1/10/2024

The four pillars of effective governance

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 an organisation, will lead the exploration, development and deployment of an organisation's purpose. Once set, the Board must act with the purpose in mind, utilising the purpose to set the organisation’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 organisation in mind.   It will encourage a high-performance culture, ensuring leadership 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 organisation'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 organisation is, and remains, compliant.   It must also identify and mitigate risk within the organisation and direct management on how to proceed.

Good governance is extremely important for any business.  If neglected or poorly executed, it can impede your organisation’s growth or even render it a failure.

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"I have had regular monthly coaching with Michelle for two years, I found Michelle kind and thoughtful, also analytical. It is helpful each session to review the numbers, budgeting and discuss forecasting with the different events that are occurring in the trust regularly. Each meeting our discussions resulted in myself as CEO to understand the numbers more and receive helpful tips towards improving our financial reporting to make them more readable and understandable to the board."

Catherine Percy, CEO Crescendo. May 2021