Governance: Is Yours Good Enough?
Governance is intended to protect an organization in achieving its goals, whether that be generating shareholder value or providing cost effective public services. That protection should ensure the organization complies with all the necessary legislation as well as from the adverse impact of well intended but poor decisions, recklessness or intentional.
It has been clear over recent years that not all corporate governance is achieving the required level of protection, with a number of high profile examples such as the Libor rate fixing, banking computer failures, money laundering admissions and even ‘dodgy’ expenses hitting the headlines.
All of these issues and others should have been prevented or at least detected early by the operation of good governance.
A few Questions
So, is it time to review your governance and make sure it is fit for purpose and operating properly? Perhaps, before any in-depth reviews a few simple questions are worth asking, such as:
- On accountabilities:
- Are they clear and understood by all?
- Is accountability aligned with authority?
- Are accountabilities complete with no gaps or overlaps (i.e. single point of accountability across all required areas of the organization)?
- Are key staff and managers incentivized to comply with (or dis-incentivized to not follow or breach) the governance?
- Does the culture of the organization promote compliance with governance?
- On relevance and scope:
- Are the key risks to be avoided/reduced clearly identified and accurately analyzed?
- Does the governance cover all the needs of the organization and the legislation that needs to be complied with?
- Is the governance proportionate to the risk it is mitigating?
- Is it tailored to meet the needs of the organization now?
- When was it last reviewed and updated?
- Are key suppliers aware of their responsibilities within the context of governance and the impact of failure? (Remembering that regulatory responsibility cannot be delegated to suppliers)
- Have failures in other organizations been considered in any reviews?
- On simplicity:
- Is the governance structured and written so that managers and staff understand it
- Has it been briefed or trained out so that users understand what is expected?
- Does it support rather than hinder employees and managers in achieving their objectives efficiently?
- Do lower level processes and procedures support the governance and are there good tools for this?
- On enforcement and detection
- Can the performance of the governance be measured?
- Are the measures really measuring the performance or do they mask issues or deficiencies in the governance and its application
- Can the threats and risks it is trying to protect against be detected and deficiencies corrected?
- Are the 'watchers' independent and objective and are they incentivized correctly?
- Is the governance used – i.e. are the performance measures available for recent periods?
Lets look at how some of these aspects might be applied in the context of programme and project management.
Is there an individual accountable for the delivery of the benefits of the initiative, not just the delivery of the project/programme deliverables on time to budget? Without this it is likely that initiatives won’t focus on the business outcomes only on the deliverables and they won’t deliver the right return on investment.
On supplier management; do suppliers have clear and unambiguous statements of work and contracts that have measureable performance indicators such as delivery of outputs on certain dates? Is it clear what you need to provide to the suppliers to enable them to do their job? The key to successful delivery here is clarity and shared understanding of what is required to be done on both sides of the commercial boundary. Regular reviews during the course of the contract are needed and these need to be open and honest; failure on either side results in failure for both parties.
Change governance underpins corporate governance for a number of reasons:
1. Change in every organization is inevitable and it needs to be successful to ensure future success and the achievement of future strategies.
2. Change is typically a microcosm of the wider organization; so getting change governance right can help getting governance right in BAU operations.
3. Exemplar governance in Change sets the example that all parts of the business should see – almost everyone will see change and the impact of change whether successful or not.
Having a look at your Change Governance is a good place to start a more general review of governance.
Answering the basic questions above might provide some level of assurance that governance is or isn’t working, it will certainly give some indications for the focus of a more detailed and ideally independent review of governance. And it might just save a lot of pain in the future; regulators and legislators are getting tougher; the fines getting bigger and the threat of imprisonment more real. The decision is yours as they say!