Good governance is essential across the private and public sectors to ensure that organisations meet the needs of their stakeholders, create momentum to reach their goals and maintain compliance with the legislation that relates to them.
- In the business world, only 35% of executives rate the effectiveness of their boards as ‘excellent’ or ‘good,’ which suggests that many businesses still need to implement better and more robust corporate governance structures to guide them to success.
- 92% of meeting participants in the non-profit sector rated their satisfaction with meetings as 5 or below out of ten. Productive meetings are at the heart of good governance.
- Only around half (53%) of professionals in the healthcare sector agreed that meeting action points remained a priority following a meeting. Only by turning decisions into tangible change can you implement governance effectively.
This is why leaders in charge of guiding private and public institutions must understand the principles of good governance. This article explores what these principles are and how you can implement them to drive your organisation onwards.
Key takeaways
- Good governance is key to better outcomes for organisations across sectors.
- Transparency ensures you make decisions openly and stakeholders understand the reasoning behind them, which builds trust and accountability.
- Accountability requires clear roles and follow-through on actions.
- Participation and inclusivity improve decision-making by incorporating diverse voices, experiences and perspectives into the governance process.
- Better efficiency allows governance boards to focus on strategic matters by streamlining meeting logistics, budgeting and information sharing.
- Governance helps you maintain the rule of law and an ethical approach to the company’s work, with an additional focus on environmental and social responsibility.
Principles of good governance
Transparency
The Council for the Defence of British Universities published a 2024 report on “University Governance: Views from the Inside,” in which it highlighted issues with transparency within higher education decision-making bodies. It claimed that many decisions were taken away from the meeting room, without the ability of committees and boards to scrutinise the process.
In addition, after Croydon Council in London was effectively declared bankrupt three times in two years, its newly elected mayor blamed the previous administration for “a lack of governance and transparency that shames Croydon and continues to have a long-lasting impact on the sustainability of our council.”
Action point
Being open about how and why the governing body makes decisions builds trust and ensures that all relevant stakeholders have an opportunity to share their expertise. In turn, this allows the board of directors to create better-informed resolutions that benefit the organisation. Display transparency by streaming public meetings, maintaining voting records on your website and recording decisions internally for future reference.
Accountability
An extension of transparency is accountability. This is how organisations ensure that decisions turn into actions. Not only do you need to be open about how you make those decisions, but also how you implement them and ensure they work for the benefit of the organisation and its stakeholders.
The statistic about only half of healthcare professionals confirming that working on action points remains a priority after a meeting shows an accountability gap. Without proper accountability, you have leadership that works in principle, but not in practice.
Action point
Ensure that all board members understand their specific roles and responsibilities so that there is no confusion over who is accountable for which actions. Use a meeting portal to assign actions with due dates and monitor their progress. Check in with stakeholders who are in danger of missing deadlines and offer support to help them complete the tasks.
Participation and inclusivity
The more members of your board or committee that can attend a meeting, the more opinions you hear from on the important matters at stake.
Think about how to improve attendance when you schedule meetings, considering factors such as other working commitments, location, childcare and anything else that might prevent a board member from joining the meeting. In addition, offer the chance to take part in meetings remotely with video conferencing. This allows members to attend without having to take time to travel to and from the meeting room and can circumvent accessibility issues with the building.
The chair should also ensure that the meeting hears from all voices in the meeting. You must prevent a few participants taking over by bringing in the quieter members and having them share their opinions. Include training on mediation and conflict resolution to help the chair manage the room more effectively in guiding the board towards making its decisions.
Action point
Ensure you recruit your board with diversity in mind. Not only should this include gender, ethnicity and other demographic considerations, but also diversity of outlook, expertise and experience. This creates an environment in which you can expand problem-solving strategies from the traditional groupthink caused by non-diverse boards.
Rule of law
Your governing body should understand the legislation that is pertinent to your organisation so that all decisions you make are aligned with your obligations. It is essential to undertake training for your board members so that they understand what is expected by regulators and what the potential sanctions are for failing to meet these requirements.
Action point
Put in place internal controls and processes for reporting, investigating and managing noncompliant activity and introduce legal expertise onto your board, usually in the form of the general counsel, so that you can run decisions through this prism.
Efficiency
The more efficient a governance board, the more time it has to spend on decision-making, rather than on administration, logistics and other matters that detract from its main purpose. The main areas in which your leaders can address efficiency are listed below.
