In modern conditions, without well-founded and tested management practices, it is impossible to ensure the effective development of the nonprofit company. In this article, we will consider the best board governance practices.
The role of principles in the board governance
Governance principles are the most general, fundamental rules and recommendations that must be taken into account and implemented in practice at all levels of management. The main principles define the philosophy and strategy of managing the organization and its units. Principles follow from the laws of management, are consciously formed in the interests of practice, and are applied depending on specific conditions.
The main requirement for the principles of management is to ensure an increase in the effect of practical activities and management of nonprofit organizations (NPOs). The principles of management can fulfill their purpose only if their content corresponds to the objective laws of management. The principles of management, being correctly known and formulated, become the basic rules following which management activities are carried out.
In NPO management, the problem of the goal is central, it determines and regulates actions and is the main law, a complex algorithm of behavior that subjugates all aspects of the control action. The management of organizations, along with strategic goals, must solve a significant set of interrelated organizational, scientific, social, and economic tasks. Simultaneously with traditional, predetermined tasks, situations constantly arise that require prompt solutions, and often the success of the team’s activities depends on the skillful solution of numerous and unexpectedly emerging problems.
The best practices of the nonprofit board governance
Among the most commonly-used practices of the board governance there are:
- The principle of purpose for NPOs is decisive under the very concept of a non-profit organization, as an organization that does not aim to make a profit. The goals of organizations of the nonprofit sector are social, charitable, educational. These goals also determine the tasks of individual structural units of a non-profit organization.
- The principle of a systematic approach to management provides for the study of the object of management and the management system together and inseparably. At the same time, goals and criteria for the operation of the facility should be determined and structuring should be carried out, revealing the whole range of issues, the solution of which ensures the compliance of the management system with the established goals and criteria. Consistency means the need to use system analysis and synthesis in every management decision.
- The principle of unity of command in the board and collegiality in the development of managerial decisions means that each employee should receive authority from only one boss and answer only to him. However, any management decision made should be developed collegially.
- The principle of centralization makes it possible to ensure strict mutual coordination of links within the framework of an integrated management system in organizations of the nonprofit sector. At the same time, decentralization in the management of the NPO should contribute to structural flexibility, the development of adaptive capabilities of the system, and allow quick and efficient response to various, including unexpected, changes in the situation already at the level of individual links of the entire system.
- The principle of unity of management in the management is significant because a rational management structure is a structure in which a clear personal assignment of the powers of management on each specific issue at each level and concerning each object of management (division or employee) is established for a specific manager.