Governance is the system organizations use to create long-lasting value. Value means the extra benefit a business delivers. If that benefit continues over a long time, it becomes sustainable. In today’s world, businesses and society depend on each other. If a company ignores how it impacts both inside and outside the organization, society will lose trust and the value it created will fade.
Building a Governance System for Sustainable Value
To deliver lasting benefit, you need to understand what drives, guides, and enables that value:
- Purpose and values drive it
- Strategy and performance management guide it
- Culture, structure, and business rules enable it
Purpose
Every business, big or small, creates real value when it operates with a clear purpose. Knowing why you exist drives meaningful work. For instance, a small grocery store serving its community functions with care and consistency, unlike one without a purpose.
Values
Values are not just slogans. They are everyday commitments that guide how you meet your purpose. A historic example from Saudi culture illustrates this well. Prophet Muhammad (PBUH) was known as As-Sadiq (the Truthful) and Al-Ameen (the Trustworthy), even before his mission began. People still trusted him deeply. That kind of trust lives when values are practiced, not just displayed.
Strategy
Strategy means choosing what actions support your purpose and what to avoid. For example, a grocery store with a service purpose might plan to:
- Stay open 24/7
- Offer delivery with one phone call
This clear focus helps the business fulfill its purpose. Strategy guides your path forward.
Performance Management
Performance management is like a GPS. It alerts you when your actions stray and shows how to return on course. It is not about today’s numbers alone. It is about explaining them and tuning your efforts to stay in line with purpose.
Culture
When values become everyday habits, that is culture in action, not just something written on walls. Think of a family: if a child admits a mistake and is guided rather than harshly punished, that teaches honesty and encourages growth. A culture of truth allows an organization to evolve and fulfill purpose.
Structure
Humans often fall for the belief that their own way is best. Structure ensures collective wisdom shapes decisions instead of ego. Without a structure that encourages collaboration, organizations risk chaos and poor outcomes.
Rules of Business
Rules help people act consistently.
For example, going to bed by 10 p.m. helps most people wake early and be productive.
But one rule doesn’t fit everyone.
Policies and procedures—your business rules—should match:
- The environment you operate in
- The culture you have
- The goals you want to achieve
Why This Matters in Saudi Arabia
Corporate governance in Saudi Arabia has evolved, guided by the Companies Law, CMA regulations for listed firms, and voluntary Ministry of Commerce guidelines for non-listed firms. These frameworks aim to clarify responsibilities among boards, management, and stakeholders, and promote transparency, trust, and fairness.
Recent research in Saudi’s sustainability space shows strong links between governance, board quality, ESG disclosure, and firm value. Boards that are independent, active, and transparent tend to perform better.
Read more at MDPI.
The Monsha’at public guide also notes that corporate governance is the foundation for performance and long-term success in the private sector.
