Every nonprofit organization has a governance system! More accurately, a governance operating system. Just as Windows 7 powers most PCs and Snow Leopard powers Macs, the governance operating system powers the nonprofit organization!
The Malcolm Baldrige Performance Excellence Program defines governance as “…the system of management and controls exercised in the stewardship of the organization. It includes the responsibilities of the organization’s owners, board of directors, and senior leaders… including administrative and operational leaders“.
The World English Dictionary defines governance as “the balance of control between stakeholders, managers and (board of ) directors of an organization“.
The Governance Operating System contains two essential components that come together like two pieces in a puzzle:
- The Board of Directors: When we talk about governance, we more than likely are referring to the organization’s governing authority — the Board of Directors. Improving governance generally is a conversation about improving the the work of the Board. The Sarbanes Oxley Act was adopted a number of years ago to improve the accountability of governance — the Board of Directors.
- The Organization: The governance operating system also includes the Organization. The Board employs an Executive Director, President, or Chief Executive Officer (CEO)to lead and manage the day-to-day affairs of the organization. While we typically see the work of the CEO and its senior leaders as leadership and/or management, their work is a part of and/or an extension of the system of governance.
The work of the Board of Directors and the Organization are part of the governance operating system that ensures accountability to its clients, customers and other stakeholders. An effective governance operating system will ensure the organization is strategically advancing forward to a preferred future while pursuing organizational excellence and sustainability.
Does your organization practice governance as a board activity or as an organizational operating system?
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