The Difference between Governance and Management
For many businesses in New Zealand, the owners are also the directors and they manage the day-to-day activities. They need to wear "two hats" at times; one for the big picture, the governance, and one for the day-to-day events, the management.
Governance is setting the strategic direction and goals for the Company or non-profit organisation and acting as a guardian of the interests of the Company's shareholders or the benefactors of the non-profit work. Non-profit organisations have board members too that need to ensure the organisation operates efficiently and effectively to extract the best possible benefit out of the limited funds they obtain. Throughout this article, the term director covers non-profit board member as well.
We Kiwi's as a nation enjoy the building, making, creating, and the customer interaction part of business. Too many directors in New Zealand are guilty of being solely focused on the hands-on aspects of the business. This is to the detriment of the governance function, with not enough time spent "with their director's hat on" thinking about business strategy, structure, and direction. This can result in under-performance of the Company over the longer term, and in worst cases will put directors at risk of neglecting their legal obligations as a director.
How do we improve the governance of an organisation? The following are some good pointers:
Management is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively. Management comprises planning, organising, staffing, leading or directing in an effort of accomplishing goals set by the board of the entity. Management involves achieving results through managing the efforts of others.