Three Tips for Improved Governance

‘Good governance’ can be a confusingly broad term which should be applied differently for each organisation, depending on its risk profile and complexity. Ultimately though, if used well, good governance has something to offer every organisation, and in particular can lead to better decision making.

There are three things every organisation can ask as a starting point to improving its governance:

1. 1. Do our People know what Decisions they can make?
      If people in your organisation are leaving decisions to their manager that they shouldn’t be, making decisions that are beyond their role, or worse still, not making decisions due to uncertainty about their authority, the organisation will not be as productive as it could be and might make costly errors. ‘Do our People know what decisions they can make?’, is a question that should be asked at all levels of an organisation including of the Peak Body (whether it be a Board, a Committee, Council or some other form). Delegations must be practical and functional for the organisation, be recorded in clear words and be discussed and promoted with all people in your organisation. This allows decisions to be made promptly by the right person(s).  Depending on your organisation’s needs, a delegations document can be a simple as a one page table, or as detailed as a manual dealing with a myriad of circumstances. It can be one document dealing with every delegation from the Peak Body, or it can be split into delegations from the Peak Body to the Chief Executive and delegations from the Chief Executive to other staff. Each organisation should determine what works best for their circumstances.

1. 1. Does our Peak Body provide Valuable Input for our Managers?
      The Peak Body of your organisation will only be capable of providing valuable input if it has appropriately skilled people, without conflicts of interest or duty, that receive papers/presentations with the right level of detail to help, guide and inform their decisions. Their meeting agenda should be written so as to focus time on the right areas (such as safety, financial performance, strategy and risk) and it needs to meet at the right times in the organisation’s cycle for key decisions to be made. A review of the delegations given to your Peak Body, the skills of its members, its standard agenda, rolling twelve month calendar and the length of its meeting papers, may reveal deficiencies. The Peak Body Chair is often the best person to consider these issues with the Company Secretary, and a Performance Review with anonymous input from the Peak Body members and the senior management team can often reveal areas for improvement.

1. Are our Policies current, clear, concise and essential?
   If your organisation’s policies, processes and procedures are voluminous, hard to understand, out of date or too theoretical, you will find that staff do not take them seriously or may not even know they exist. Either way, the organisation will have staff doing different things, potentially making up the rules as they go along, causing inefficiency, inconsistency and potentially legal problems. Policies must be clear and concise and compliant with the law, mandatory standards and codes. There are certain essential policies every organisation should have, including Workplace Health and Safety, Workplace Behaviour, Privacy and a Code of Conduct.  However, the number of policies needs to be contained so that from a practical perspective staff can be trained on their content regularly and can absorb and understand them. Staff should be required by their employment documents to comply with your organisation’s policies and it is a useful compliance step to ask staff to give an annual compliance undertaking that they have read, understood and complied with the policies.

Taking a step back from the business and considering these three issues can quickly reveal where important improvements to corporate governance can be made in your organisation.

If you need any help with these or other corporate governance issues, please don’t hesitate to get in touch with me.