Governance is behavioural – not legal or financial

Following the series of mini-blogs on how governance affects culture, behaviour, risk and strategy I felt to dig a bit deeper into how governance is primarily behavioural.

If governance of organisations is merely an exercise in legal compliance or financial astuteness then it is bound eventually to come undone. Certainly both legal compliance and financial astuteness are significant results of a well-governed organisation but measuring governance by this measure is mistaking the fruit for the root.

One definition of govern is “to control the actions and behaviour of” and obviously this is done by putting in place a set of rules and regulations that compel people to act in a certain way. The most important thing about governance however is not the sets of rules and regulations but rather the resultant behaviour of the people being governed.

Another definition of govern “to exercise a deciding or determining influence on” – governance has an objective, an aim. A well governed organisation is directed, it aims to achieve a specific goal in a particular way, The way it aims to achieve this goal allows its people to act in certain ways and not in others.

A third definition of governing is “to exercise a directing or restraining influence over” in the way that people are motivated to decide and act in a certain way and not in another way. Governance in organisations is the function of enabling certain decisions and actions and disallowing others.

Lastly governing is defined as “keeping in check”. Here the evidence of legal compliance and financial astuteness provides proof that the organisation (or more accurately the people in the organisation) have been kept in check. Again this is primarily a behavioural concept – certain behaviours are allowed and certain behaviours are not allowed.

To what extent does the governance of your organisation control, influence, determine and restrain behaviour and keep it in check, or is it merely seen as a tick the box compliance effort?

Next up: Directors Duties – positive not negative (publish target date – 30 Oct 2013)

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