An Organization’s Governance
Organizational governance provides a framework of rules, relationships, systems, and processes that enable authority to be exercised and controlled within an organization. This includes the way the organization and those people that lead it are held accountable .If the governance is effective, it is more likely that the organization will meet its objectives in an uncertain world. Governance enables the leaders to direct and control the uncertainty associated with the organization’s opportunities and threats. Effective uncertainty management is essential for the organization to understand its risks, modify them if possible, and maximize its chance of achieving its objectives.
Risk is always focused on meeting the objectives, which is facilitated by managing the opportunities and threats that contribute to or detract from the objectives. Poor governance increases the uncertainty and leads to problems with the long-term stability of the organization. Governance, management of the uncertainty, and risk are highly interdependent. Organizational resilience is an outcome of organizational governance.
It is important to separate the organizational perspective from the focus on “corporate governance. ”Corporate governance is focused on the fiduciary responsibility of the board of directors. This form of governance is found in publicly traded companies. There was little attention paid to corporate governance until the mid-1990’s.In a globalized world of publicly traded companies, it is now universally understood that these publicly traded companies are regulated, operated, and controlled by boards of directors to give them overall redirection and control, and satisfy reasonable expectations of accountability and performance of the board of directors. In a supply chain we are looking at organizational governance.
To remain competitive in an uncertain world, organizations must innovate and adapt to their governance practices so they can address the interests of the stakeholders through organizational sustainability and sustainable development. These organization must also grasp new opportunities to offset identified threats in their business. The management of uncertainty effects must be a key of any organizational governance program.
The structural elements of organizational governance include the following: commitment, governance policy, leadership responsibility for governance, and continual improvement. These elements help implement the organization’s commitment to effective governance and address the common elements that constitute good governance practices over the long term. Organizations typically use a formal or informal code of conduct to convey the organizational governance within the organization.
There are some further operational elements that can improve direction to those with the responsibility for governance within an organization. The sustainability manager is usually involved in translating the governance to the people that are participating in the organizational sustainability program.
Dr. Bob Pojasek
Sustainability Legend | ESG Reporting & Disclosures | Uncertainty Risk | Pollution Prevention Expert | Process Improvement | Organizational Sustainability Reporting | Sustainable Procurement Professor
Chairman, Education and Research Executive Board (EREB) VCARE Academy Inc. Managing Director Center for Corporate Performance & Sustainability 📩 rpojasek@sprynet.com
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