Tuesday, March 22, 2005

The meaning of governance

We need to distinguish governance from management, and an inability to do so probably indicates that we have not understood the question of the development of business. The management question is “how do we organise ourselves to address current priorities?”. The governance question is more like “how do I make sure the available resources are used wisely and accountably?”.

The questions differ markedly in scope. Whom and what is to be managed is generally narrowly drawn to improve local accountability. Governance has a natural remit that includes anything and everything that can affect or be affected by the business. The task of governance is to make sure that management is a tool whose use and effectiveness is understood. Management can never be counter-productive in its own terms, but there are plenty of business situations where management is indeed a barrier to what needs to be done.

Governance is a process, and because we are speaking of the governance of business organisations, it is a process of inclusion. Its task is to harness a wide range of opinion, interest and skill into the success of the business as a benefit to all in their own terms. In turn this inclusion is reflected in the acquired legitimacy of the governance process in the organisations concerned.

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