Effective governance can be summarised by four key governance practices, also known as the four pillars of effective governance:
1. Determining the business’s purpose.
An effective Board, one that truly adds value to a business, will lead the exploration, development and deployment of a company’s purpose.
Once set, the Board must act with the purpose in mind, utilising the purpose to set the business’s goals, and then devising the strategy to achieve them.
2. Maintaining strong governance culture.
An effective Board will work well as a team by ensuring a healthy Board environment where open and non-personal debate is encouraged. A Board should celebrate thoughtful challenge and dissent, commitment, and trust.
Holding positive Board meetings is part of ensuring all Board members adopt a learning mentality and always operate with the best interests of the business in mind. It will encourage a high-performance culture, leading directors to deal with the right issues at the right time and in the right manner.
3. Holding management to account.
An effective Board will hold management to account through informed, astute, effective, and professional oversight.
It does not do management’s job. Instead, it ensures the company’s purpose and strategy are understood by management and implemented according to a clear plan with proper resource deployment, task allocation, and performance management.
4. Ensuring compliance.
This one is pretty important. An effective Board ensures the company is, and remains, solvent. It must also identify and mitigate risk within the company and direct management on how to proceed.
Good governance is extremely important for any business. If neglected or poorly executed, it can impede your business’s growth or even render it a failure.
We can help you get it right! Get in touch.