GRC Rationality

Governance is to frame business management, it should orchestrate change, and do it with trust and flexibility.

Governance is about enforcing business management effectiveness, efficiency, and maturity. How to enforce the organizational governance discipline depends on the nature, scale, and complexity of the organization, as well as understanding its risks and conducting "Intentionality" or "rationality" in the context of "GRC."

Bounded Rationality: Bounded rationality refers to the idea that individuals make decisions based on limited information and cognitive constraints, rather than achieving optimal outcomes. Organizations can influence rational decision-making by structuring decision premises, managing information, and creating hierarchical goals. This structuring helps individuals make rational choices within the constraints of their environment, aligning personal decisions with organizational goals.

Rationality in organizations involves the structured decision-making processes that aim to achieve organizational goals efficiently. Organizations can enhance rational decision-making by structuring the decision-making environment. They do this by manipulating decision premises, filtering information, and emphasizing certain facts as important. Hierarchies within organizations help ensure that the right information reaches the right decision-makers and that decisions are made by the appropriate individuals. This structured approach allows organizations to align individual decisions with broader organizational goals; where each level of the organization has specific goals that contribute to the overall mission.

Some people argue that organizations are not cohesive entities with unified goals but are instead composed of competing coalitions with disparate interests. In this view, organizational goals are set by a temporarily dominant coalition, and decision-making is more about bargaining and negotiation than rational goal pursuit. The power dynamics within organizations are influenced by individuals' abilities to resolve uncertainties and manage resources, which can shift the composition of the dominant coalition over time.

Governance is to frame business management, it should orchestrate change, and do it with trust and flexibility. It’s about how well an organization is being run and if set upright, it should effectively oversee the achievement of the business strategy. 

Posted in: Decision Making,Digital Maturity,GRC