Organisational effectiveness should not be seen as a goal in itself but rather the means to an end - achieving your goals. Since our definition of corporate governance is in essence about good management, it follows that to achieve your goals, through the implementation of an ongoing strategic management process, requires an appropriate and effective organisation.
So our Fourth Golden Rule of Corporate Governance is that the organisation should be framed to embody the most appropriate shape and style of management to achieve success, and that it is constructed to serve the needs of all the key stakeholding groups.
With an inappropriate organisation in place, the goal will not be achieved, and the approach to business will be vulnerable to a falling short in ethical behaviour. Furthermore, any relationship between the way the business is being run and the expectations of the various non-managerial stakeholders will be purely coincidental.
Before embarking on change to improve organisational effectiveness we must first understand where we are now and where we want to get to. This once again highlights the importance of strategic management, our third Golden Rule of corporate governance. During this process, we analyse all our available resources and how they are currently organised. This will give clear insights into pros and cons of the present way of organising the business, and the strategic plan will indicate desirable modifications.
Guiding the decisions about organisational change will be:
Into this process must be built the means of providing appropriately for the needs of all the various stakeholders to ensure that their interests are properly taken care of.
There are two key elements to be considered when designing for organisational effectiveness:
To achieve maximum organisational effectiveness, we believe the stakeholder approach is required. Through regular consultation with all stakeholder groups we can assess how effective our chosen shape and style are and where and how it needs modification. As long as this is performed as part of the ongoing strategy process, it can only contribute to the success of the business in achieving its goals. As we say in our second Gold Rule, an essential part of this process is the need to align business goals through the same process of consultation.
This way, we know we have a common goal that the majority of stakeholders believe in, a coherent strategy to achieve it, and a high level of organisational effectiveness to implement the strategy and out-perform the competition.
This is the fourth in our series on Best Corporate Governance Practice - the Golden Rules of corporate governance:
Rule 1: The Importance of Business Ethics
Rule 2: Towards a Common Goal - Align Business Goals
Rule 3: The Importance of Strategic Management
Rule 4: Organisational Effectiveness for Good Corporate Governance
Rule 5: The Importance of Corporate Communication
Return from Organisational Effectiveness to Best Corporate Governance Practice
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Our corporate governance seminar series and small group workshops are a great way of learning our unique methodology and how to apply it to your own organisation. This methodology is also explained in our corporate governance course, a series of ebooks delivered direct to your inbox over 6 days.
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