Eight conditions of good governance

Senior consultant Daniel Taylor lists the crucial factors that must be in place for good governance

Not so long ago a colleague of mine shared a paper he was putting together on corporate failure. He had been studying and compiling an evidence-based list of the warning signs looking at how they manifest as governance issues.

This prompted a line of thinking: good governance, like the existence of law, is not simply a matter of declaration or structure—it is a conditional state. There are certain aspects, principles and conditions that must be realised for good governance to exist. When these conditions are in place, good governance produces real outcomes: value creation, effective control, ethical culture, and legitimacy.

But good governance isn’t just a conditional state, at a certain level it is also a contingent one. The contingent being that a set of principles or conditions must be true or present, and any one thing missing would invalidate the claim.

It was an interview I did recently which reminded me of my colleague’s work on corporate failure, and got me thinking: what would I say are the fundamental list of things an organisation’s corporate governance must exhibit to have good governance?

My thinking was in part inspired by acclaimed American legal theorist Lon L Fuller’s work on natural law. Fuller posited that for law to be said to exist in a community, nine principle conditions must be met; the lack of any one of those conditions meant that law could not be said to exist.

So, to draw a parallel between Lon L Fuller’s principles of law and an equivalent for good governance in an organisation or institution, we would need to identify principles that are equally foundational for a well-functioning, ethical, and accountable system of governance.

Here are my eight contingent conditions necessary for good governance in an organisation:

1. Clarity of purpose and objectives

Governance in an organisation requires a clear and well-articulated purpose. The institution’s mission, vision, and strategic goals must be understandable to all members. This ensures alignment and a shared understanding of where the organisation is headed and how it will achieve its objectives.

2. Transparency of decision-making

Decisions within the organisation must be made transparently, with processes and reasoning accessible to stakeholders. This ensures accountability and builds trust within the organisation, allowing members to understand how and why decisions are made.

3. Accountability and responsibility

Good governance ensures that individuals in positions of power are held accountable for their actions and decisions. Clear structures must exist for performance oversight, to ensure that leaders and members are answerable for their roles and for the execution of agreed strategy, fostering an environment of responsibility throughout the organisation.

4. Consistency and fairness in implementation

The rules, policies, and decisions should be applied consistently across the organisation, regardless of position or status. There should be mechanisms in place to prevent arbitrary or biased actions, ensuring fairness and equity for all members.

5. Participation and inclusiveness

An organisation’s governance must encourage the participation of all relevant stakeholders. Whether through decision-making processes, feedback channels, or consultations, a system of governance must allow for inclusive input, ensuring that all voices are heard and considered.

6. Rule of policy, procedure and ethical conduct

Like Fuller’s legal principles, good governance requires adherence to established norms, laws, and ethical standards. The organisation must have clear policies and regulations that are aligned with ethical considerations, and leaders must model integrity in their actions.

7. Adaptability, agility and responsiveness

Good governance must ensure that the organisation is adaptable to changing circumstances. This involves the ability to respond to new challenges, crises, or opportunities in a way that maintains the organisation’s objectives and values.

8. Sustainability and long-term thinking

Governance must prioritise long-term sustainability, considering not just immediate needs but also future impacts. This includes financial stability, social responsibility, and environmental considerations, ensuring that the organisation’s actions support its future viability.

But what is the purpose of such thinking?

It may seem pedantic or overly rigid to break governance down into its constituent elements—but this is precisely how governance codes are written. They express a set of expected characteristics, behaviours, or principles that together form a functioning system.

To think in this way is not to reduce governance to a checklist. Instead, it is to emphasise that governance is not an abstract ideal—it must be evidenced in practice. These conditions help shift thinking from comply or explain to apply and explain. That is, governance is less about ticking boxes and more about demonstrating outcomes and values in action.

Outcomes and morality

Seeing these in terms of outcomes is important, otherwise governance risks being reduced to a mere compliance mindset. Indeed it is seeing them in terms of outcomes in which the thinking about governance in an organisation shifts from comply or explain to apply and explain. Culture too is important.

One final condition—often overlooked, yet indispensable—is moral intent. An organisation may meet all eight of the structural or procedural conditions listed above and still fail in its governance if its leadership lacks an ethical mindset. Morality cannot be codified in the same way, but it must be present. Without it, governance can become manipulative, performative, or extractive. Ethics must guide conduct at the highest level.

For good governance to be said to exist, these eight conditions must be met. They are not optional; they are interdependent and foundational. They are the contingent truths of governance. And alongside them there must exist a strong ethical mindset and moral intent in the leadership and execution of governance.

These conditions are not intended to constrain, but to clarify. They are not a checklist—but if your organisation can evidence all eight, there is a compelling case to be made that good governance is truly in place.

Do you agree with these eight conditions? What would you add or change? If you'd like to test whether these are in place for your organisation, talk to us about a governance review.