What is good governance, and do you have it?
We recently hosted a training session on good governance with our brilliant partners Gowling WLG, for our Women of Impact beneficiaries. It got us thinking about the value of strong governance for social enterprises and its importance for long term success.
But you might be wondering: what is governance, let alone good governance?
Governance refers to how an organisation is directed and controlled: it’s how decisions are made, who makes them and how to hold those people accountable. Having effective systems in place that work for your organisation is what good governance is all about.
At their core, social enterprises should have strong governance procedures in place that meet relevant legal obligations and fiduciary duties. It’s crucial that directors and key personnel understand these requirements and how to stay compliant.
But good governance should also go beyond a legal box-ticking exercise. Organisations can build on a strong foundation of compliance to help them make decisions even more effectively, protect their mission and manage risk.
Once you’ve got your core procedures in place, here are some additional top tips for even greater success:
Healthy culture: a shared sense of purpose, honesty, accountability and mutual respect
Diversity: having a variety of perspectives at a senior level
Transparency: open communication with stakeholders (staff, funders, beneficiaries) about decisions being made, finances and impact
Mission alignment: remaining focused on the social purpose, in a sustainable way
Succession planning: having steps in place for new perspectives and replacing key people when needed
What are some warning signs that may signal poor governance?
A dominant personality on the board, preventing others from contributing meaningfully
Lack of diversity at a senior level, resulting in a lack of alternative viewpoints
Low engagement or attendance by board members
Bringing matters to the board just for sign off, rather than to discuss and decide collaboratively
Skills gap: where the board is lacking expertise in a particular area or doesn’t have a good range of skills and experience represented
Micromanagement by the founder, or a blurring of roles between senior management and board members
Mission drift, where the organisation strays from its purpose
Have you considered an advisory board?
For some social enterprises, their board might not meet all their needs. This can especially be the case for early stage or scaling enterprises, where additional strategic support may be useful.
Advisory boards can be a smart solution: instead of expanding your formal board, you could establish an additional resource that offers flexible, informal support without the legal duties that come with a director or trustee role. Advisory board members can provide advice, mentorship, and insights, without the same level of formalities and commitment.
When setting up an advisory board, think about the specific challenges or opportunities you want help with, whether it's marketing, financial planning, scaling impact, or industry expertise. By targeting experts with relevant experience, your advisory board can become a valuable source of guidance and innovative ideas.
Quiz:
Quick Governance Health Check:
Do your board members regularly attend and actively participate in meetings?
Does your board have a good mix of skills and backgrounds? E.g. skills across finance, legal, and social impact, and diversity of perspectives and lived experiences?
Do you have clear, documented roles and responsibilities for your board members?
Is your board helping you think strategically about risks, opportunities and future planning, not just day to day issues?
Have you reviewed your board’s composition and performance in the past 12-18 months?
Is there a mechanism for board members and staff to raise concerns or suggestions safely and effectively?
If you answered no to any of these, it might be time to check in on your governance practices!