What is Governance?

The Relationship Model
What is Governance?

You Asked: I keep reading about managing boards and governing boards, but honestly, I’m not sure that I could explain the difference. What is a governing board?

Answer: A governing board is a board that controls the organization by policies instead of a steady stream of management decisions. Governance involves designing board structure and process, directing strategic priorities, delegating authority and responsibility and monitoring and measuring results.

A managing board of a restaurant would spend most of the time in the kitchen stirring the stew and discussing ways to make it taste even better. A governing board would hire a chef to do the cooking. The board itself would spend most of its time talking to the customers about their needs and wants and some time planning the future of their restaurant and some time giving direction about their clientele and their needs (but not management advice) to the chef. They would improve their service by checking with the customers, not by tasting the stew themselves.

Governance is more like parenting than it is like managing. Wise parents give as much freedom to their children as they can handle, but always with clear limits, and always with expectations. Parents who “manage” their children’s activity instead of “governing” them will have children who will under-perform without ever learning and growing from mistakes of their own. Likewise, a governing board delegates as much authority to the CEO as possible. That authority with limitations is directed to specific strategic goals and thus is accompanied by specific expectations.

Governance is a more effective method of control than management for larger and more complex organizations. In fact, I would suggest that some organizations where the board is more involved in day-to-day management issues cannot grow beyond their present size because their boards can’t manage anymore with volunteer board members trying to manage the operation as a group.

It’s normal for newer, smaller organizations to have managing boards, particularly before they are large enough to hire a Chief Executive Officer, but every managing board should actively seek to move towards governance as the organization grows and become more complex.

Les Stahlke, President/CEO
GovernanceMatters.com Inc.

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