Governance and Good Governance
Dr.Nasser Ali Ahmed Alakhram, BSc, MPH, PhD.
Does these the Main Pillars of
Governance?
Representative
Accountably
Participatory
Autonomous
Transparency
Follow the
rule of law
Fairness
Legitimacy
Panel Discussion
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Does these the Main themes of
organizing of governance?
Leadership
Strategy
Board
oversight
and
responsibilit
ies
Communications
and Information
Organization
Structure
Design
Committee(s)
authorities
and
responbilities
Technology
Responsibility
Delegation
Policies and
procedures
Panel Discussion
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Presentation Overview
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Definition of Governance
Functions of Governance
Governance and structures.
Definition of Management
Functions of management
The Board’s building, structure,
characteristics, role and framework.
Key success factors for an effective Board.
Directorship Competence Map.
Barriers to effective governance.
Governance in your organization
An Practical Example.
Good governance definition.
Basic features of good governance .
Why is good governance important?
What is Governance?
“The importance of governance
lies in its contribution both to
business prosperity and to
accountability.”
Governance
“ governance is concerned with holding the balance
between economic and social goals and between
individual and communal goals…… The aim is to
align as nearly as possible the interests of individuals,
institution and society.”
Sir Adrian Cadbury
Corporate Governance Overview, 1999
[World Bank Report]
Governance
is a mechanism through which boards and
directors are able to direct, monitor and supervise the
conduct and operation of the institution and its management
in a manner that ensures appropriate levels of authority,
accountability, stewardship, leadership, direction and control.
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Definition of Governance
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Governance concerns the structures, functions,
processes, and organizational traditions that have
been put in place within the context of a program’s
authorizing environment “to ensure that the
[institution/program] is run in such a way that it
achieves its objectives in an effective and
transparent manner.
It is the “framework of accountability to users,
stakeholders and the wider community, within which
organizations take decisions, and lead and control their
functions, to achieve their objectives.
Functions of Governance
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Strategic direction:
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Establishing a vision and a mission for the
institution/program, reviewing and approving strategic
documents, and establishing operational policies and
guidelines.
Exercising effective leadership that optimizes the use of
the financial, human, social, and technological resources of
the institution/program.
Continually monitoring the effectiveness of the
institution’s/program’s governance arrangements and
making changes as needed
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Functions of Governance (cont…)
 Management oversight:
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Monitoring managerial performance and program
implementation, appointing key personnel, approving annual
budgets and business plans, and overseeing major capital
expenditures.
Promoting high performance and efficient processes by
establishing an appropriate balance between control by the
governing body and entrepreneurship by the management
unit.
Monitoring compliance with all applicable laws and
regulations, and with the regulations and procedures of the
host organization, as the case may be.
Functions of Governance (cont…)
 Stakeholder participation:
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Establishing policies for inclusion of stakeholders in
programmatic activities.
Ensuring adequate consultation, communication, transparency,
and disclosure in relation to institution/program stakeholders
that are not represented on the governing bodies of the
institution/program.
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Risk management:
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Establishing a policy for managing risks and monitoring the
implementation of the policy.
Ensuring that the volume of financial resources is
commensurate with the institution’s/program’s needs and that
the sources of finance are adequately diversified to mitigate
financial shocks.
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Functions of Governance (cont…)
 Conflict management:
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Monitoring and managing the potential conflicts of interest of
members of the governing body and staff of the management units.
Monitoring and managing conflicting interests among
institution/program partners and participants, especially those that
arise during the process of institution/program implementation.
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Audit and evaluation:
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Ensuring the integrity of the institution’s/program’s accounting and
financial reporting systems, including independent audits.
Setting evaluation policy, commissioning evaluations in a timely way,
and overseeing management uptake and implementation of accepted
recommendations.
Ensuring that evaluations lead to learning and programmatic
enhancement.
