Organization & Leadership Consulting

Why Governance is Important to an Organization

Motor oil being poured from the bottle

“With great power comes great responsibility.” 

To whom is this quote attributed? Some would say Ben Parker, fictional uncle of Peter Parker, the “secret identity” of Spiderman. Some would say Voltaire, or another thinker/activist from the later French Revolution. And yet others would go back to classical philosophers or biblical times (see Luke 24:18). Either way, the interface of power and responsibility is integral to organizational governance.

Here’s the logic: an inherent reality of an organization’s existence is its power to get results. Ideally, that power has been contained within a set of parameters that give it focus. If gasoline is used to help ignite a bonfire, it will generate an immediately noticeable impact and quite possibly a lot of harm. However, gasoline combined with oxygen and ignited by a spark plug within the cylinders of an internal combustion engine will generate power which can then be harnessed by the vehicle’s drive train and get things moving. 

Gasoline on a fire is simple and efficient but chaotic. Gasoline powering a vehicle is complex and effective.

An organization without appropriate governance will eventually explode (or implode) and cause a lot of harm. I’m sure specific examples come to mind. An organization, even one with great authority (power), when properly governed, will more effectively focus that authority as power applied to levers that get good things done in appropriate ways for the right reasons. That is why governance is important.

Governance is necessary for focusing and leveraging an organization’s power to get good things done so that resources are not wasted and people are not harmed.

(Even evil organizations have some form of internal governance that ensures it gets things done. That’s a topic for another time.) Here are a few pragmatic reasons why governance is important:

  • The “State” has laws that require organizations to honor their declared purposes to provide a service to the public, or the owners, or the stakeholders.
  • The “State” has laws that protect the public from abuse by an organization.
  • An organization needs an oversight entity that keeps it aligned with those laws as well as its declared mission (which is usually registered with the “State”).
  • Organizations need strong, effective leadership. That is usually looked for in a CEO, ED, or other “First Chair” role. That First Chair needs an entity to keep it accountable.
  • The person in the First Chair will eventually leave. The organization needs an entity that will provide long-haul oversight and foresight, especially during transitions.
  • When an effective First Chair is in place, that person needs appropriate support, encouragement, and a “we’re in it together” source of necessary questions and accountability measures.
  • The First Chair needs a governing body with multiple members in order to avoid developing a skewed perspective that comes from operating in isolation.

Ideally, no one in a governance role views it as a perk or a “lazy-river inner tube ride”. Rather, it ought to be viewed as a responsibility, like providing the boundaries for the ride. Likewise, a leader accountable to a governing body ought to view it, and the people on it, as assets for generating and focusing the organization’s authority to act in appropriately powerful ways.


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