Question

why is good governance necessary??

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Answer 1

Answer:

The fundamental reasons why good governance is necessary:

1. To preserve and strengthen stakeholder confidence – nothing distracts an organisation more than having to deal with a disgruntled stakeholder group caused by a lack of confidence in the governing body. And on the positive side, a supportive stakeholder base can generate benefits for the organisation though social and emotional support, intangible but very valuable attributes that all organisations should strive to achieve and sustain;

2. To provide the foundation for a high-performing organisation – the achievement of goals and sustainable success requires input and support from all levels of an organisation. The Board, though good governance practices, provides the framework for planning, implementation and monitoring of performance and without a foundation to build high performance upon, the achievement of this goal becomes problematic.  Achievement of the best performance and results possible, within existing capacity and capability, should be an organisation’s on going goal. Good governance should support management and staff to be “the best they can be”; and

3. To ensure the organisation is well placed to respond to a changing external environment –business today operates in an environment of constant change.  Technology has created an information age that has transformed our world, and for business to both survive and remain profitable to enable it to fulfil its mission and achieve its vision, a system has to be in place to assist an organisation to identify changes in both the external environment and emerging trends.  This process of understanding our changing world does not happen by chance, it requires leadership, commitment and resources from the governing body to establish and maintain such a system within the organisation.  Change generally does not happen “over-night”, it is there for all to see if they have in place a system for looking. Governing bodies, as the ultimate leaders of an organisation, should take prime responsibility for this activity.  

In summary, governance encompasses the processes by which organisations are directed, controlled and held to account.  It includes the authority, accountability, leadership, direction and control exercised in an organisation.  Greatness can be achieved when good governance principles and practises are applied throughout the whole organisation and that’s why governance is important.