Why governance matters

Governance is about leadership and accountability.

As owners and stakeholders, we need to know that companies and organizations are in competent hands. We need to be confident that the board of directors will lead the business or organization in a responsible and ethical manner - and in a direction that will achieve desired results.

As shareholders, business people, communities, organization members, citizens, taxpayers - we collectively demand strong and wise leadership, and we expect nothing less than good governance of companies and organizations.

• Shareholders expect the corporate board of directors to represent their interests and to direct the actions of management toward long term growth; the expected outcome is an increase in shareholder value or societal wealth.
• In the family business, family members are seeking corporate sustainability and a good balance between the business and the interests of the family members.
• Citizens and taxpayers expect public sector boards, commissions and agencies to produce benefits for society and to demonstrate good fiscal management of public funds.
• Governments and sponsor agencies that fund and support social and community organizations expect boards to maximize funding and to deliver promised outcomes.
• Communities expect social agency boards to mitigate societal problems and suffering, and to enhance the quality of life of citizens.
• Members of professional, recreational and cultural organizations expect boards to understand and meet their program and service needs and in a fiscally responsive manner.
• Corporations are seen to have an impact on global sustainability, and thus a duty to society. Stakeholders expect boards will assume their social corporate responsibility and seek to balance economic and social realities in achieving their corporate goals.
• Increased reporting requirements for boards are set out in regulation and society monitors board performance through reporting by media and oversight agencies such as RiskMetrics.

High performance boards recognize the significance of their leadership roles and the impact of their decisions and actions. They are stepping up to the plate to educate themselves, to equip themselves in order to govern well. Board Dynamics is positioned to help.