Organizational governance is the system by which an organization makes and implements decisions in pursuit of its objectives. These decisions are usually made during the planning phase of organizational sustainability. Organizational governance can comprise both formal governance mechanisms based on defined structures and processes and informal mechanisms that emerge in connection with the organizatoin’s culture and values, often influenced by the people leading the organization. Organizational governance is a core function of every kind of organization as it is the framework for decision making within the organization.
Governance systems vary, depending on the size and type of organization and the environmental, economic, political, cultural, and social context in which it operates. These systems are directed by a person or group of persons (owners, members, constituents or other) having the authority and responsibility for pursuing the planning the addresses the organization’s objectives.
Organizational governance is the most important factor in enabling an organization to take responsibility for the impacts of its planning and decisions and activities and to integrate organizational sustainability throughout the organization and its relationships.
Organizational governance is the most crucial factor in enabling an organization to take responsibility for the impacts of its planning of decisions and activities and to integrate organizational sustainability throughout the organization and its relationships with its stakeholders.
Effective governance should be based on incorporating the principles of social responsibility in planning, decision making, and implementation. The principles are accountability, transparency, ethical behavior, respect for stakeholder interest, respect for the rule of law, respect for international norms of behavior and respect for human rights. In addition to these principles, an organization should consider the practices and the issues of social responsibility when it establishes and reviews its governance system and leadership.
Leadership is also critical to effective organizational governance. This is true not only for planning and decision making, but also for employee motivation to practice organizational sustainabilty8 and to integrate social responsibility into organizational culture.
Every organization has decision-making processes and structures. In some cases, these are formal, sophisticated, and even subject to laws and regulations. In other cases they are informal, rooted in its organizational culture and values. All organization should put in place processes, systems, structures, or other mechanisms that make it possible to apply the principles and practices of organizational sustainability.
An organization’s planning and decision-making processes, and structures should enable it to:
Plan, develop strategies, and objectives that reflect the organizations commitment to organizational sustainability and social responsibility
Demonstrate leadership commitment and accountability
Create and nurture an environment and culture in which the principles of social reposnibility8 are practiced
Create a system of economic and non-economic incentives related to performance on social responsibility within an organizational sustainability surrounding
Use financial, natural, and human resources efficiently
Promote a fair opportunity for underrepresented groups (including women and racial and ethnic groups ) to occupy senior positions in the organization
Balance the needs of the organization and its stakeholders, including immediate needs and those of future generations
Establish two-way communication processes with its stakeholders, identifying areas of agreement and disagreement and negotiating to resolve possible conflicts
Encourage effective participation of all levels of employees in the organization’s social responsibility activities
Balance the level of authority, responsibility, and capacity of people who make decisions on behalf of the organization
Keep track of the implementation of decisions to ensure that these decisions are followed in a socially responsible way, and to determine accountability for the results of the organization’s decisions and activities, either positive or negative
Periodically reviews and evaluate the governance processes of the organization, adjust processes according to the outcome of the review and communicate changes throughout the organization
ISO 26000:2010 is a good source of ideas for planning support.
Dr. Bob Pojasek
Sustainability Legend | ESG Reporting & Disclosures | Uncertainty Risk | Pollution Prevention Expert | Process Improvement | Organizational Sustainability Reporting | Sustainable Procurement Professor
Chairman, Education and Research Executive Board (EREB)
VCARE Academy Inc.
Managing Director
Center for Corporate Performance & Sustainability
📩 rpojasek@sprynet.com
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