ISO 37005:2024

Governance of organizations — Developing indicators for effective governance

This document provides guidance to governing bodies on how to approach the development and use of indicators in their governing activities. This document is primarily written for use by governing bodies, it is also written to be of relevance to a range of other stakeholders inside and outside of the organization to help them improve the quality of the information on which they assess and make decisions regarding the organization’s governance. It is applicable to all organizations regardless of type, size, location, structure or purpose. This document does not cover indicators of effective governance.

Gouvernance des organismes — Élaboration d'indicateurs d'une gouvernance efficace

Upravljanje organizacij – Razvoj kazalnikov za učinkovito upravljanje

General Information

• Status: Published
• Publication Date: 30-Jul-2024
• ICS: 03.100.02 - Governance and ethics
• Technical Committee: ISO/TC 309 - Governance of organizations
• Drafting Committee: ISO/TC 309 - Governance of organizations
• Current Stage: 6060 - International Standard published
• Start Date: 31-Jul-2024
• Due Date: 09-Jul-2024
• Completion Date: 31-Jul-2024
• Ref Project: kSIST ISO/FDIS 37005:2024 - Governance of organizations - Developing Indicators for effective governance

Standards Content (Sample)

International
Standard
ISO 37005
First edition
Governance of organizations —
2024-07
Developing indicators for effective
governance
Gouvernance des organismes — Élaboration d'indicateurs d'une
gouvernance efficace
Reference number
© ISO 2024
All rights reserved. Unless otherwise specified, or required in the context of its implementation, no part of this publication may
be reproduced or utilized otherwise in any form or by any means, electronic or mechanical, including photocopying, or posting on
the internet or an intranet, without prior written permission. Permission can be requested from either ISO at the address below
or ISO’s member body in the country of the requester.
ISO copyright office
CP 401 • Ch. de Blandonnet 8
CH-1214 Vernier, Geneva
Phone: [phone]
Email: [e-mail]
Website: www.iso.org
Published in Switzerland
ii
Contents Page
Foreword .iv
Introduction .v
1 Scope . 1
2 Normative references . 1
3 Terms and definitions . 1
4 Understanding indicators . 3
4.1 General .3
4.2 Structure of indicators .4
4.3 Impact of indicators on decision making .4
4.4 Stages in the development and use of indicators .5
5 A taxonomy of types of indicators . 5
5.1 Means to ends – inputs to impacts . .5
5.2 Subjective or objective indicators .6
6 Using the taxonomy . 6
6.1 General .6
6.2 Choosing an indicator .7
6.3 What type of indicators .7
6.3.1 General .7
6.3.2 Indicators of impact .9
6.4 Characteristics of an indicator .9
6.4.1 General .9
6.4.2 Assurable .10
6.4.3 Timely .10
6.4.4 Comparisons .10
6.5 Risks arising from indicator selection and use .10
6.5.1 General .10
6.5.2 Unintended consequences .10
6.5.3 Lack of accountability .11
6.5.4 Non-alignment of purpose and sustainability .11
6.5.5 Selecting indicators to measure against purpose or to measure effectiveness .11
6.5.6 Indicators of the method used to achieve the organization’s purpose . 12
6.5.7 Too much information . 12
7 Selection of indicators by governing bodies using ISO 37000:2021 .12
7.1 General . 12
7.2 Aspects related to decision making . . 13
7.3 Aspects related to strategy, partnership and collaborations . 15
7.4 Aspects related to organizational strategy and relevant indicators . 15
7.5 Selecting indicators . 15
8 Using indicators . 16
8.1 Choosing one option over others .16
8.2 Decisions following an assessment of performance .16
9 Implementation . .16
Bibliography .18

