Organisational structure and governance
When considering any form of management cycle, we must establish concepts of how organisations behave and, in particular, the role and importance of governance.
Governance is evolving to meet the demands of the ever-changing world. We might consider governance to be the same as government or governing, as both of these terms have a similar linguistic root. However, governance is broader in concept and is described in many ways.
What is governance?
According to Business Dictionary, governance is the:
‘Establishment of policies, and continuous monitoring of their proper implementation, by the members of the governing body of an organisation. It includes the mechanisms required to balance the powers of the members (with the associated accountability), and their primary duty of enhancing the prosperity and viability of the organisation.’
(Business Dictionary n.d.)
In practice, governance plays a considerable and often hidden role in the success or failure of management approaches, initiatives or innovations. Understanding the part governance has to play in Business Continuity Management (BCM) is important to appreciate its efficacy and context.
There are a number of core concepts relating to governance that we’ll explore in more detail during this course. These are:
- Stakeholders – the role of those that are interested in or affected by decisions
- Policies and procedures – what is to be achieved and how?
- Risk – the approach to dealing with uncertainty
- Decision-making – short and long-term, and how do we know we are making the best one
- Performance – how do we measure it and how is it used in decision-making?
- Cooperation and collaboration – how do organisations with different governance come together in BCM?
So, what are the principles of good democratic governance?
The Council for Europe has produced a series of principles which are transferable to other types of governance:
- Fair conduct of elections, representation and participation
- Efficiency and effectiveness
- Openness and transparency
- Rule of law
- Ethical conduct
- Competence and capacity
- Innovation and openness to change
- Sustainability and long-term orientation
- Sound financial management
- Human rights, cultural diversity and social cohesion
In May 2018, the Association of Chartered Certified Accountants (ACCA) produced a report setting out five principles of corporate governance:
‘A company is best equipped to manage its risk and opportunities when its employees agree, or better still, are committed to realising its purpose. This enables the entire organisation to be alert to changes in the surroundings and respond appropriately, enhancing the chance of its survival. This is why a pervasive, positive organisational culture is not just helpful, but essential.’
(ACCA 2018: 14)
It can be seen in both of these extracts that good governance is more than just a role fulfilled by senior positions. A well governed organisation engages employees at all levels in the process in order to ensure commitment to cultural values, which in turn leads to an enhanced capacity for an organisation to respond to and recover from unforeseen events.
Types of governance
Hierarchical forms of governance are the traditional and most commonly used form. People in senior positions make decisions that trickle down through an organisation, and performance is monitored and reported back to the top to allow the best decisions to be made in order to make progress.
Read this Forbes blog post by Jacob Morgan to gain a better understanding of the strengths and weakness of the hierarchical governance approach in organisations.
In his sequence of posts on hierarchies, look at part five, where Jacob discusses the idea of a ‘boss-less’ organisation – the ‘holacratic’ approach.
Consider the evolution of the idea of governance from hierarchical models to more holacratic approaches and the relative strengths and weaknesses of each.
Discuss your experiences about working under these governance approaches. How well did it work and what might be changed to improve it?
Business Dictionary (n.d.) Businesss Dictionary [online] available from http://www.businessdictionary.com/definition/governance.html [07 May 2019]
Council for Europe (n.d.) 12 Principles of Good Governance and European Label of Governance Excellence (ELoGE) [online] available from https://www.coe.int/en/web/good-governance/12-principles-and-eloge [07 May 2019]
Association of Chartered Certified Accountants (2018) Tenets of Good Corporate Governance [online] available from https://www.accaglobal.com/content/dam/ACCA_Global/professional-insights/Tenets-of-good-corporate-governance/Tenets-good-corporate-governance.pdf [07 May 2019]
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