Governance framework

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Governance frameworks are the structure of a government and reflect the interrelated relationships, factors, and other influences upon the institution. [1] Governance structure is often used interchangeably with governance framework as they both refer to the structure of the governance of the organization. [2] Governance frameworks structure and delineate power and the governing or management roles in an organization. [1] They also set rules, procedures, and other informational guidelines. [3] In addition, governance frameworks define, guide, and provide for enforcement of these processes. [3] These frameworks are shaped by the goals, strategic mandates, financial incentives, and established power structures and processes of the organization. [4]

Contents

Governance frameworks establish and perpetuate the efficiency or lack of efficiency in an organization or institution's ability to meet its goals, and even their public relations and perception. [4] The organization of the governance framework is important for the success of the organization meeting its goals. Sociologist John Child states that these are connected and, in a circular manner, belief that changes in governance frameworks will succeed positively impacts the chance that the framework will result in the desired changes. [5] Additionally, Williamson suggests that the organization of a governance framework results in economic consequences for that organization. [2]

Frequently, the term good governance framework references a preferred style of governance that the author believes to be better suited to that industry or organization, especially in relation to public relations, and organizational and financial transparency. [1] [4]

Applications

There are examples of the use of governance frameworks in a wide variety of industries, as well as in the government of nation states and the public sector. [1] [3] [6] [7] [8]

In their application to specific industries, companies, and problems, governance frameworks appear differently and reflect the unique needs of the group or organization. [5] In the governance structure of information technology (IT) organizations, multiple frameworks have been suggested by authors connecting IT issues to the underlying theoretical business, organizational sociology, and economic models. [6] [7] In marine ecology, governance framework suggestions proposed by Fanning et al. provide a guiding structure for the management and conservation of marine in the Wider Caribbean Region. [8] Corporate governance frameworks are also well established and the theories behind how they are structured are discussed in academic papers, with different theoretical perspectives shaping how governance structures are used and influenced by the business. [9] [5] For example, Braganza and Lambert suggest that business leaders use an adaptable governance framework that they believe better addresses strategy as well as operation. [10]

In the public sector's governance frameworks, issues of public opinion and financial transparency tied to the concept of good governance frameworks are important, according to consulting firm Clayton Utz. [4] [11] The Charity Commission for England and Wales, a public commission responsible for ensuring trustworthiness of registered charities in the United Kingdom emphasizes its motives and mission, and accountability and transparency goals in its governance framework. [3] It also uses the governance framework to make publicly available its internal organization and leadership structure. [3] Loorbach suggests governance frameworks for nation state governments' development which challenge current paradigms and that he suggests will lead to more sustainable development. [12]

See also

Related Research Articles

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Corporate governance refers to the mechanisms, processes, practices, and relations by which corporations are controlled and operated by their boards of directors, managers, shareholders, and stakeholders.

<span class="mw-page-title-main">Business performance management</span> Processes to bring output into alignment with goals

Business performance management (BPM) is a management approach which encompasses a set of processes and analytical tools to ensure that an organization's activities and output are aligned with its goals. BPM is associated with business process management, a larger framework managing organizational processes.

Governance is the overall complex system or framework of processes, functions, structures, rules, laws and norms born out of the relationships, interactions, powerdynamics, cultures and communication within an organized group of individuals which not only sets the boundaries of acceptable conduct and practices of different actors of the group and controls their decision-making processes through the creation and enforcement of rules and guidelines, but also manages, allocates and mobilizes relevant resources and capacities of different members and sets the overall direction of the group in order to effectively address its specific collective needs, problems and challenges. The concept of governance can be applied to social, political or economic entities such as a state and its government, a governed territory, a society, a community, a social group, a formal or informal organization, a corporation, a non-governmental organization, a non-profit organization, a project team, a market, a network or even the global stage. "Governance" can also pertain to a specific sector of activities such as land, environment, health, internet, security, etc. The degree of formality in governance depends on the internal rules of a given entity and its external interactions with similar entities. As such, governance may take many forms, driven by many different motivations and with many different results.

Information technology (IT)governance is a subset discipline of corporate governance, focused on information technology (IT) and its performance and risk management. The interest in IT governance is due to the ongoing need within organizations to focus value creation efforts on an organization's strategic objectives and to better manage the performance of those responsible for creating this value in the best interest of all stakeholders. It has evolved from The Principles of Scientific Management, Total Quality Management and ISO 9001 Quality Management System.

Enterprise architecture (EA) is a business function concerned with the structures and behaviours of a business, especially business roles and processes that create and use business data. The international definition according to the Federation of Enterprise Architecture Professional Organizations is "a well-defined practice for conducting enterprise analysis, design, planning, and implementation, using a comprehensive approach at all times, for the successful development and execution of strategy. Enterprise architecture applies architecture principles and practices to guide organizations through the business, information, process, and technology changes necessary to execute their strategies. These practices utilize the various aspects of an enterprise to identify, motivate, and achieve these changes."

