What is Governance?

What governance is is the oversight of an enterprise, normally from a level above that of management. Perhaps the most important thing to say is that governance is not management. Today, the single greatest challenge that managements have is to maintain their ability to guide and drive an organization while recognizing the critical role and intense concern of the board of directors.

I work with as many as a hundred of boards each year and the single most vexing challenge that these boards have is to know how and when to govern vs. when if ever, to manage. Boards clearly need to manage themselves and their activities as a board, they cannot find themselves in a position where they are effectively behaving as if they were managing the enterprise. yet, although this may be clear and true, “keeping the nose in and the fingers out” is a huge challenge for boards in the post-Sarbanes-Oxley era. The challenge is for boards to know when engagement turns into meddling; when inquiry turns into inquisition and when challenging turns into distrust and even rejection. The line between these is not always clear, and yet boards are constantly faced with the decision to either stay at 50,000 feet or to fly at 1,000 feet. Flying at 1,000 feet can be necessary at times, but it will never represent the state of activity of a board that is “governing” a well functioning organization.