Governance and management – there’s a difference?

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We often hear people bemoaning the performance of companies, government, local government, hospitals and schools within our communities.

Too often the phrase “If I was in their position I’d sort things out in no time” is cast about. However the reality of matters is the governing bodies, such as council, boards of directors or boards of trustees are not always those in the driving seat.

Governance actually has little to do with the day-to-day management and operations of the entity – a shock to many directors and appointed representatives. Governance can be said to be the process of setting the right policy and sequences for ensuring things are done in a proper way. On the contrary management is all about doing things in the proper way.

Governance has the role to oversee the functioning of the management and has no role in the management itself. Governance is a system of direction and control, the purpose of which is to ensure that the organisation achieves what it should and avoids what is unacceptable. Governance when it works well sets a clear direction and sets the objectives for the entity.

On the flip side of this, management ensures that the organisation implements the plans and policies, achieves the set goals and moves in the direction set by the governing board. Management is there to support the board, provide information and guidance to the board and to ensure the board has the information it needs to fulfill its responsibilities.

In its simplest form, it’s a matter of direction versus delivery.

This illustrates what is known as the “Leadership Dilemma” – where does management start and governance finish? As a nation of business developers and inventors we often struggle with the concept of separation of powers and have a very real need to be hands on.

Unfortunately, the role of director/councillor/trustee is not an easy one. It is a common mistake made by board members that they should be able to get their “hands in the gear box”, to get involved in day-to-day operations. The reality is that is not their role or their responsibility. This can be a difficult position to accept as the board/council exists to be accountable for the efficiency of its association. The board is where all accountability resides and yet it relies on its management team to deliver the results.

The relationship between governance and management is a symbiotic one, where the two roles are different to, yet dependent upon, one another. Good governance and good management offers a positive platform for performance. Where one or both of the roles falls short then the platform becomes less stable.

Board/council members have a responsibility to be well-informed and to participate in decision making with the benefit of information, advice and guidance provided by their management team. It is not acceptable that a board member merely sits in the background and signs papers when asked to do so by the other directors or the management team.

If you:

  • are a director/trustee/appointed representative, or
  • you want to appoint a director/trustee/representative to your own entity, or
  • you have been invited to become a director/trustee/representative,

and you are unsure of your duties, responsibilities and obligations please contact our team and we’ll be happy to work through those with you.