What is governance and what does good governance mean for today’s boards of directors? Good governance of today accounts for longstanding governance practices, as well as modern governance principles. Both are necessary to address the present and future needs of organizations. Good governance should be evident in every organization’s policy-setting and decision-making. In reviewing their governance standards, boards must consider the needs of all internal and external stakeholders in addition to the old and new components that demonstrate good governance practices.
It’s important to consider how governance principles have modernized over time. Along those lines, advancements in technology offer new ways for organizations to ensure good governance practices and communicate their commitment to good governance to their stakeholders.
What Are the Components of Good Governance?
One of the first things that come to mind surrounding the issue of good governance is the rule of law. The rule of law is a basic principle of governance that requires organizations to consider basic human rights in the course of their business. This means that organizations must abide by legal frameworks as determined by regulatory bodies for the full protection of stakeholders. Businesses and nonprofits alike must be honest in their operations and treat all individuals and groups equally. The rule of law also means that the law applies to everyone, even those with power.
Boards that display good governance area consensus-oriented. They understand the different interests of stakeholders and work to reach a broad consensus for the best interests of the entire stakeholder group. This requires them to hear from a variety of perspectives before voting on issues that are relevant to their purpose. Boards need to make decisions that are wise and sustainable over time.
The issue of transparency has become even more important for corporations and nonprofits in recent years. Transparent organizations provide information that’s easy to understand and make it freely available to anyone that it might affect. Good governance requires organizations to communicate the results of good and bad decisions and to provide explanations for their rationality. The issue of transparency also requires boards to be transparent around how they are compliant with laws and regulations.
A component that isn’t mentioned often is responsiveness. Good governance principles encourage organizations to respond to their stakeholders in a timely manner in practice, word, and deed to demonstrate that they have the stakeholders’ best interests at heart.
Accountability is one of the mainstays of good governance. Board policies should document what organizations are accountable for and who in the organization is responsible for certain tasks or areas of responsibility. Organizations are accountable to all stakeholders who are affected by the board’s and executive’s actions and decisions.
Another important principle of good governance is equity and inclusiveness. Regardless of the type of organization, stakeholders should have opportunities to maintain or improve their well-being through their relationship with an organization. Equity and inclusiveness add value to our society.
Good governance is inherently participatory. This means that participation should be open to men, women, minorities, and ethnicities either directly or through other representation. Broad representation allows for multiple perspectives, as well as freedom of expression. Multiple, varied perspectives are necessary for the best interests of organizations, stakeholders, and our general society.
Organizations that are committed to good governance practices are efficient and effective. They make the best use of their resources to meet the needs of their stakeholders and produce positive results.
Finally, good governance accounts for the evolution of modern governance. Modern governance is the practice of empowering leaders with the technology, insights, and processes that are required to fuel good governance. It means that boards have the right information at the right time to effect good decision-making.
Board Management Software Promotes Good Governance
It’s vital for corporations and nonprofits not to take good governance for granted. Boards must pursue their duties and responsibilities with good intent, expertise, and due diligence. Board management software by BoardEffect is the best way for organizations to ensure good governance. The principles of good governance require organizations to operate as efficiently, effectively, and transparently as possible. A board portal is a secure, digital tool that helps boards comply with good governance.
BoardEffect streamlines the processes for agendas and meeting management and offers the additional benefit of promoting security and confidentiality. The portal provides a way for board directors and executives to communicate and collaborate on board business during board meetings and outside of meetings using their mobile devices.
BoardEffect features a digital survey tool that allows boards to do annual self-evaluations online in a timely manner and get their results quickly so they can identify their weaknesses and work toward improving their performance, individually and collectively.
Other features of the board portal assist boards with maintaining their development cycle so they can continually work on board and executive recruitment, refreshment, and succession planning. Their efforts in working on board composition will help them to build a qualified, competent board during times of board vacancies and in between.
Legal compliance is another important component of good governance and board portal software is a key to ensuring that boards are continually addressing compliance needs and are abiding by regulatory requirements. The automation features also help boards to track cycles for events and ensure that nonprofits won’t miss opportunities for donations.
A BoardEffect board portal system is a centralized platform that brings all components of governance into one electronic system to help boards manage all aspects of board business for every size organization.
It’s difficult for organizations to achieve good governance in totality, but it’s still an important issue for all organizations to strive for. Board directors and executives are usually well-intentioned individuals who bring their thoughts, experiences, and expertise to the boardroom, along with their inherent strengths and weaknesses. Overall, boards can achieve good governance by doing their best to capture all the needs and considerations that are involved in ensuring that the interests of stakeholders are reflected in board policies and stakeholder interests are continually and appropriately addressed.