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For a long time the concept of governance has been associated in many minds with excessive bureaucracy, rigid policies and procedures aimed more at compliance with laws and regulations and avoiding violations than at achieving the main goal — sustainable growth. In truth, governance is about achieving economic sustainability, meaning profit tied to the continuity and stability of the economic entity and generating returns at a reasonable cost. There is a direct relationship between the quality of governance and the economic performance of an organization.

Organizations with strong governance, competent leaders and employees, greater transparency, sound risk mitigation and an embedded ethical culture tend to achieve improved financial performance, reduced corruption and waste, strengthened investor confidence, increased investment attractiveness and enhanced competitiveness.

Even so, reality shows that an organization’s commitment to governance principles does not necessarily guarantee its effectiveness. The more important question today is not whether an organization applies governance but, rather, does it have an impact? Is it seen as part of a strategy or simply a formality?

The truth is that the most successful organizations are not merely those that apply governance principles or comply with internal policies and procedures but those that transform governance into impact — into a way of working, into a culture that adds value.

It is also important to recognize that governance policies and procedures and their impact may differ depending on the size of the organization, its operations and business model. Nonetheless, I believe there are several common factors that usually contribute to effective governance and support institutional transformation.

First, effective governance begins at the top. The board and its committees must carry out their oversight responsibilities with independence and effectiveness, taking a positive role that goes beyond reviewing periodic reports to include providing strategic guidance, ensuring accountability and emphasizing the importance of governance and compliance. Here the role of the corporate secretary is critical as a cornerstone of governance and a key enabler that helps the board and its committees perform their oversight and strategic functions with independence, efficiency, integrity and balance. This role includes setting a strong agenda that prioritizes issues most relevant to the organization’s needs during its transition phase to ensure productive and effective meetings, providing the right advice at the right time and communicating information clearly, continuous follow-up to ensure tasks are implemented within agreed timelines and facilitating coordination between the board and executive management, and supporting decision-making processes and strengthening accountability across the organization.

Second, for governance to bear fruit, there must be clear, measurable institutional objectives that go beyond financial results. For example, are we measuring cultural transformation, tracking progress in digitalization, linking performance to sustainability? Here, the CEO plays a critical leadership role as the link between strategic objectives and their translation into daily operations. This approach, establishing clear institutional goals, is fundamental to driving the desired organizational transformation, with regular monitoring, performance evaluation and alignment with the board of directors.

Third, because none of this suffices without real implementation, the presence of an independent governance, risk and compliance function ensures governance is embedded in day-to-day operations. This serves as the operational and organizational bridge that links the company’s strategic objectives with its risk exposure and legal and regulatory requirements. It ensures clear policies and procedures, effective controls and a culture of compliance. Its main responsibilities include providing training and awareness for employees, fostering ethical values and behavior across the organization and entrenching transparency through secure and confidential whistleblowing mechanisms that protect those who report misconduct. All of these are essential for building a governance culture.

Effective governance is not a set of adopted resolutions but an institutional behavior that starts at the top and permeates all levels.

In conclusion, experience has shown that effective governance only succeeds when it becomes part of an institution’s culture, not a file reviewed at the end of every quarter. That is the challenge and that is the opportunity.

• Sultan Ahmed Alghamdi is board secretary and chief legal and governance officer at Saudi Dairy and Foodstuff Co.

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