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Governance and structures
Accountability
Responsibility
Transparency
Information
Governance
Structure
Definition of Management
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Management
Management concerns the day-to-day operation of the
institution/program within the context of the strategies,
policies, processes, and procedures that have been
established by the governing body.
Whereas governance is concerned with “doing the right
thing,” management is concerned with “doing things
right.
Functions of management
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Program implementation:
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Managing financial and human resources.
Reviewing proposals for inclusion in the portfolio of
activities and allocating financial resources among
activities.
Supervising the implementation of activities.
Contracting with implementing or executing agencies to
implement individual activities.
Ensuring that these agencies are self-monitoring and
reporting their progress in a timely way.
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Functions of management (cont…)
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Regulatory compliance:
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Ensuring compliance with all applicable laws and regulations at
the international, national, and institutional levels, including the
regulations and procedures of the host organization, as the
case may be. Being aware of and adhering to these
requirements and standards on a day to- day basis.
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Reviewing and reporting:
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Taking stock of the overall performance of the portfolio in
relation to the institution’s/program’s objectives and strategies.
Reporting progress to the governing body, including any
adverse effects of the institution’s/program’s activities.
Serving the needs of the governing body by preparing
strategies, policy statements, etc.
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Functions of management (cont…)
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Administrative efficiency:
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Maintaining a lean administrative cost structure (while
recognizing that administrative costs tend to be higher
during the launch period of institution/program).
Proposing ways to maintain high performance while
reducing costs to increase operational effectiveness.
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Stakeholder communication:
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Implementing board-approved policies for stakeholder
inclusion in programmatic activities.
Finding ways to increase the effectiveness of stakeholder
participation in all aspects of the institution/program.
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Functions of management (cont…)
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Learning:
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Distilling and discerning lessons from the implementation
of activities across the portfolio.
Transmitting these lessons to both governing partners
and beneficiaries in order to inform policy making and to
enhance implementation of activities.
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Performance assessment:
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Reviewing the performance of operational staff on a
regular basis, as well as the performance of consultants at
the end of their assignments.
Building Effective Board Governance
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Defining key board roles
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Board Chairman
Chief Executive Officer
Board Directors - executive and non-executive
Putting in place board governance arrangements
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Board
Board committees to support decision process
Supporting functions to regulate processes
Board procedures and rules, e.g. conflicts of interest
Delegated authorities for management
Ensuring proper oversight and supervision
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Management reporting and public disclosures
Assurance processes and controls
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Chairman as Leader of the Board
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Primary role
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Provide overall leadership to the board
Function
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Principal link between board and CEO/management
team
Responsible for board agenda and work plan
Work with board committee chairmen
Involved in selection and induction of new directors
Counsel individual directors on their performance
Participate in discussions with investors, key
stakeholders
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CEO as Leader of the Institution
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Primary role
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Lead the management team, reporting to the board
Function
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Work closely with board chairman
Responsible for performance of management team
Formulate institution strategy, annual business plan and budget
Responsible for institution and financial objectives
Formulate major institution policies
Ensure continuous improvement in services and products
Manage relations with investors, major customers, regulators
Responsible for institution’s long-term sustainability
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Board Structure and Composition
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Balancing executive and non-exec. participation
Ensuring an effective selection process
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Key personal and professional attributes
Skills aligned to strategy and business
Also fill board committee requirements, where appropriate
Appointed or elected governing board members
Size of the governing board
Candidates for the governing board
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Diversity in experience and skill
Community connections
Diversity in perspective
Employees as advisors
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Benefits of Effective Board Committees
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Assist the board in its decision making
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Supports board responsibilities in key areas
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Brings together non-executives and management
Allows detailed discussion on management matters
But, filters out operational issues that remain with management
And, focuses on strategic decisions required of the board
Audit, internal controls and risk
Executive compensation and management appointments
Governance issues and institution policies
Nomination and selection of non-executive directors
Others, e.g. health, safety, environment, etc.
