The difference between goverance and management

Blog Layout

The difference between goverance and management

Hamish Pryde • July 30, 2012

The Difference between Governance and Management

For many businesses in New Zealand, the owners are also the directors and they manage the day-to-day activities. They need to wear "two hats" at times; one for the big picture, the governance, and one for the day-to-day events, the management.

Governance is setting the strategic direction and goals for the Company or non-profit organisation and acting as a guardian of the interests of the Company's shareholders or the benefactors of the non-profit work. Non-profit organisations have board members too that need to ensure the organisation operates efficiently and effectively to extract the best possible benefit out of the limited funds they obtain. Throughout this article, the term director covers non-profit board member as well.

We Kiwi's as a nation enjoy the building, making, creating, and the customer interaction part of business. Too many directors in New Zealand are guilty of being solely focused on the hands-on aspects of the business. This is to the detriment of the governance function, with not enough time spent "with their director's hat on" thinking about business strategy, structure, and direction. This can result in under-performance of the Company over the longer term, and in worst cases will put directors at risk of neglecting their legal obligations as a director.

How do we improve the governance of an organisation? The following are some good pointers:

You should have formal board meetings. These should be scheduled regularly, at least monthly, and should be separate from operational / management meetings.
Set an agenda for directors' meetings that focuses on governance issues. These are the organisation's reason for being, point of difference, what you want to achieve strategy, long-term planning and financial review.
Circulate the agenda and any papers that are critical for discussion and decision-making in advance of the meeting.
The chairpersonship of the meetings needs to be strong. The role of the chair is to ensure that good ideas come to the table and are fully discussed and understood by all. Full and frank discussion is important, and all members of the board should be encouraged to share their views – that is what they are there for! Formal meeting time together is precious, and a good chairperson will keep discussion focussed so that the meeting keeps to time and gets through its agenda.
Important decisions reached must be recorded. In fact, there is a legal requirement to document all proceedings at board meetings.
The chair should not dominate discussions, but should maintain good control of the meeting. He or she should see that decisions are reached and that all properly understand them and recorded.
Consider appointing one or more independent directors. Having a perspective from someone not personally invested in, employed by, or transacting with the business can be very useful around the boardroom table.
Even if the Company does not appoint any independent directors, consider using advisory panel members (non-directors who attend the meeting) – this may bring fresh perspectives and new ideas.
Wherever possible, ensure that board meetings are enjoyable. They are unlikely to achieve all that they should if they are long boring and overly serious. Directors are often underpaid for the time and effort involved and need to enjoy this important position.

Management is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively. Management comprises planning, organising, staffing, leading or directing in an effort of accomplishing goals set by the board of the entity. Management involves achieving results through managing the efforts of others.

< Older Post

Newer Post >

More & More Paper Less

By Hamish Pryde • September 11, 2024

Paper is everywhere. We spend a lot of time and money moving paperwork around. But with today’s technology it is now possible to get rid of paper entirely. Digital documents are simpler, easier to store and send, more searchable and permanent. How long does it take to post a document to somebody via the ole stamp and envelope method, that is snail mail? It is more efficient and timelier to email the document. How many times do you go to print a document at home and find that your printer has run out of ink? Why do we still hold onto printing paper documents? Sometimes it’s just because that’s what we’ve always done and let’s face it change can be difficult at first. Paper alone is cheap. But when you start paying for printers, toner, servicing and maintenance, paper starts to look more expensive. Let alone the storage cost. Paper tax records for seven years can be quite a few boxes of paper. We have embraced some paperless technology as part of a modern business practice. This includes digital signatures, digital collaboration, paperless minutes of business improvement and coaching meetings, electronic work papers and my new digital notebook which I am enjoying. We send questionnaires via email to you to gather vital information to enable us to prepare your annual financial statements. This is a PDF document. Instead of printing the questionnaires you could save the document down into a folder of your choice then edit the PDF document and return to us. How do you edit a PDF document you ask? Once you have opened the document the Adobe online editor lets you do some things for free. The online editor works in any web browser and lets you add text, sticky notes and highlights. Click on the fill & sign button to the right of the document, then in the top toolbar click Iab text button. You can add text directly on the PDF document. Have a try next time you have a PDF document open. Xero and Farm Focus users can attach invoices directly to the transaction loaded into Xero. Then if you are looking at the rates expense in the profit and loss account or farm working account, you can drill down into the rates code and see the transactions. Then attached to each transaction is the rates invoice if you use this great functionality. All invoices can now be stored in the cloud. So why paperless? Productivity - electronic documents are instantly and simultaneously available to everyone who needs them. Reduce waiting times with less risk of loss or damage. Cost savings - you will save money on printing, postage and associated costs. You could pay less rent because you won’t need all that space for your files. Security - electronic documents are more secure than printed ones. Digital records can be password protected and rendered unreadable through encryption. Printed documents are only as secure as their proximity to a copy machine. Reduced Clutter - paperwork on desks and shelves are not only untidy it’s inefficient too. The organisation of digital files is simpler and your office will look much neater. That will help you clear your mind to focus on your business. Environmentally friendly - less printing means fewer trees cut down for pulp and less energy used to make and transport paper. Disaster recovery - if there is a fire or flood, recovery from the backup is much easier with digital storage them with paper. There are great help articles available in Xero or Farm Focus if you are not attaching invoices to payments already. To find out how click on the links below: If you would like to explore ways you can go paperless we can help.