The 10 principles of good governance

07
Aug 19
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Given the evolving nature of Australia’s aged care sector, it’s vital providers remain true to the key principles of good governance. These strengthen all aspects of business function from service delivery to internal operations.

These are the ten key principles as captured by the Australian Institute of Company Directors:

  1. Purpose and strategy

The organisational purpose should be clear and outlined in governing documents as well as being clearly understood by the board. The strategy should answer key questions including:

  • Why the organisation exists
  • What the organisation does
  • Who the organisation benefits
  • How the organisation will achieve its goals
  • What success looks like for the organisation

Alongside strategy, purpose is what the company hopes to achieve. Purpose is the reason for being and all activities should contribute to the purpose in some way.

Strategy and purpose are directly aligned with identity, and both should be thoroughly understood by governing members. Any changes to these must also be in collaboration with these stakeholders.

2. Roles and responsibilities

“The roles of the people involved in an organisation and their relationships to one another must be clear and understood.”

As the board has ultimate responsibility for and control over the organisation, it’s vital the board Directors understand their duties:

  • To act in good faith and for a proper purpose
  • To act with reasonable care, skill and diligence
  • Not to improperly use information or position
  • To disclose and manage conflicts of interest

3. Board composition

Directors should be appointed based on merit through a transparent process. “There is no one-size-fits-all ideal structure and composition for boards. Instead, the directors must decide what form their board should take and give consideration to how this might change over time.”

Boards should aim to reflect a diverse range of personal attributes including gender, sexuality, age, family status, etc

4. Board effectiveness

An effective board engages in careful forward planning, efficient operation of board meetings, regular performance assessments and effective chair arrangements.

5. Risk management

The board should understand the organisation’s risk and make decisions based on this understanding. They must also oversee a framework that manages risk on an ongoing basis. “Risk is not something to be avoided, but to be understood and leveraged in pursuit
of an organisation’s purpose.”

6. Performance

The board should work closely with staff to ensure resources are available to meet the organisation’s goals and oversee their appropriate use. These resources might be financial, physical, human or intellectual.

7. Accountability and transparency

As boards have ultimate authority for the organisation,they have an obligation to report, explain and be answerable for the consequences of decisions it has made.

Boards should have oversight of the two components of accountability: answerablity (providing information and justification for actions) and enforcement (accepting the consequences of failing to meet those actions).

8. Stakeholder engagement

An awareness of the stakeholder environment should be a priority of the board. “At the heart of stakeholder engagement is the acknowledgement that organisations are impacted by, and have an impact on those with whom they interact.”

The organisation’s stakeholders include members, suppliers, neighbours, staff, clients and their families, volunteers, etc.

9. Conduct and compliance

Clear expectations with regard to behaviour should be established and enforced from a governance level. The code of conduct should be made aware to all levels of the organisation and consequences in the instance of failure to comply should be equally transparent.

10. Culture

An organisation’s culture contributes significantly to its ability, or inability, to achieve its purpose. By leading through example, board play an important role in establishing culture. While culture can be difficult to monitor, many companies analyse metrics such as employee engagement, retention and turnover rates as an indicator of staff satisfaction- a key indicator of overall culture.

The Quality in Aged Care Conference running in Sydney from the 26th – 29th August is once
again brought to you in partnership with COTA Australia and ACSA. Following a gathering
of over 200 leaders from across Australia at the Quality in Aged Care Conference in March
2019, this next conference offers insights into the next chapter of aged care reform. It is a
critical opportunity for all providers of aged care services to learn from industry leaders,
peak bodies and legislators and prepare their organisations for some of the biggest
challenges facing the industry, including the Royal Commission and the new standards.

Submitted by Criterion Content Team

Criterion Content Team

This post has been written by the Criterion Conferences Content Team. Based in Sydney, we are an independent research organisation, producing over 90 conferences a year across a variety of industries. Our events, attended by thousands of senior delegates from the public and private sector, are designed to enrich, inspire and motivate. Our focus is on providing innovative, value adding content via our conferences and blogs like this are extension of that principle. You can view our conferences by visiting our website http://www.criterionconferences.com/conferences.

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