Today the management, monitoring, and governance of a business are increasingly seen as separate functions to be done by separate bodies, even if some of the membership of those bodies overlaps. This is the corporate equivalent of the separation of powers. Management is the executive function, responsible for delivering the goods. Monitoring is the judicial function, responsible for seeing that the goods are delivered according to the laws of the land, that standards are met, and ethical principles observed. Governance is the legislative function, responsible for overseeing management and monitoring and, most important, for the corporation’s future, for strategy, policy, and direction.
When these three functions are combined in one body, the short-term tends to drive out the long, with month-to-month management and monitoring issues stealing the time and attention needed for governance. The big decisions then go wrong.
Author: Charles Handy
Source: Harvard Business Review
Subjects: Corporate Governance, Management
Click to Add the First »