Building Trust Through ISO 37000: A Framework for #Purpose-Driven, Good Governance

The International Organization for Standardization (@isostandards), a worldwide federation of national standards bodies, develops global standards through its technical committees and partners, such as the International Electrotechnical Commission (IEC). The ISO37000 Standard on Purpose Governance followed these established development protocols, though its adoption remained voluntary.

In very general terms, the ISO 37000 states that “purpose and good governance are fundamental to organizational success” because good governance enables organizations to achieve their objectives ethically and effectively while meeting stakeholder expectations through effective performance, responsible stewardship, and #ethicalbehaviours.

What is a “good governance”?

For example, one of the things that the effective, good governance requires is embedding the organization's purpose along with values and culture in all decision-making processes and organizational structures. While the standard is mainly directed at governing bodies or groups, it does offer the guidance to all stakeholders (employees, vendors, partners) on how to integrate the principles into the day-to-day operations. "Good governance", therefore, encourages ethical standards sharing thorough better understandings of stakeholders' expectations and better alignment with organizational culture (purpose, mission, values) leading to better business and reputation outcomes (trust, accountability, transparency, loyalty) overall. Although the ISO 37000 is meant to assist with decision-making processes other benefits include: enhanced data quality and compliance, improved risk management and environmental stewardship, and enhanced ethical approaches throughout the value chain. In other words, ISO 37000 provides a sustainability framework that helps organizations create long-term value while meeting stakeholder needs.

How ISO 37000 helps with creation of long-term value?

The key benefits of implementation are:

• Long-term Stakeholder Value (e.g., aligning organizational objectives with the UN Sustainable Development Goals - SDGs) and ensuring effective #oversight of operations and strategy);
• Resource Management (e.g., transparent decision-making processes, clear accountability measures, and effective whistle blowing and stakeholder engagement mechanisms);
• Resilience (e.g., better adaptability to change, enhanced risk management practices, well-supported succession planning, and clear delegation of authority);
• Better Decision-Making (e.g., a comprehensive organizational perspective, accelerated decision-making processes through clear accountability, and accommodation of increased complexity);
• Talent Management (e.g., attracting purpose-driven employees, retaining staff through ethical leadership, fostering a culture of transparency);
• Financial Benefits (e.g., increasing investor confidence, improved access to capital, reduced capital costs, and enhanced reputation and goodwill);
• Accountability (e.g., transparent reporting, 360-degree stakeholder evaluations, improved performance bench marking, and monitoring of environmental, social, and economic impacts).

Governance vs. Management

The standard draws a distinct but complementary line between Governance and Management. Governance concerns the organization's purpose and accountability, whereas management focuses on achieving objectives within predetermined parameters like OKRs. Governing involves clearly outlining roles and responsibilities and ensuring accountability for those with delegated powers. Although there can be some overlap (such as with executive #board members), it is crucial to distinguish governance duties from management tasks. The main duty of sustainable #governance is to ensure long-term success, value creation, and meeting current needs without jeopardizing future generations' capacity. Consequently, governing responsibilities are now becoming naturally aligned with sustainable development principles, and the types of metrics such as the UN #SDGs. As one of the ISO 37000 governance duty is to consider #multi-stakeholder perspectives balancing stakeholder interests fairly when setting organizational goals and defining value creation, considering environmental and #socialimpact in decision-making is critical, regardless of direct stakeholder representation

Governance Bodies

Although the structure of governing bodies varies, transparency in appointments and recruitment that considers factors such as competence, diversity, inclusion, independent thinking ability, and current capacity are essential. Members of governing bodies are expected to continuously enhance their understanding of organizational operations and context, maintain relevant skills and experience, and have clear performance metrics that not only include regular assessments of their own effectiveness but also regular reporting the results to all key stakeholders. Committees may be established within this framework, particularly for the purpose of providing additional expertise or representing affected groups of stakeholders, such as beneficiaries. While committees may be formed to provide specialized expertise or stakeholder representation, the governing body remains ultimately accountable for all decisions.

Since organizational purpose forms the cornerstone of an organization, its governing body must direct all operations with having organizational purpose in mind first and foremost. Every other principle described in the standard basically derives from and reinforces this central notion of "purpose", a statement that clearly defines the organization's reason for being. For instance, as MCIS Language Solutions has a social purpose defined as "upholding the human right to be informed, heard, and understood" this statement will impact revenue generation, procurement, social and environmental factors as well as stakeholder relationships.

From the notion of "purpose" the standard suggest development of the Four Foundational Principles:

1. Value Generation that helps with aligning stated purpose and values within the environmental, social, and economic contexts.
2. Strategy that directs activities to meet value generation objectives in line with the purpose and core mission.
3. Oversight that monitors organizational performance while ensuring adherence to ethical standards related to the purpose statement as well as legal requirements.
4. Accountability that demonstrates responsibility within the organization, inclusive of holding delegated powers accountable for their duties while applying governance principles that support the organization's purpose and core mission.

VIDEO: Carolyn Chalmers on the Governance Model in ISO 37000 and how we create value in organizations.

In conclusion, the ISO 37000 reveals two main insights.

First, governance and management have distinct but interconnected roles that must be clearly understood and delineated. Second, effective governance requires a system with built-in elements of transparency, diversity, and commitment to continuous improvement and sustainability. The governing body, aligned with these foundational principles, will be able to effectively guide organization in meeting present needs, securing future success and fulfilling social purpose. Finally, implementing the ISO 37000 has the potential to enhance the operational excellence and stakeholder trust because organizations could demonstrate their values in parallel with benefiting society, the environment, and people.

With careful supervision, clear strategic direction, and a strong commitment to accountability, our #Board of Directors is set on the goal of transforming governance function from a compliance checkbox into a catalyst for MCIS Language Solutions continuous growth and success.