iii
Foreword
ISO (the International Organization for Standardization) is a worldwide federation of national standards
bodies (ISO member bodies). The work of preparing International Standards is normally carried out through
ISO technical committees. Each member body interested in a subject for which a technical committee
has been established has the right to be represented on that committee. International organizations,
governmental and non-governmental, in liaison with ISO, also take part in the work. ISO collaborates closely
with the International Electrotechnical Commission (IEC) on all matters of electrotechnical standardization.
The procedures used to develop this document and those intended for its further maintenance are described
in the ISO/IEC Directives, Part 1. In particular, the different approval criteria needed for the different types
of ISO document should be noted. This document was drafted in accordance with the editorial rules of the
ISO/IEC Directives, Part 2 (see www.iso.org/directives).
ISO draws attention to the possibility that the implementation of this document may involve the use of (a)
patent(s). ISO takes no position concerning the evidence, validity or applicability of any claimed patent
rights in respect thereof. As of the date of publication of this document, ISO had not received notice of (a)
patent(s) which may be required to implement this document. However, implementers are cautioned that
this may not represent the latest information, which may be obtained from the patent database available at
www.iso.org/patents. ISO shall not be held responsible for identifying any or all such patent rights.
Any trade name used in this document is information given for the convenience of users and does not
constitute an endorsement.
For an explanation of the voluntary nature of standards, the meaning of ISO specific terms and expressions
related to conformity assessment, as well as information about ISO's adherence to the World Trade
Organization (WTO) principles in the Technical Barriers to Trade (TBT), see www.iso.org/iso/foreword.html.
This document was prepared by Technical Committee ISO/TC 309, Governance of organizations.
Any feedback or questions on this document should be directed to the user’s national standards body. A
complete listing of these bodies can be found atwww.iso.org/members.html.

iv
Introduction
The purpose of indicators is to enable measurement that helps an organization to establish, implement,
maintain, and improve an effective governance framework and the conditions and practices enabling the
organization to fulfil its purpose. By following the guidance in this document organizations can realize the
governance principles as set out in ISO 37000.
This document provides a means to assess how an organization’s governance framework contributes most
effectively to the fulfilment of the organization's purpose. It covers:
— a taxonomy for the classification of different types of indicators;
— the context in which they are used, including the purpose of the organization and its appetite for risk
given impacts on all stakeholders;
— the risk appetite and tolerance of the organization and stakeholders;
— the limitations of indicators;
— choosing or developing meaningful indicators.
The role of an organization’s governing body is to establish, implement and maintain the organizational
governance framework, conditions and practices so that the organization can fulfil its purpose. In
performing this role the governing body has to make decisions and choose between available options,
as many times there will not be one solution. The indicators used will be part of the process to generate
those options and part of the mechanism to guide the choice between options. Governing bodies should
measure performance against objectives, which requires indicators. ISO 37000 helps to create cross-sector
international consensus on the role and results of organizational governance. However, the organizational
outcomes of organizational governance depend on the decisions made by governing bodies, the information
used to support those decisions as well as their execution. These decisions mean making choices between
the intended performance of alternative options for the same organizational purpose. A mechanism is
required to compare these options, in order to choose the optimal one for the specific context.
There is always the possibility that the choice made between options does not represent the "best"
choice or that the execution is not effective. Effective governance therefore requires an understanding of
appropriate indicators in the context of that possibility and the risk appetite of the governing body. Effective
consideration of indicators linked to organizational purpose, stakeholder issues, materiality and risk
appetite/tolerance reduces the extent to which a governing body can make decisions without the full range
of material information. It also enhances a dynamic monitoring approach.
Indicators are used and understood in various ways. Ultimately the governing body is seeking to achieve the
organizati
...

SLOVENSKI STANDARD
oSIST ISO/DIS 37005:2023
01-november-2023
Upravljanje organizacij – Razvoj kazalnikov za učinkovito upravljanje
Governance of organizations - Developing Indicators for effective governance
Titre manque
Ta slovenski standard je istoveten z: ISO/DIS 37005
ICS:
03.100.02 Upravljanje in etika Governance and ethics
oSIST ISO/DIS 37005:2023 en
2003-01.Slovenski inštitut za standardizacijo. Razmnoževanje celote ali delov tega standarda ni dovoljeno.

