The 7 key governance capabilities
Effective governance is a learned skill and is one which is improved on the job. There are seven key capabilities, or skill sets, you should focus on to improve your governance skills and become an effective director. There are:
- Understanding financial information and Key Performance Indicators (KPIs). Start with learning what each financial report tells you about the business's performance. Then, learn what's driving these numbers - the KPIs most relevant to the company. Understanding these allows you to become much more confident in your decision making.
- Understanding yourself and others. It is important to understand yourself so you can understand those around you and how you should interact with them for the best outcomes. Consider your own strengths, weaknesses, motivators, and stressors and those of others around you. Knowing this allows you to tailor your governance and communication style to individuals.
- Focused planning. Learn to focus your time on the things that influence the long-term success of the company, rather than seemingly urgent, but actually unimportant, activities. Focused planning ensures you keep coming back to executing the purpose of the business, one of the key responsibilities of your role as a director.
- Directing, in service of others. Every business exists to create value for others. An effective director 'builds enduring greatness through a paradoxical blend of personal humility and professional will', as described by Jim Collins in his book 'Good to Great'. To act with personal humility means to demonstrate modesty; act with calm determination; channel ambition into the company, not yourself; and apportion responsibility for poor performance to yourself, not others.
- Managing, to ensure performance outcomes. An effective leader manages people by giving them outcomes to achieve instead of tasks to do. This means you need to trust your team to come up with solutions and allow them to actively take responsibility for their role.
- Leading. Inspire your team with the purpose of the business. Ensure each team member can connect everything they do to the business's purpose, so they understand how they contribute to the overall goals of the business.
- Teaching. See the potential in those around you and teach them what you know. Be excited by learning and sharing your knowledge with others.
Good governance isn't so much about learning a set of rules and procedures; it is about having a mindset that is always learning and developing the skills required to be an effective leader.
"Most great leaders do not start as great leaders. They grow into great leaders." - Jim Collins.
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