Defined terms of reference and limitations
Generally, no executive powers
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Characteristics of Effective Governing Boards
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Passionate belief in the mission
Shares a clear vision for the future
Has a firm understanding of the charter
Focused on results
Focused on strategic issues
Has a clear understanding of roles and responsibilities
Has an appropriate structure, size, and composition
Has a clear understanding of the difference between
governance and management
Maintains a strong relationship with the institution leader
Facilitates the mutual support of a strong institution
leader who understands charter governance
Board’s Role in Strategic Planning
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Review and approve
Understand & challenge
assumptions
Understand critical success
factors
Ensure sufficient due diligence
Is the plan realistic/achievable?
How will success be measured?
Monitor performance
Board’s Role in Financial Oversight
 Duty to maintain proper accounting records
 Periodic reporting of financial position, performance
 Establishing, monitoring proper internal controls
 Ensuring proper external controls and audit
 Skills, knowledge required by directors
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Board’s Role in Risk Management
 The board should know about and evaluate the:
↳ Most significant risks facing the institution
↳ Possible effects on shareowners
↳ Institution’s management of a crisis
↳ Importance of stakeholder confidence in the organization
↳ Communications with the investment community
 The board should ensure that:
↳ Sufficient time is devoted to discuss risk strategy
↳ Appropriate levels of awareness exist throughout the institution
↳ Risk-management processes work effectively
↳ A clear risk-management policy is published
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Board Governance Framework
Board of Directors
Institution
Secretary
Reporting &
Disclosure
Governance
System and
Controls
Key Areas of Responsibility
Board
Meetings
Board Operations
Chairman
• Achievement of strategic objectives and value creation
• Fulfil responsibilities and duties in law and prescribed functions
Strategy
Institution Policies & Procedures
Board Governance Instruments
Monitoring and Evaluation
Board Committees
Audit
Committee
Information and Communication
Shareholders
CEO & Management
Remuneration
Committee
Other
Committees
Executive
Committee
Internal Controls
& Assurance
Combined Assurance Model
Internal Audit
External Audit
Other Assurance
Providers
Management
Source: KPMG
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Key success factors for an effective Board
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Outstanding leadership
Unquestioned legitimacy and effective power
Enlightened definition of function, role and
responsibilities
Outstanding competence
A supportive, functional culture; and
Efficient management of function, structure
and process
From: MAKING BOARDS WORK, Richard Ivey School of Business, University
of Western Ontario, Canada
Directorship Competence Map
Strategic
planning & thinking
Leadership
Directing
change
Finance
Co-op
& technology
knowledge
Market
awareness
Business know-how
Dealing with
people
Boardroom
practice
Being a Director
Corporate
governance
Self
perception
Judgment
& decision
making
Influencing
& negotiating
Personal
development
Presentation
Managing
workload &
pressure
Interpersonal
communication
Teamwork
Barriers to effective governance
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Ineffective leadership
Lack of sustained commitment
to Vision, Mission and Values
Unclear definitions of functions,
roles and responsibilities
Lack of clarity between role of
management & Board
Lack of mutual trust within
Board and between Board and
management
Barriers to effective governance
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Imbalance of
skills/competencies
Poor information management
(too much/too little)
Burnout of Board members
Turnover of Board members
and little/no corporate
memory
Lack of succession planning
Discuss: Governance in your organization
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Is there a governance structure in place?
If so, what is it? Does it work (in terms of what we’ve
been discussing)? How does it work? How can it be
improved?
If not, what do you think might be needed?
Governance by-laws development
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Normally there are documents that set out the rules of an
organisation’s governance structure – by-laws
The by-laws along with legal documentation
(incorporation) and the mission statement as well as other
documents communicate what the organisation is doing,
how it’s doing it and where it’s going
A basic governance (by-laws)…
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Membership rules
Board election processes
Responsibilities of the board
Board positions, criteria and duty statements
Terms of office for board members
Decision making and minuting procedures
Frequency and number of meetings per year
Meeting quorum
How meeting dates are set and agendas developed (and by
who)
Developing a governance (by-laws)…
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Takes time
Must be consultative
Engage the organisation’s members and/or constituents
Must be formally endorsed by the membership
… however, we can make a start today!
