Governance - Definition, Importance, Types & Steps
What is Governance?
Governance means controlling or governing the variables which affect any performance. Governance of performances can be of a people, corporate, a small firm, operations floor, logistics, product manufacturing, services, product or service marketing or other functions. Governance is an important aspect for any corporate as it allows checking the functioning of departments and the people and brings the mission vision and goal in alignment with the operations. Governance variables range from people involved in functions, the policies of the company and the mission of the company.
Importance of Governance
Governance manages the business aspect of any company and caters to the needs of the controlling actions taken in the field of business, for the employees, product or service. It helps in aligning the business strategy and the business goals on the basis of which plans & designs can be formed. It enhances credibility of the business plan and makes it viable in the financial aspect. By implementing a successful governance in companies, redundancy of resources such as allocation of same staff, systems, and other functions doing the same job repeatedly for distinct products rather than doing it commonly for all.
Wastage of resources also includes the time and opportunity cost if the staff is not responding on time or the cost of delayed purchasing of materials. Governance in business helps to control the operations and induce discipline in the stream of product promotion and customer segmentation. It aids in streamlining the forecasts of demand with the production plan and the financial of the company.
Good governance is ably achieved by effective management practices like leadership, time management, team management etc. For an organization to prosper, apart from good governance, it is important that the motivation of employees are high, their skills are improved by training and development, and there are career development options for them.
Elements of Good Governance
Some important elements of good governance are:
1. Accountability & Transparency
2. Responsive, Inclusive & Equality
3. Effective & efficient
4. Bound by Rules
5. Induces Participation
6. Agreement of Stakeholders
Types of Governance
There are several types of governance based on rules, policies, implementation etc. Some of them are monarchy, democracy, oligarchy, authoritarianism, and totalitarianism.
Steps for Effective Governance
There are certain basic steps for creating and implementing an effective governance plan for business:
1. Goal setting: Set up a proper goal and define the objectives clearly to formulate the path ahead
2. Alignment: The corporate level goals and objectives should be aligned with the marketing objectives for better support of each function
3. Building communication plans: Communication between different departments and functions is of utmost importance. Every plan relevant to the corporate level governance should be communicated throughout the departments which are directly or indirectly related
4. Resources: The forecasting and demand predictions can help in devising the production plans and placement of the products in respective distribution centers
5. Research: Conducting a relevant research to identify the gaps and needs for the products and updating of existing products and services is important for governance
6. Rules and regulations: Setting up of relevant rules and regulations with respect to the marketing of products and services should be done in order to bring discipline the value chain.
Governance in business affects the efficiency, performance and growth of the company in a huge toll. Ignorance on this part results in loss of market and customers which are hard to regain. With proper implantation of governance in a company the functionalities can be controlled and modified to reap in benefits.
Hence, this concludes the definition of Governance along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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