With the recent backlash on sustainability and ESG topics, some commercial organisations seem to have, at least for now, pivoted away from targeting anything other than pure commercial success. However, many others continue to want to put purpose into their mission, to safeguard their integrity and to ensure that they incorporate ethics and social good.
Governance can be a key tool in helping with this, but what do we mean by “governance” and what are the governance tools we can deploy?
Start with Your Foundation
Start with the mission and values of your organisation and put them at the core. If you have founding principles that you want to refer to, do that. These shouldn’t just live in corporate documents, they need to be actively integrated into your decision-making processes and “lived and breathed” daily.
Identify Your Pressure Points
Hold honest discussions about where the organisation could lose or compromise on its principles – where are the pressure points? Could it be working for a particular customer, maintaining independence, taking certain lobbying positions? By identifying these challenges up front, you can build governance safeguards beforeyou’re in the midst of difficult decisions.
Practical Governance Steps
From a practical standpoint, review and implement the following:
- Board Composition and Structure – Include diverse perspectives with both mission-oriented and commercially-minded directors, plus independent oversight. Look at voting rights, weighting and vetoes around particular decisions. This doesn’t have to be long and tortuous – a crisp one-page set of rules and principles can cover a lot.
- Incorporate your Mission – Embed your mission directly into governance documents such as your Articles of Association, Board Charters / Terms of Reference.
- Dual Reporting – Establish reporting that embraces both mission achievement and financial performance. Ensure the cadence of reporting allows time to measure outcomes.
- Decision-Making Frameworks – Carve out explicit criteria for evaluating major decisions that consider both mission alignment and commercial viability.
- Stakeholder Engagement Mechanisms – Build formal processes for stakeholder input into governance decisions through advisory boards or community councils. Consider employees, the public, regulators and other bodies.
- Compensation Alignment – Consider structuring incentives to reward both mission achievement and financial performance.
- Audits – Consider periodic assessments of how well the organisation is living its mission, led by independent parties, to hold the organisation accountable.
- Accreditation. Accreditation with bodies such as B-Corp can provide independent validation of your mission.
Recommended reading
For more insights in this space, the following books are on my reading list:
- “Net Positive” by Paul Polman and Andrew Winston. A book from the former CEO of Unilever on broader purpose and balancing commercial success with doing good.
- “Good to Great and the Social Sectors” by Jim Collins – How organisations in the social sector think differently about governance, leadership and success metrics beyond profit.
- “Boards That Lead” by Ram Charan, Dennis Carey, and Michael Useem – Written for corporate boards and also contains sections on purpose-driven governance and stakeholder capitalism that apply to mission-driven organisations.
- “The Nonprofit Board Answer Book” by BoardSource – Apparently, the gold standard for governance best practices in the not-for-profit sector.
Are you struggling to align your governance with your mission? Let me know.
For more insights on setting up your organisation for success, check out my books and online courses on www.csuiteframework.com/courses
