Organizational governance has been described as the exercise of power within
organizations and provides the system by which the elements of organizations
are controlled and directed. Good organizational governance should
ensure that the board and management seek to deliver outcomes for the benefit
of the organization and its members and that the means used to attain these
outcomes are effectively monitored.
A distinction is made between corporate governance that deals with the
governance of profit seeking companies and corporations that focus on protecting
and enhancing shareholder value, and non-profit governance that is
concerned with the governance of voluntary based organizations that seek to
provide a community service or facilitate the involvement of individuals in
social, artistic or sporting activities.
Sport organizations and their governance frameworks have diverse elements
that prevent the development of an overarching theory of sport
governance. A number of theoretical perspectives, namely agency theory,
stewardship theory, institutional theory, resource dependence theory,
network theory, and stakeholder theory can be used to illuminate parts of
the governance assumptions, processes, structures and outcomes for sport
organizations.
The traditional governance structure for VSOs outlined earlier has been
criticized for being unwieldy and cumbersome, slow to react to changes in
market conditions, subject to potentially damaging politics or power plays
between delegates, and imposing significant constraints on organizations
wishing to change. On the other hand, the majority of sports organizations
still use this model today and value its ability to ensure members have a say
in decision-making, the transparency of decisions and the autonomy granted
to organizations at every level of the system.
A number of models for sport governance exist, each emphasizing different
levels of responsibility for the chair of the board and paid executive.
VSO boards perform better if a degree of trust exists between the board
and staff and that board leadership is shared amongst a dominant coalition
of the board chair, executive and a small group of senior board members.
While evaluation systems for board performance are still relatively simplistic,
they do cover a wide range of board activities. Evaluation of individual
board member performance is more problematic and is the subject of ongoing
research.
Finally, VSOs are increasingly under pressure from funding agencies to
improve the delivery of their core programmes and services. The threat
of litigation against sport organizations, their members or board members,
has forced sport organizations to address issues such as risk management,
fiduciary compliance, incorporation, directors’ liability insurance, and board
training and evaluation. The heightened awareness of the implications of governance
failure due to high profile corporate cases worldwide has also forced
sport organizations to improve their governance systems.