The Importance and Power of Governance on Boards-Darryl Hawkins
In public and non-profit organizations, governance is a cornerstone for success and sustainability. Having served on boards, I’ve witnessed firsthand the transformative power of effective governance. Governance is more than just a buzzword; it is a vital framework that ensures accountability, strategic direction, and ethical oversight. At its core, governance provides a structured approach to decision-making, guiding organizations toward achieving their objectives while balancing the interests of various stakeholders. This structure is essential for both public and non-profit entities, where the alignment of mission, values, and resources is paramount.
Over the past few years, I’ve had the privilege of serving on various boards, one in particular was a public policy council in California. This board is an advocacy group dedicated to fostering leadership that will render the community sustainable, prosperous, and innovative. Composed of business and civic leaders, our objective is to ensure economic vitality by advocating for enhanced education, infrastructure, and governance, thereby making our region an even better place to live and work. These experiences have afforded me a distinctive perspective on overall influence.
The governance of a board is significantly shaped by the position one occupies. Roles vary, including independent director, chair and CEO, CEO only, or chair only. It is crucial to view corporate governance from the perspective of each of these roles. With a comprehensive understanding of each position, companies can maintain a firm grip in the boardroom, perpetuating their success through successive generations of leadership and board composition.
Boards play a crucial role in setting and maintaining the strategic direction of an organization. By leveraging their diverse expertise, board members can offer valuable insights, challenge assumptions, and provide a long-term vision that aligns with the organization’s mission and goals. At Verizon, strategic oversight has been. Pivotal in navigating the complexities of the telecommunications industry and driving innovation. Governance frameworks ensure that organizations operate with high levels of accountability and transparency. This is particularly important for non-profits, where public trust and donor confidence are directly tied to how transparently the organization operates. Clear governance policies and procedures help in monitoring performance, managing risks, and ensuring that resources are used effectively.
Effective governance involves identifying, assessing, and mitigating risks. Boards are responsible for ensuring that robust risk management practices are in place, safeguarding the organization from potential threats. In financial boards, where market volatility and regulatory changes are constant, a proactive approach to risk management is indispensable.
Governance is about fostering a culture of integrity and ethical behavior. Boards must lead by example, setting the tone and ensuring the organizations’ values are upheld at all levels. Ethical governance builds a solid foundation for sustainable success. Governance is a powerful tool that drives the success and sustainability of public and non-profit organizations. Through strategic oversight, accountability, risk management, and ethical leadership, effective governance ensures that these entities can navigate challenges, seize opportunities, and fulfill their missions. I can attest to the profound impact that strong governance has on an organization’s ability to thrive in a constantly changing landscape.
It’s crucial for boards to recognize that no single structure is universally applicable. Boards must be flexible enough to adapt to the individuals involved, rather than enforcing a rigid framework. All directors, especially CEOs, should respect diverse perspectives and strive to reduce the inevitable conflicts they bring. This demands advanced listening skills, the capacity to understand situations from another’s perspective, and the insight to appreciate the value of others’ expertise and knowledge.
As the global corporate landscape evolves, boards must also adapt to the demands of a dynamic world. The pursuit of corporate governance best practices can be hindered by an ad hoc regulatory system, a combination of public and private policymakers, and the absence of a universally accepted success metric. For sustainable company management, boards must be empowered to govern beyond mere quarterly oversight, which might entail ceasing earnings guidance and modifying the staggered board approach. Boards should implement measures to ensure the boardroom is filled with the most qualified individuals, even if it means making unpopular decisions. This involves conducting substantial director evaluations and considering shareholder proxy access. Boards should provide shareholders with a structured voice. Rather than unconditionally defending corporate fortresses, directors should ensure a fair process that allows shareholders to make informed decisions. A memorable piece of advice from early in my board service career was from a CEO who said that a board member’s primary duty is to enrich shareholders.
Connect with Darryl on Linkedin
