Difference Between Governance and Management

Governance vs Management

Governance and management are words that hold significance in terms of running an organization in a smooth and efficient manner. While there are governing bodies and managers both serving inside an organization, their roles and responsibilities are clearly spelt out. There seems to be no difference between the two concepts with both being concerned with controlling an organization for the purpose of running it to achieve the goals that have been set forth. In fact, there are many who use the words interchangeably. However, there are subtle differences that will be highlighted in this article.

Governance

We are living in times when the over simplistic division between governance and management as being policy making and carrying out or implementing these policies does not hold water anymore. This is especially true when financial expectations from organizations have increased manifold and governing bodies in a company are no longer names on a letterhead and equally responsible for generating profits as are the managers in the company.

However, governance is broadly seen as a task that is concerned with setting goals for an organization, direction to be taken to achieve these goals, and roles and responsibilities of functionaries in the organization. Looking objectively, governance is a term that deals with WHAT in an organization as the word comes from government, and we all know what a government does. What an organization must do and what it should become in the future is primarily the concern of governance. Governance is ensuring compliance with the rules and regulations and making necessary changes in policies to avoid conflicts inside the organization.

Management

Management is a more common term used in organizations these days. It is seen as a task that confines itself with resource allocation and looking after operations of the organization on a day to day basis. The role of management seems to be to look after smooth running of the organization in the direction that has been chosen by the governing body that happens to be the board of directors in most instances these days. Management works at various levels at the same time and represents the face of the company to not just the public but also to the stakeholders. Hiring and firing of employees, bookkeeping, check writing, securing orders, arranging raw material and looking after production are all jobs that make up management.

What is the difference between Governance and Management?

• Governance is a term associated more with the board of directors while management is a term associated more with executive and managerial level employees in an organization.

• Governance is a task that concerns with setting of the goals and direction to be taken to achieve these goals whereas management is concerned more with looking after day to day operations to run the organization in a smooth manner.

• Governance answers what in an organization (what it does and what it should become in a few years) whereas management answers the how in an organization (how to achieve the goals of the organization).