such consultation should occur with each stakeholder;
- Include events that should be communicated to stakeholders; and
- Identify the frequency and format of ongoing consultation and communication
Roles and Responsibilities:
The organisation should develop documented policy describing the roles and responsibilities of the Board, of individual Board members and of management. The policy should be clearly communicated and understood by the Board, management, staff, consumers and members of the organisation.
Skills, Independence and Resources:
The Board should have the right mix of skills to manage the organisation’s affairs. These skills should cover key functional areas such as- Business acumen/expertise, finance, marketing, production or service-management, legal, etc.
As an individual Board member it is difficult to have the expertise across all these areas. If achieving this mix of skills on the Board is difficult then the organization can consider accessing professional people to provide advice on certain matters.
It is also important to have a mix of people on the Board, including those who are independent of the organisation. As such, these people should not be members or have a direct interest in the affairs of the organisation. The reason for this is to provide a- balanced, objective representation on the Board. This should assist in ensuring that the Board does not make decisions purely on an emotive basis.
Conduct and Ethics:
The tone set by the Board member or management, has a major influence on the organisation’s integrity, ethics and values. If staff and consumers see the top level acting ethically and with integrity, this sets a tone in the organisation that these attributes are valued.
In setting a standard that you expect people in the organisation to work to, it is very important that a code of conduct be established, which covers the Board members, management and staff.
The code of conduct should be developed with management and staff and should cover such things as:
management and staff, and
- Principles of responsibilities and duties of Board members,
- Guidance for interpreting the principles
A means of assessing the performance of Board members should be in place. Given that members of Boards are largely volunteers, the nature of the performance measures and reporting should not be overly oppressive and onerous. On the other hand, it is important to have in place some formal means of establishing an expected level of performance and to assess if it is being achieved.
An important aspect in developing a performance measurement framework is the definition of the roles of each Board member. From that, the expectation of their contribution may be determined and a means of performance measurement established.
At some point in the future a successor will be required to continue the management of the organisation. If possible, the current manager should be responsible for grooming other senior staff as potential successors.
However, if the organisation does not have access to these resources, the Board should be aware of this risk and review it and act accordingly. The selection of a business manager, whether internally or externally, should be based on specific selection criteria. This is to ensure that, when required, a successor is appointed based upon their qualifications, experience and suitability for the role.
Financial and Operational Reporting:
Timely financial and operational reporting is important in ensuring that organisation’s performance is accessible so as to assist in decision making. Reporting should also enable assessment of the performance of the management and staff. Therefore, reports should incorporate not just actual achievements, but projected or budgeted targets that should have been achieved.
Reporting needs to be comprehensive enough to ensure that you are well informed, but not so complex that it confuses the key issues being reported. The Board should establish an agreed format for reporting to ensure that all matters that should be reported are reported.
An audit committee’s role is to assist the Board in fulfilling its oversight responsibilities for the financial reporting process, the system of internal control over financial reporting, the audit process, and the organisation’s process for monitoring compliance with laws and regulations.
For larger organisations, an audit committee of non-executive (independent) Board members can be useful in considering audit related issues in more depth than would normally be undertaken by the full Board. However, the audit committee should not act as a barrier between the auditor and the full Board or presume to overtake the functions of the full Board.
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