What happens when governance goes right? By Gareth Hart.
Here at Iridescent towers - currently disappearing into the Plymouth mist and storm Imogen - we’ve been delivering the Pop Ideas funding and business planning advice scheme on behalf of Plymouth City Council, in partnership with Zebra Collective, for well over a year now.
This successful project has now seen over £1.5 million brought in to 69 community groups across the city. This represents a return on the City Council’s investment so far of 25 to 1!
In our last blog on Pop Ideas we talked about the reasons for organizations not getting funding. Another point that is becoming apparent is that well governed groups are more likely to succeed.
That’s obvious right? Well yes, but it seems to us that getting governance right can be a challenge. In the light of the Kids Company fiasco and the accompanying government report, governance is high on the agenda. That report focusses on when governance goes wrong. And we only really hear about governance when it goes wrong because that’s the sensation that makes the news.
However, we think that good governance shouldn’t be difficult or scary or dry. It is about common sense, judgement and proportionality. It should be the bedrock that enables your business to thrive.
What is governance?
I like this definition from Good Governance in Australia: “Good governance is about the processes for making and implementing decisions. It’s not about making ‘correct’ decisions, but about the best possible process for making those decisions.”
This older definition from Chris Cornforth, still stands the test of time: “[Governance] is the systems and processes concerned with ensuring the overall direction, effectiveness, supervision and accountability of an organisation.”
What happens when governance goes right?
Why bother with governance? It’s all policy, red tape and dull isn’t it? Well there appears to be evidence that getting it right can help. There is some research about the link between good governance and growth of organizations. These studies tend to look at private sector businesses rather than those in the social economy (there’s a gap in the market there) but the concept is similar.
In 2014 a report in the august publication ‘Principles of Contemporary Corporate Governance’ (Cambridge University Press) stated that: “There now exists ‘empirical proof’…that good corporate governance is important to companies and does add value and make a difference”.
An Association of British Insurers report in August 2013 found that good corporate governance adds value: “Good corporate governance enhances…a company’s long-term sustainable performance: it is critical to…economic growth.”
Others are a little more sceptical: The ‘Business Case for Corporate Governance’ (again Cambridge University Press) states that it is “Inconclusive that there is a direct link,” however; it points out that, at the very least: “Sensible corporate governance activities may prevent the destruction of value.” We would sagely argue that it’s important to stop the ‘destruction of value’! Even the government report into Kids Company says that it did good stuff. Sadly that value appears to have been 'destroyed' by poor governance.
So what have we seen in Plymouth?
Our experience is that groups with good basic foundations in place; those with policies and procedures appropriate to their work, size and complexity can prosper. These organizations win more tenders, gain more grants and gather more supporters. However, a caveat, the reverse may also be true: again look at Kids Company; on the face of it they were phenomenally successful at fund-raising.
We have all seen examples where governance may not be outright terrible but it can be flaky. Of course the problem is that governance is not sexy. But the academic evidence and our own experience seems to suggest that good governance can help you. In times of austerity, cuts and competition for funding any edge you can find will help.
It’s like David Brailsford’s theory of marginal gains in cycling that led to oodles of gold medals. Increase one, two, three percent in each area and it all adds up to significant improvement. This takes leadership, vision, drive and time. But broken down into manageable chunks it is achievable.
We’ll leave you with a question: What can you do each week to marginally improve your governance?