Wednesday, September 21, 2022


How to enforce the organizational governance discipline depends on the complexity, scale, and management maturity of the organization.

Governance is about steering the organization in the right direction with premium speed. The more complex contemporary organizations become, the broader scope of corporate governance turns out to be. People, process, culture, technology are all crucial ingredients of corporate governance disciplines. 

There is no standard model for corporate governance because the context for corporate governance includes a wide range of circumstances and capabilities which are subject to constant organizational variability.

Corporate governance is a guidance system for achievement of planned strategic business goals & objectives: Corporate governance is about how well an organization is being run and if set up right, it should effectively oversee the achievement of the business vision, mission, and objective. A structural governance approach includes setting strong governance principles, optimizing governance structure and behaviors.

Corporate governance and management are interdependent. Corporate governance discipline can fulfill its purpose as a high-level strategy enabler by providing a structured communication bridge between shareholders/investors and top business leaders. In many organizations there are gaps existing in capability development because there are no strong governance processes to handle risks and there is no common set of rules to improve business effectiveness. Strong governance disciplines enforce the ability to reinforce what you have, putting into management processes before moving on to new phases consistently.

Good corporate governance enables a good decision-making system:
Uncertainties and complexities are common occurrences in any walk of human progress sociologically. Governance is fundamentally about having a systematic approach to improve decision coherence within the corporate entity. The governance structure can’t impact performance directly; it must be through the governance behavior and practices. Governance as a complex system, if fully functioning, will lead to decision coherence at the different levels of organizational hierarchy

A strong governance model illustrates the governance processes that are used to govern specific activities, illustrates the mechanisms of escalation and resolution used to make effective decisions across the organizational hierarchy. The best practice of governance enforces information-based decision-making, and gets the people, culture, and accountability right.

Governance is to frame innovation management and improve innovation excellence:
Innovation has to deliver business objectives, but it needs the right kind of governance to thrive. Corporate governance isn’t just about controlling, putting restrictions on what you can do, it is more about enabling, monitoring and knowing when things are not going to plan so that you can take appropriate actions at the right time. Thus, effective governance should orchestrate innovation management, not stifle creativity, do it with trust and flexibility.

The right level of guidance and processes are important, but overly rigid processes or too pushy goals will stifle innovation. Organizations should identify patterns for good governance that advocate engagement, motivation, and innovation as these are vital aspects of top-performing enterprises in our modern economy. There are often disruptive processes or technologies that need some relaxation of the old governance models. If governance is deemed to stifle innovation, then it is wrongly understood and implemented. Sound governance is part of setting the right risk appetite, attitude, management disciplines for eliminating risk and doing the right thing.

How to enforce the organizational governance discipline depends on the complexity, scale, and management maturity of the organization. The established governance rules, solid governance structure along with healthy governance behaviors and best practices keep steering the organization forward via refocusing on prioritized issues, reorganizing business structure, rebalancing corporate resources, and reinventing a high performance company.


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