Corporate transparency describes the extent to which a corporation's actions are observable by outsiders. This is a consequence of regulation, local norms, and the set of information, privacy, and business policies concerning corporate decision-making and operations openness to employees, stakeholders, shareholders and the general public. From the perspective of outsiders, transparency can be defined simply as the perceived quality of intentionally shared information from the corporation.

The chief risk officer (CRO), chief risk management officer (CRMO), or chief risk and compliance officer (CRCO) of a firm or corporation is the executive accountable for enabling the efficient and effective governance of significant risks, and related opportunities, to a business and its various segments. Risks are commonly categorized as strategic, reputational, operational, financial, or compliance-related. CROs are accountable to the Executive Committee and The Board for enabling the business to balance risk and reward. In more complex organizations, they are generally responsible for coordinating the organization's Enterprise Risk Management (ERM) approach. The CRO is responsible for assessing and mitigating significant competitive, regulatory, and technological threats to a firm's capital and earnings. The CRO roles and responsibilities vary depending on the size of the organization and industry. The CRO works to ensure that the firm is compliant with government regulations, such as Sarbanes–Oxley, and reviews factors that could negatively affect investments. Typically, the CRO is responsible for the firm's risk management operations, including managing, identifying, evaluating, reporting and overseeing the firm's risks externally and internally to the organization and works diligently with senior management such as chief executive officer and chief financial officer.

Project portfolio management (PPM) is the centralized management of the processes, methods, and technologies used by project managers and project management offices (PMOs) to analyze and collectively manage current or proposed projects based on numerous key characteristics. The objectives of PPM are to determine the optimal resource mix for delivery and to schedule activities to best achieve an organization's operational and financial goals, while honouring constraints imposed by customers, strategic objectives, or external real-world factors. Standards for Portfolio Management include Project Management Institute's framework for project portfolio management, Management of Portfolios by Office of Government Commerce and the PfM² Portfolio Management Methodology by the PM² Foundation.

<span class="mw-page-title-main">Capacity building</span> Process within NGOs and non-profits

Capacity building is the improvement in an individual's or organization's facility "to produce, perform or deploy". The terms capacity building and capacity development have often been used interchangeably, although a publication by OECD-DAC stated in 2006 that capacity development was the preferable term. Since the 1950s, international organizations, governments, non-governmental organizations (NGOs) and communities use the concept of capacity building as part of "social and economic development" in national and subnational plans. The United Nations Development Programme defines itself by "capacity development" in the sense of "'how UNDP works" to fulfill its mission. The UN system applies it in almost every sector, including several of the Sustainable Development Goals to be achieved by 2030. For example, the Sustainable Development Goal 17 advocates for enhanced international support for capacity building in developing countries to support national plans to implement the 2030 Agenda. 

Sustainability reporting refers to the disclosure, whether voluntary, solicited, or required, of non-financial performance information to outsiders of the organization. Sustainability reporting deals with qualitative and quantitative information concerning environmental, social, economic and governance issues. These are the criteria often gathered under the acronym ESG.

<span class="mw-page-title-main">Global Reporting Initiative</span> International standards organization

The Global Reporting Initiative is an international independent standards organization that helps businesses, governments, and other organizations understand and communicate their impacts on issues such as climate change, human rights, and corruption.

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. Internal auditing might achieve this goal by providing insight and recommendations based on analyses and assessments of data and business processes. With commitment to integrity and accountability, internal auditing provides value to governing bodies and senior management as an objective source of independent advice. Professionals called internal auditors are employed by organizations to perform the internal auditing activity.

Contract management or contract administration is the management of contracts made with customers, vendors, partners, or employees. Contract management includes negotiating the terms and conditions in contracts and ensuring compliance with the terms and conditions, as well as documenting and agreeing on any changes or amendments that may arise during its implementation or execution. It can be summarized as the process of systematically and efficiently managing contract creation, execution, and analysis for the purpose of maximizing financial and operational performance and minimizing risk.

Governance, risk management and compliance (GRC) is the term covering an organization's approach across these three practices: governance, risk management, and compliance.

<span class="mw-page-title-main">Hybrid organization</span> Theoretical concept

A hybrid organization is an organization that mixes elements, value systems and action logics of various sectors of society, i.e. the public sector, the private sector and the voluntary sector. A more general notion of hybridity can be found in Hybrid institutions and governance.

