Governance is one of those things that businesses typically don’t notice until something has gone terribly wrong. When everyone is completely focused on getting their job completed, questions about how the board is composed are forgotten and sometimes it seems that no one has time to develop robust accountability measures.
The governance lens requires consideration of practices, principles, and structures. The practices define how the entire company is governed. If the practices are ill defined or poorly structured, one of two extremes can develop. Requirements can become so onerous that they cause bottlenecks in the company and impede business. Alternatively, practices can become so lax that stakeholders, including employees and customers, find themselves compromised. These practices are guided by governance principles that provide guidelines for conduct. And finally, governance structures help explain who has control of what in the company. Are leaders sufficiently accountable?
While some might think this lens is unimportant, or only of secondary importance at best, governance affects every other lens. In addition to potentially impeding everyday business, poor governance can give corruption a foothold. If corruption sets in, then waste begins to erode the company. This does not have to be Chicago-style mass corruption to affect a company. It can be something as simple as an unaccountable board member funneling business to an unproductive contractor. Even if no technical violation occurs, dubious behavior reflects poorly on the company as a whole. Thus, it is within a company’s best interest to avoid any charges of misconduct by developing a sound governance lens.
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