What is good governance?

"Good governance makes it really difficult to do the wrong thing and really easy to do the right thing." - Andrew Corbett-Nolan

A persistent theme that GGI encounters when working with organisations is the view that governance is just a safety system of rules rather than a dynamic form of organisational control.

What Professor Mervyn King calls ‘grudge compliance’ is often confused with governance. Simply putting in place, without thought to purpose, governance structures and systems will never deliver the benefits that the discipline of governance can.

Governance that is just a static structure, considered as a safety net or obligation and orientated around policy and regulatory compliance, cannot deliver real benefit.

Good governance is about delivering outcomes. Professor King talks of the ‘meaningful outcomes of governance’ as:

  • Ethical culture

  • Good performance

  • Effective control

  • Legitimacy

In his Three Kings series of interviews for GGI, Professor King states:

‘Effective leadership means an acceptance by the corporate leaders, the directors, that the company is an incapacitated, artificial person that has no mind and no conscience, that they are the conscience of the company’.

Intellectual honesty by an organisation’s leaders is needed to understand and use governance in a dynamic sense, with a determination to deliver the mindful outcomes and give governance a purpose beyond window-dressing for the auditors.

We work with as many high-performing organisations as organisations in trouble. By ‘high-performing’ we mean those with good regulator ratings, strong balance sheets and the achievement of their performance targets.

These organisations can be more of worry to than organisations in trouble because good performance and regulatory achievement does not provide an obvious argument for change. Indeed, it can discourage change. This is dangerous territory.

In our NHS, some highly rated organisations have suddenly found themselves in trouble. Some years ago the 13 ‘Keogh trusts’, where higher than acceptable mortality rates were found, included some organisations that had only recently been authorised as NHS foundation trusts. This has involved passing a test of being ‘well-governed’ against a set of rules and standards.

As GGI has undertaken developmental well-led reviews for some high-performing trusts we have observed that success is often a result of excellent management and leadership, but this is not buttressed by the purposeful application of governance to maintain this success in a sustainable way.

Some organisations in this category are described by their external stakeholders with equal measures of admiration for their achievements and frustration for an ‘arrogant’ or ‘remote’ leadership attitude. The leaderships simply are not open to a change in style or direction. These leaderships may carry on delivering success for years, but when the music stops they find themselves without a chair.

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