Corporate governance encompasses the establishment of systems and processes that shape, enable and oversee the management of an organisation. It is the activity undertaken by governing bodies (often boards) of formulating strategy, setting policy, delegating responsibility, supervising management, and ensuring that appropriate risk management and accountability arrangements are in place throughout the organisation.
Management has an operational focus, whereas governance has a strategic focus. Managers run organisations, whereas the governing body ensures that the organisation is run well and in the right direction. It is the board’s responsibility to ensure good governance.1
The governing body derives its authority to conduct the business of the organisation from the enabling legislation, licences and the organisation’s constitutional documents. The organisation is governed using corporate and clinical governance processes, elements of which are implemented by the governing body and by the workforce. As part of governance, the governing body.
- Establishes the strategic direction for the organisation
- Endorses a strategic and policy framework
- Delegates responsibility for operating the organisation to the chief executive officer, who in turn delegates specific responsibilities to the workforce
- Supervises the performance of the chief executive officer
- Monitors the organisation’s performance.2
- Edwards M, Clough R. Corporate governance and performance: an exploration of the connection in a public sector context. Canberra: University of Canberra; 2005. (Issues Series Paper No. 1.)
- Australian Commission on Safety and Quality in Health Care. National Model Clinical Governance Framework. Sydney: ACSQHC; 2017.