oSIST ISO/DIS 37005:2023
oSIST ISO/DIS 37005:2023
DRAFT INTERNATIONAL STANDARD
ISO/DIS 37005
ISO/TC 309 Secretariat: BSI
Voting begins on: Voting terminates on:
2023-08-02 2023-10-25
Governance of organizations — Developing Indicators for
effective governance
ICS: 03.100.02
THIS DOCUMENT IS A DRAFT CIRCULATED
FOR COMMENT AND APPROVAL. IT IS
THEREFORE SUBJECT TO CHANGE AND MAY
This document is circulated as received from the committee secretariat.
NOT BE REFERRED TO AS AN INTERNATIONAL
STANDARD UNTIL PUBLISHED AS SUCH.
IN ADDITION TO THEIR EVALUATION AS
BEING ACCEPTABLE FOR INDUSTRIAL,
TECHNOLOGICAL, COMMERCIAL AND
USER PURPOSES, DRAFT INTERNATIONAL
STANDARDS MAY ON OCCASION HAVE TO
BE CONSIDERED IN THE LIGHT OF THEIR
POTENTIAL TO BECOME STANDARDS TO
WHICH REFERENCE MAY BE MADE IN
Reference number
NATIONAL REGULATIONS.
ISO/DIS 37005:2023(E)
RECIPIENTS OF THIS DRAFT ARE INVITED
TO SUBMIT, WITH THEIR COMMENTS,
NOTIFICATION OF ANY RELEVANT PATENT
RIGHTS OF WHICH THEY ARE AWARE AND TO
PROVIDE SUPPORTING DOCUMENTATION. © ISO 2023

oSIST ISO/DIS 37005:2023
ISO/DIS 37005:2023(E)
DRAFT INTERNATIONAL STANDARD
ISO/DIS 37005
ISO/TC 309 Secretariat: BSI
Voting begins on: Voting terminates on:

Governance of organizations — Developing Indicators for
effective governance
ICS: 03.100.02
THIS DOCUMENT IS A DRAFT CIRCULATED
FOR COMMENT AND APPROVAL. IT IS
© ISO 2023
THEREFORE SUBJECT TO CHANGE AND MAY
This document is circulated as received from the committee secretariat.
All rights reserved. Unless otherwise specified, or required in the context of its implementation, no part of this publication may
NOT BE REFERRED TO AS AN INTERNATIONAL
be reproduced or utilized otherwise in any form or by any means, electronic or mechanical, including photocopying, or posting on STANDARD UNTIL PUBLISHED AS SUCH.
the internet or an intranet, without prior written permission. Permission can be requested from either ISO at the address below
IN ADDITION TO THEIR EVALUATION AS
or ISO’s member body in the country of the requester. BEING ACCEPTABLE FOR INDUSTRIAL,
TECHNOLOGICAL, COMMERCIAL AND
ISO copyright office
USER PURPOSES, DRAFT INTERNATIONAL
CP 401 • Ch. de Blandonnet 8
STANDARDS MAY ON OCCASION HAVE TO
BE CONSIDERED IN THE LIGHT OF THEIR
CH-1214 Vernier, Geneva
POTENTIAL TO BECOME STANDARDS TO
Phone: [phone]
WHICH REFERENCE MAY BE MADE IN
Reference number
Email: [e-mail]
NATIONAL REGULATIONS.
Website: www.iso.org ISO/DIS 37005:2023(E)
RECIPIENTS OF THIS DRAFT ARE INVITED
Published in Switzerland
TO SUBMIT, WITH THEIR COMMENTS,
NOTIFICATION OF ANY RELEVANT PATENT
RIGHTS OF WHICH THEY ARE AWARE AND TO
ii
PROVIDE SUPPORTING DOCUMENTATION. © ISO 2023