Action points
| Area | How to improve efficiency |
| Time | Ensure that your meeting processes are streamlined. For example, using a meeting portal with an agenda builder can save hours of work creating and distributing meeting agendas and canvassing for feedback from your meeting participants. |
| Money | Improve financial efficiency by aligning budgets with strategic priorities and regularly reviewing expenditures for cost-effectiveness. Find solutions that reduce costs overall. For example, take meetings online to save on venue costs or go paperless to reduce printing and distribution expenses. |
| Personnel | Clearly define roles within the governance structure to avoid duplication of efforts from members. Invest in training and upskilling, and delegate responsibilities based on expertise to ensure you best utilise the skills available to your team. |
| Information | Improve information efficiency by using centralised, digital and cloud-based systems that ensure timely access to the latest versions of meeting materials. Provide data in an easily digestible way to ensure that members can use it to make the best-informed decisions possible. |
Ethics and integrity
An ethical approach to leading an organisation is essential for good governance. In all sectors, stakeholders need to be secure in the fact that they can trust senior management to act in the best interests of the organisation, its staff, partners, clients and service users. Without this trust filtering down from the top, the organisation is at risk of losing investment and encountering legal, financial and reputational damage.
Action points
Implement a code of conduct and ethics that all members should read, understand and sign. Include clauses on corruption, bribery, insider trading, confidentiality, conflicts of interest, neglect of duty and other elements required to show integrity in the role.
In addition, establish a whistleblowing reporting system so that members can confidentially alert you to breaches. Make sure you have an investigation procedure in place to establish the truth in a timely manner.
Sustainability
With the rise of sustainable investing and a wider consciousness over environmental and social matters, including the upholding of human rights, it is important for governing bodies to integrate these concerns into decision-making. Governance is the G in ESG and that highlights how integral sustainability is to the effective running of businesses and the perception of the organisation by external stakeholders.
Action point
Establish a sustainability committee to manage your ESG approach. Reduce the use of paper, cut down on unnecessary travel and ensure you have oversight on how the organisation treats its people. Conduct impact assessments at regular intervals and monitor performance to be certain that you are doing all you can to meet your obligations to the environment and society.
Effectiveness and evaluation
Good governance requires an effective board, working at the top of its game. This means you must commit to regular evaluations that look into how well your board works, the effectiveness of your meetings and whether your corporate decisions turn into effective actions.
Action points
Have board members take an evaluation survey every few months to discover what internal stakeholders feel about the board’s work, create a skills matrix to understand which gaps you need to fill and bring in third parties to look into how effectively your board is working.
You can also analyse internal data such as meeting attendance and, if you use a board portal, how many documents they open and read. This will help you understand how engaged they are, putting in place procedures to improve matters if necessary.
Innovation and digital governance
The use of digital tools in your governance processes maintains an electronic audit trail that improves transparency and maintains accountability. A board portal captures votes and allows you to check back in the future to understand the board’s decisions. It also holds members accountable for completing actions assigned to them and makes it easier to create, distribute and archive meeting minutes as an accurate representation of your governance workflow.
Technology allows for greater accessibility, aids collaboration between board meetings as members annotate documents and improves the approval workflows for your processes.
However, you must make sure you find a secure system, built with high-level encryption capabilities and compliant with GDPR, to maintain data integrity.
FAQ
Why is the MECE framework useful in discussing governance?
The MECE (Mutually Exclusive, Collectively Exhaustive) framework helps break down governance topics into clear, non-overlapping categories that cover all relevant aspects, making complex governance issues easier to understand and address systematically.
What are the common signs of poor governance?
Common signs include unclear roles and responsibilities, lack of transparency, inconsistent decision-making, poor stakeholder engagement and frequent ethical or compliance breaches.
What role does culture play in shaping governance practices?
Organisational culture influences how governance policies are implemented, how openly issues are discussed and whether ethical behaviour and accountability are consistently upheld across the institution.
Conclusion
Good governance is key to influencing better decision making and, therefore, better outcomes for organisations across a range of sectors, from the corporate world to public institutions, including local government and healthcare. By implementing these principles of good governance, you create a robust platform on which to base your risk management, decision-making and follow-up procedures. iBabs’ board portal is an essential tool for good governance, allowing you to engage your members and equip them with the tools they need to make informed decisions and follow up in an effective, efficient and ethical manner. Request a demo today to find out how it can improve your governance efforts.
