Good Governance: what is it and why is it important?

Good governance is critical for the success of any organisation, and human resources (HR) is no exception. Effective HR governance ensures that an organisation’s people are managed efficiently and effectively and comply with legal and ethical standards.

Good governance in HR helps promote transparency, accountability, and fairness in an organisation’s human resource management practices, making its significance undeniable. This article will explore the importance of good governance in human resources and how it can benefit organisations in the long run.
Managing an organisation’s people fairly, consistently, and transparently requires implementing practices, policies, and procedures that constitute good governance in HR. It involves establishing clear lines of authority, responsibility, and accountability for all HR functions, including recruitment, selection, retention, training and development, performance management, and compensation.

Effective HR governance requires a sound understanding of legal and regulatory requirements and industry best practices. It involves adopting ethical and transparent practices that promote workplace diversity, equity, and inclusion.

In short, good governance in HR involves creating a culture of trust, transparency, and accountability in an organisation’s human resource management practices.

1. Ensuring Compliance with Legal and Ethical Standards
   One of the primary benefits of good governance in HR is that it ensures compliance with legal and ethical standards. HR policies and practices must comply with the local, state (which may differ from state to state if you have a national business), and federal laws and industry regulations. Effective HR governance ensures that the organisation’s HR policies and practices comply with these legal and ethical standards, which, in turn, helps to mitigate costly legal and reputational risks for the organisation.
   
   
2. Improving Recruitment and Selection Processes
   Effective HR governance can improve an organisation’s recruitment and selection processes. HR governance helps ensure that recruitment and selection processes are transparent, objective, and merit-based. It also promotes diversity and inclusion in the recruitment process, which can lead to a more diverse and inclusive workplace. Effective HR governance can help to reduce bias in the recruitment and selection process, leading to better outcomes for the organisation as well as a good experience for the candidates, which helps your organisation’s brand and reputation.
   
   
3. Enhancing Employee Engagement and Retention
   Good governance in HR can enhance team members’ engagement and retention. Effective HR governance ensures that employees are treated fairly, with respect and dignity. It also ensures employees have the necessary tools and resources to perform their job effectively and that you invest in training for them to grow and become more valuable to you. Employees who feel valued and engaged are more likely to stay with an organisation and contribute to its success, saving you the cost of re-hiring or retraining new staff.
   
   
4. Promoting Organisational Performance
   Effective HR governance can promote organisational performance. HR policies and practices aligned with the organisation’s goals can help promote productivity, innovation, and efficiency. It can also help reduce turnover, absenteeism, and poor performance costs. Good governance in HR ensures that HR policies and practices are aligned with the organisation’s strategic goals, leading to improved organisational performance.
   
   
5. Fostering a Culture of Trust, Transparency, and Accountability
   Effective HR governance fosters a culture of trust, transparency, and accountability. HR policies and practices that are fair, consistent, and transparent help to build trust between employees and the organisation, promoting a sense of accountability among employees and leading to better organisational performance. A culture of trust, transparency, and accountability also helps to attract and retain top talent, which is critical.
   
   

Good HR governance means your business can go from strength to strength. By actively mitigating issues from arising, you can save yourself from headaches and stress that inevitably occur when things go wrong. It not only protects you from people issues, but it also helps to strengthen the support and culture between your team members.

Does your business need help to create policies or implement change to improve your HR governance? Our team of experts can help you determine any missing gaps and areas to improve; talk to us today.