oSIST ISO/DIS 37005:2023
ISO/DIS 37005:2023(E)
Contents Page
Foreword .iv
Introduction .v
1 Scope . 1
2 Normative references . 1
3 Terms and definitions . 1
4 Understanding indicators . 3
4.1 General . 3
4.2 Structure of indicators . 4
4.3 How indicators impact decision making . 4
4.4 Stages in the developtment and use . 5
5 A taxonomy of types of indicators .5
5.1 Means to ends - inputs to impacts . 5
5.2 Subjective or objective indicators . 6
6 Using the taxonomy . 6
6.1 What to measure . 7
6.2 What type of indicators . 7
6.2.1 Indicators of impact . 9
6.3 Characteristics of an indicator . 9
6.3.1 Assurable . . 10
6.3.2 Timely . 10
6.3.3 Comparisons . 10
6.4 Risks arising from indicator selection and use . 10
6.4.1 Unintended consequences . 10
6.4.2 Lack of accountability . 11
6.4.3 Non-alignment of purpose and sustainability . 11
6.4.4 Selecting indicators to measure against purpose or to measure effectiveness . 11
6.4.5 Indicators of the method used to achieve the organization purpose . 11
6.4.6 Too much information . 11
7 Selection of indicators by governing bodies using ISO 37000:2021 .12
7.1 Decision making .12
7.2 Strategy, partnership and collaborations . 15
7.3 Developing a governing body’s strategy and aligning with indicators .15
7.4 Selecting indicators . 15
8 Using indicators .16
8.1 Choosing one option over others . 16
8.2 Decisions following an assessment of performance . 16
9 Implementation . .16
Bibliography .17
iii
oSIST ISO/DIS 37005:2023
ISO/DIS 37005:2023(E)
Foreword
ISO (the International Organization for Standardization) is a worldwide federation of national standards
bodies (ISO member bodies). The work of preparing International Standards is normally carried out
through ISO technical committees. Each member body interested in a subject for which a technical
committee has been established has the right to be represented on that committee. International
organizations, governmental and non-governmental, in liaison with ISO, also take part in the work.
ISO collaborates closely with the International Electrotechnical Commission (IEC) on all matters of
electrotechnical standardization.
The procedures used to develop this document and those intended for its further maintenance are
described in the ISO/IEC Directives, Part 1. In particular the different approval criteria needed for the
different types of ISO documents should be noted. This document was drafted in accordance with the
editorial rules of the ISO/IEC Directives, Part 2 (see www.iso.org/directives).
Attention is drawn to the possibility that some of the elements of this document may be the subject of
patent rights. ISO shall not be held responsible for identifying any or all such patent rights. Details of
any patent rights identified during the development of the document will be in the Introduction and/or
on the ISO list of patent declarations received (see www.iso.org/patents).
Any trade name used in this document is information given for the convenience of users and does not
constitute an endorsement.
For an explanation on the meaning of ISO specific terms and expressions related to conformity assessment,
as well as information about ISO's adherence to the World Trade Organization (WTO) principles in the
Technical Barriers to Trade (TBT) see the following URL: www.iso.org/iso/foreword.html.
This document was prepared by Technical Committee ISO/TC 309, Governance of organizations.
Any feedback or questions on this document should be directed to the user’s national standards body. A
complete listing of these bodies can be found atwww.iso.org/members.html.
iv
oSIST ISO/DIS 37005:2023
ISO/DIS 37005:2023(E)
Introduction
The purpose of indicators is to enable measurement that helps an organization in achieving its purpose.
Provides a simple and reliable means to assess how the governing body´s decisions and possible actions
contribute most effectively to the fulfilment of the organization's purpose. Useful indicators provide a
measure of performance in line with organizational purpose. This document covers:
— a taxonomy for the classification of different types of indicators;
— the context in which they are used, including the purpose of the organization and its appetite for
risk given impacts on all stakeholders;
— the risk appetite and tolerance of the organization and stakeholders;
— the limitations of indicators;
— choosing or developing meaningful indicators.
The role of a governing body is to make decisions that support achievement of organizational
purpose and well considered objectives. To make effective decisions a governing body needs measure
performance against purpose, this requires indicators. ISO 37000 helps to create cross-sector
international consensus on the role and results of organizational governance. However, the outcomes of
organizational governance depend on the effectiveness of the decisions made by governing bodies, the
information used to support those decisions as well as their execution. These decisions mean making
choices between the intended performance of alternative options for the same organizational purpose.
It is required to have a mechanism to compare these options to choose the optimal one for the specifc
context. Performance indicators, their performance measurements and decision criteria are useful
tools in this regard.
There is always the possibility that the choice made between options did not represent the "best"
choice or that the execution is not effective. Effective governance therefore requires an understanding
of appropriate indicators in the context of that possibility and the risk appetite of the governing body.
Effective consideration of indica
...