Strengthening accountability and purpose through governance

Of all the elements necessary for an organisation to succeed, governance is perhaps the most important.

It lays the foundation for effective decision making, strengthens accountability, manages risk, promotes stability, and so much more. 

However, governance can also be one of the most difficult elements to get right. This is particularly true for organisations that have experienced a seismic shift in growth or complexity, where the governance practices that worked at one level quickly fall apart at another. 

With systemic governance challenges emerging across major institutions – whether in education, sport, community services, or others grounded in public trust – it’s clear that maintaining effective governance in an environment of constant change is becoming ever-more difficult. 

When governance issues go public

Over this past year, I’ve authored several articles urging university councils and boards to pause, reflect, and reassess how their organisations are faring amid reports of budget cuts, staffing pressures, declining enrolments, and similar challenges. 

Last month, a report into the quality of governance in Australian higher education providers reinforced concerns that had been building for some time. The report found:

• Executive salaries at Australian universities have reached historically high levels, raising questions about alignment with public purpose.
• Accountability mechanisms are frequently unclear or insufficient which limits oversight and control.
• Transparency around financial decision making and governance practices is inconsistent and often inadequate.
• Poor governance has contributed to negative impacts such as job losses, course closures, wage theft allegations and a loss of trust among staff, students, and the public.

Unfortunately, it appears the situation may get worse before it gets better. While the report outlines recommendations aimed at strengthening oversight and accountability, many of these measures would extend the role of external authorities and essentially increase government involvement in university governance. Boards and councils would be wise to take control of their internal situation now, with a rigorous review of operations and a resolve to make the tough decisions which may be necessary to restore confidence and accountability.

It’s not just universities struggling with governance issues in the public domain though.

Last month, reports of governance issues plaguing the Australian Football League (AFL) also made headlines. Uncertainties around succession planning have contributed to a perception of instability, with some media coverage suggesting internal dynamics may be negatively impacting performance. 

Also within sport, the Australian Turf Club is reportedly grappling with significant governance and financial issues which has prompted Racing NSW to issue a show-cause notice. The notice questions the club's financial viability and management practices, citing a decade of financial decline and giving the club a fortnight to demonstrate its ability to manage financial obligations and governance responsibilities.

Navigating governance challenges under pressure

There is no one-size-fits-all approach to effective governance. Sometimes it requires adjusting structures, other times leadership, and other times culture or processes.

Fortunately, governance issues are rarely sudden. They build up quietly over time, and only spill out into the public domain when they can no longer be contained. 

At their core, these situations often reveal fundamental truths like:

• Purpose is lost in day-to-day decisions.
• Internal structures and people are out of sync.
• The bigger mission is unclear.

It’s easy for these truths to get lost in the daily grind of running a multi-million-dollar enterprise. For example, the AFL has grown from a sole focus on the game to incorporating brand management, media rights, commercial partnerships and membership programs. Governance models originally designed for the sport itself will struggle to keep pace with the scale and complexity of the enterprise. Add in power struggles, tension between enduring and new leaders, and conflicting priorities, and the whole structure can start to unravel.

Everyone stops asking: Who are we? Where are we headed? Who are we here to serve? 

Governance cannot stay static while everything around it evolves. Governance is also not just an exercise in compliance or oversight, but a great tool for connecting everyday decisions with long term vision and purpose. The more we remember both of these, the stronger and more adaptable our organisations can become.

If your organisation is struggling with governance issues, consider working with a business advisor or restructuring specialist to help you get back on track. Especially where there is rapid growth or complexity, an advisor will be able to identify risks and opportunities you might otherwise miss and benchmark your governance practices against where they need to be. 

At RSM, our business advisors work with organisations to:

• Strengthen decision making frameworks
• Clarify roles, responsibilities, and accountability
• Uncover cultural issues and develop plans to address them
• Improve processes and controls
• Align governance with purpose and long term strategy

The key is to combine a forward-looking mindset with practical action to address immediate challenges and build governance capacity that will support the organisation well into the future.

To learn more, organise a free and confidential initial discussion with an experienced advisor at your local RSM office.