Governance in the Dark: Govn365 White Paper

White Paper:

Governance in the Dark

Most organisatons do not know how well they are governed or what areas of governance to prioritise, and are paying the price.

The Governance in the Dark: White Paper draws upon research in 2021 that investigated concerns regarding poor standards of governance in many New Zealand organisations, and aimed to understand potential solutions. The research was carried out by Michael Poynter Consulting on behalf of Govn365 and identified two key issues contributing to poor standards of governance; it found that these two issues are part of a feedback loop reinforcing each other.

WhitePaperImage 01

Many organisations see governance as a burden that adds little value.

Few organisations regularly assess governance performance; it is likely that most never do.

Aside from these issues feeding back on each other, they are also driven by:

  • Low levels of governance education and competence.
  • Organisations valuing governance only or primarily to ensure compliance.
  • Perceptions that standard governance advice is unfit for purpose.
  • Organisations not being aware of evaluation tools and services.
  • Absence of convenient, cost-effective tools to monitor governance standards on a regular basis.
  • Directors/governance groups fearing evaluation, and resisting learning and development.

An organisation’s belief that governance adds little value may be bolstered by the fact that their enterprise is performing adequately, and use this as a reason not to act. Often it is not until there is some crisis or transition event that the organisation realises the need for better governance.

 

The consequences of these issues include:

  • Organisations spending too little time on strategy and risk;
  • Being blind to governance gaps;
  • Underinvesting in governance;
  • Failing to properly prioritise governance resources; and
  • Loss of commitment and motivation to address governance issues.

 

Why does it matter?

Although they may not be aware, organisations pay a price for poor standards of governance including reduced performance, increased risk and lower valuation. Reasons for improving the standard of governance covers director liability and reputation, organisation performance, improved strategy and risk management, increased valuation, and benefits for stakeholder relationships.

Who does it affect?

All organisations can improve their governance and have opportunities to add value and reduce risk. Organisations facing major transitions such as significant growth, international expansion or change of ownership are examples where there is especially critical need.

What is the solution?

Considering solutions to these issues, we need to encourage more organisations to properly assess governance maturity across all areas of governance. This is key to governance groups understanding where they are exposed, and how they could be adding more value to their organisations. It is a critical first step to developing an organisation’s governance capabilities and understanding the value of good governance.

Further, there is a need for tools enabling organisations to update assessments and monitor governance performance on a regular basis. This means governance groups can track progress and maintain motivation and commitment to address capability gaps, reducing risk and increasing the value of the organisation.

Govn365 is a new facilitated software tool that can help solve a number of these key issues and is introduced in the full White Paper.

View the full White Paper

White Paper