An Practical Example (University)
Example
• Delegates authority to manage university to the president
Board
President
• Empowers and delegates to leadership to manage
• Delegates academic governance to the faculty.
• Committee and organizational structure created to share decision
making and accountability in the service of advancing the institution.
Governance • Crosses faculty, staff, college and university levels.
The board of trustees – Primarily oversee policy and resource
management.
Review
Purpose of
Vision and
Mission
Approve policies
e.g. P and T,
Workload, Salary
Policies
Oversee and
approve education
program changes
and Quality
Board
Oversight
Appoint the
President
Assist with
fund raising.
Oversee
Investment and
Financial Plan
Board committees
Academic and Student Affairs
Committee
Finance Committee
Executive Committees
Membership.
Audit Committee
Institutional Advancement
Committee
Governance structure - executive
President’s Cabinet
Leadership Team
• Strategic Plan
Management.
• Overarching strategic,
Operational, and
Management issues.
• Budgetary oversight
Shared Governance
Committees on
Operational Topics
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EOG (Expeditionary Operations Group)
STP (Short-Term Plan)
BISG (Business Information Support Group)
Etc..
Ad Hoc Structures – e.g.
Retention TaskForce
Academic Cabinet
• Oversees academic
enterprise.
• Works collaboratively
with stakeholders across
the institution – academic
quality, new programs,
reengineered programs,
program modalities,
academic strategies.
• Cross functional “PM”
approach.
Governance structure - management
Faculty
Governance
structure
• Faculty Senate
• Committee
Structure
Staff Council
Department
• Staff
representation
on key issues.
• Faculty
• Staff
• Administration
• Elected
separately from
other structures.
Good
Governance
‘Good governance’ is…
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‘A transparent decision-making process in which the
leadership of an organization, in an effective and
accountable way, directs resources and exercises power
on the basis of shared values’
- Marilyn Watt, A Handbook of NGO Governance
A sharing of decision making so that power and
resources do not accumulate in the hands of one
person or a single group.
What might ‘bad governance’ mean?
Discuss: Who makes the decisions?
Who makes the decisions in your organisation?
 How are they made?
 How can others participate in this?
 Do they participate?
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Basic features of good governance
A basic form of accountability
 Decisions are discussed and made collectively
 There are restrictions on one person becoming
more powerful than the others
 This doesn’t happen accidentally, by chance or
because of good will – it has to be formalised
through rules and procedures
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In a ‘good governance’ …
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There is a membership
There are regular elections for the board and
nominations for all positions on a board
The board is voluntary and unpaid
There are clear and specific roles
(president/chairperson, treasurer, secretary)
There are regular, minuted meetings
The meetings are organised in a standard format with
regular reports on key issues
There are written procedures for how elections and
meetings and for how conflict is resolved
Also…
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There is a coordinator, executive officer or secretariat
responsible for the organisation’s daily business, they are
accountable to the board
There is a distinction between governance (board, broad
direction) and management (staff, everyday activity).
Good governance adds value by improving the
performance of the institution/program through more
efficient management, more strategic and equitable
resource allocation and service provision, and other such
efficiency improvements that lend themselves to improved
development outcomes and impacts. It also ensures the
ethical and effective implementation of its core functions.
Brainstorm:
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Why is good governance important?
Stability and reliability
Guards against corruption
Clear rules and procedures (transparency)
Accountability to communities/members
Sustainability and development
Diversity of views
Participation of more people
Guard against autocratic rule
Having structure to keep organisation focused on stated
mission
And many more…
Bringing today together…
ACCOUNTABILITY
TRANSPARENCY
GOOD GOVERNANCE
Thanks for Your Attention