The term, government-ability, refers to the willingness of people to be governed. Various Issues can fall under the umbrella of culture including innovation, transparency, maturity, professionalism, risk tolerance, environmental, social, and governance issues, and much more. All organizations must know and understand the laws and regulations that govern their organization.
They have a legal obligation to work towards the best interest of the organization and part of this means that the board must ensure that the organization is continually in good legal standing at all times. The board must ensure legal and regulatory compliance with working within their ethical and cultural framework. The board of directors is responsible for establishing a framework that governs all departments, people, and operations.
In the course of their duties, boards may elect to delegate some of the work to various individuals, groups, or committees. Along with any delegated responsibility, the board also delegates the appropriate levels of authority and responsibility to managers. It is important for boards to manage governance because it creates efficiency in the work that they do.
In addition, good governance practices highlight instances of errors and problems. By flagging potential issues, boards have the chance to respond quickly and appropriately. A focus on good governance holds the board accountable for improving efficiency, which also lends itself to reducing costs.
When boards practice good governance, all processes run smoothly. There is less chance of crisis where the board needs to react rather than act and they have the proper time to be responsible in their acts and decision-making. Organizations that have a culture that supports good governance practices are more likely to offer quality products and services that meet the demands and expectations of the public.
Best practices result from good governance and create a framework where all companies and organizations can measure themselves against. As a general principle, the roles of an oversight body should be segregated from those of management. To illustrate this principle, Table 1 presents the usual roles of boards of directors and management in public sector agencies, boards and authorities.
Members of oversight bodies should also be independent from management in order to avoid real or perceived conflicts of interest. Log in. Remember Me. Practice Guide to Auditing Oversight. What Is Governance? Tikanga, kawa and values that meet the aspirations of iwi, hapu and whanau often give direction to board work.
Tikanga can easily fit alongside governance best practice. Three organisations committed to good governance in New Zealand, the Institute of Directors in New Zealand , Securities Commission of New Zealand and the New Zealand Stock Exchange have all published detailed guidelines on the principles of governance and the responsibilities of boards. As you can see from the governance diagram below, boards are the critical link between the aspirations of iwi, hapu, whanau and shareholders and the way an organisation is run day-to-day.
This diagram shows the relationship between the owners and people who benefit from an organisation, its board, and the management. Although good governance principles and practices are universal, no two organisations are ever the same.
This means that they are not set up just to make a profit. Many have to balance being financially viable with the social and cultural aspirations of the owners as their core purposes. Although the organisations may trade commercially and measure themselves against economic indicators, wealth creation is not seen as an end in itself. In setting up and selecting the type of legal structure for an organisation, it is important to clearly know the intended purpose of that structure.
Cultural considerations will sometimes take precedence over purely economic factors for example building in close proximity to urupa or recovering debts from relatives. These elements should support the general principles of good governance. It can be important to have people with expertise in tikanga and kawa on the board. This has implications for many aspects of governance such as selecting board members with a view to handing the business on, and in strategic planning where a 25 year view, or even more, may be taken.
Some stakeholders, including people providing finance, may take a short-term view, for example focusing on immediate and short-term returns or only thinking in terms of a five year planning cycle.
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