<span class="mw-page-title-main">Sustainability accounting</span> A term of financial accounting

Sustainability accounting originated in the 1970s and is considered a subcategory of financial accounting that focuses on the disclosure of non-financial information about a firm's performance to external stakeholders, such as capital holders, creditors, and other authorities. Sustainability accounting represents the activities that have a direct impact on society, environment, and economic performance of an organisation. Sustainability accounting in managerial accounting contrasts with financial accounting in that managerial accounting is used for internal decision making and the creation of new policies that will have an effect on the organisation's performance at economic, ecological, and social level. Sustainability accounting is often used to generate value creation within an organisation.

Sustainability standards and certifications are voluntary guidelines used by producers, manufacturers, traders, retailers, and service providers to demonstrate their commitment to good environmental, social, ethical, and food safety practices. There are over 400 such standards across the world.

Strategic alignment is a process that ensures an organization's structure, use of resources support its strategy. "In its simplest form, organizational strategic alignment is lining up a business' strategy with its culture." Successful outcomes also require an awareness of the wider environment, regulatory issues and technological change. Strategic alignment contributes to improved performance by optimizing the operation of processes/systems, and the activities of teams and departments. Goal-setting theory supports the relevance of clear, measurable operational objectives that can be linked to superordinate goals. This helps ensure resources are used effectively.

Willy (Wim) Van Grembergen is a Belgian organizational theorist and Professor of Information Systems Management at the University of Antwerp, and Academic Director of the IT Alignment and Governance Research Institute., known for his work on IT governance. His recent book on IT Governance: "Enterprise governance of information technology: Achieving strategic alignment and value", Springer, 2009.

References

  1. 1 2 3 4 "Governance Framework - Governance - SCU". scu.edu.au. Retrieved 2017-05-04.
  2. 1 2 Williamson, Oliver E. (1984-01-01). "The Economics of Governance: Framework and Implications". Zeitschrift für die Gesamte Staatswissenschaft / Journal of Institutional and Theoretical Economics. 140 (1): 195–223. JSTOR   40750687.
  3. 1 2 3 4 5 "Governance framework - GOV.UK". www.gov.uk. Retrieved 2017-06-02.
  4. 1 2 3 4 "Writing good governance frameworks: A how-to guide - Knowledge - Clayton Utz". www.claytonutz.com. Retrieved 2017-06-02.
  5. 1 2 3 Child, John (January 1972). "Organizational Structure, Environment and Performance: The Role of Strategic Choice". Sociology. 6 (1): 1–22. doi:10.1177/003803857200600101. S2CID   145175167.
  6. 1 2 Dahlberg, T.; Kivijarvi, H. (2006). "An Integrated Framework for IT Governance and the Development and Validation of an Assessment Instrument". Proceedings of the 39th Annual Hawaii International Conference on System Sciences (HICSS'06). pp. 194b. doi:10.1109/HICSS.2006.57. ISBN   978-0-7695-2507-5. S2CID   8976153.
  7. 1 2 Veiga, A. Da; Eloff, J. H. P. (2 October 2007). "An Information Security Governance Framework". Information Systems Management. 24 (4): 361–372. doi:10.1080/10580530701586136. S2CID   31577345.
  8. 1 2 Fanning, Lucia; Mahon, Robin; McConney, Patrick; Angulo, Jorge; Burrows, Felicity; Chakalall, Bisessar; Gil, Diego; Haughton, Milton; Heileman, Sherry; Martínez, Sergio; Ostine, L’ouverture; Oviedo, Adrian; Parsons, Scott; Phillips, Terrence; Santizo Arroya, Claudia; Simmons, Bertha; Toro, Cesar (July 2007). "A large marine ecosystem governance framework". Marine Policy. 31 (4): 434–443. doi:10.1016/j.marpol.2007.01.003.
  9. ↑ Pande, Santosh; Ansari, Valeed Ahmad (2014). "A Theoretical Framework for Corporate Governance". Indian Journal of Corporate Governance. 7 (1): 56–72. doi:10.1177/0974686220140104. S2CID   166874450.
  10. ↑ Braganza, Ashley; Lambert, Rob (2000). "Strategic integration: Developing a Process-Governance Framework". Knowledge and Process Management. 7 (3): 177–186. doi:10.1002/1099-1441(200007/09)7:3<177::AID-KPM104>3.0.CO;2-U. ProQuest   215204753.
  11. ↑ Utz, Clayton. "Governance Frameworks: Building the Framework". Clayton Utz. Retrieved June 1, 2017.
  12. ↑ Loorbach, Derk (January 2010). "Transition Management for Sustainable Development: A Prescriptive, Complexity-Based Governance Framework". Governance. 23 (1): 161–183. doi: 10.1111/j.1468-0491.2009.01471.x .
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