Over the past 12 months, we have witnessed the very public demise, on both a national and local level , of organisational leaders – Chief Executives, Board Chairman and even whole Boards have either “fallen on their swords” or been dismissed for poor performance and failures to fulfil their fiduciary, governance and leadership responsibilities.
Such unplanned turnover is disruptive, impacts on stakeholder perceptions and confidence and reflects poorly on all concerned in how the organisation arrived at this point, where such a decision is the only option available to restore stability to the business. Whilst no system is infallible, what we have seen over the past 12 months is governance at its worst from Boards and Leaders who should have known better.
The failure was people, not systems and processes, so it is timely to reflect on these issues again.
The word governance has been bandied about a lot lately, whether it be in relation to the failure of our institutions to protect the young and venerable or the banking and financial sector and their failures in ensuring the right culture was embedded in their organisations.
It is not uncommon, however, when a conversation about governance is initiated within the general population that one of the first questions is: what does the word governance actually mean? If you Google the words “corporate governance”, you will be advised that there are 98,400,000 references to these words in the stratosphere, however in this article I will try to provide a simple definition, provide some basic principles and then explain why it is so important that organisations, both in the public and private sectors, incorporate good governance principles and practises into their daily business activities.