Thursday, May 20, 2021

Unlocking Performance by Enforcing Disipline without Disciplinarians

 It’s theoretically and practically possible to get governance discipline without too many disciplinarians, and run a harmonized organization with autonomy to delight people and unlock business performance.

One significant effect of today’s digital economy is high velocity, uncertainty, complexity, unpredictability, and a need for a faster response to changes in businesses. Governance ensures business effectiveness by enforcing accountability and collaboration. A strong governance approach steers the business in the right direction and unlock performance. 

By principle, governance comprises "value delivery to the business" and the "governance of risk management." By practice, how to enforce the organizational governance discipline depends on the nature, scale, and complexity of the organization, as well as understanding business risks and conduct comprehensively. To simply put, the purpose of governance is to enforce management discipline. Can you get discipline without disciplinarians?

Governance as "decision-making optimizer”:
In today's “VUCA” digital environment, decisions become more complex and involve diverse stakeholders and you have to weigh varying factors. Oftentimes, there might be many negative and positive vectors to a decision and each is weighed against each other to arrive at a satisfactory way forward. You need a sound process with governance mechanisms embedded in it to frame the decision scenario, leverage quality information, weigh options appropriately with the right people and actually make an effective decision. Governance as a decision optimizer is the act of guiding, influencing and regulating the decisions and behaviors of the entire workforce, management included, to improve decision maturity and drive sustainable value-creation to the shareholders.

A strong governance model illustrates the governance processes that are used to govern specific activities and establish decision rights, and illustrates the mechanisms of escalation and resolution used to make effective decisions. Good corporate governance enables a good decision-making system and optimal decision-making mechanisms to ensure decisions occur as fast as they possibly can to adapt to the “VUCA” new normal. It can assure the corporation’s operation under the correct directions and behaviors correctly without too many manual procedures and unnecessary complexity.

Governance as a policy setter: You cannot have effective governance without the soft ingredients such as culture and awareness. Strong governance discipline can only be implemented in humans via setting good policies to encourage positive attitudes and good behaviors. Policy is a set of principles for decision making or guidelines to shape collective mindset, attitude, and drive behaviors. With a set of well defined policies and principles, companies can enforce governance disciplines to improve manageability and transparency of the company via efficient automation mechanisms without too many human interventions.

In reality though, there are some organizations out there that have a plethora of policies and many of them are nothing more than that, just a policy. Good governance = superior management, to ensure the right things are easy to do. We do need to not just develop positive policies but also align actions and attitudes with them. From the boardroom to front desks, policies are communication from the top. Business management should take their leadership position seriously with educated intention to set good policies, enforce accountability and improve business process transparency, intelligence and maturity.

Governance as business aligner: Alignment is fundamental and multidimensional to ensure a seamless strategy implementation and it is key to fully achieve corporate performance goals. Good governance can create good performance and manage risks effectively, especially in the long run. There are often disruptive processes or technologies that need some relaxation of the old governance models. An effective governance model illustrates the governance processes with the mechanisms of escalation and resolution used to strengthen the weakest links of strategy management, and make seamless functional and skill alignment. Alignment goes beyond conformity and order taking, it needs to include a close partnership with interpersonal communication, value analytics, seamless execution.

Having an in-depth understanding of the business vision and mission, doing the governance mapping helps to identify interdependencies and streamline governance processes, and ensure the appropriate GRC structure and mechanism are realized without being bureaucratic, manually intervened or misaligned with business objectives. Strong GRC disciplines have a direct link to business and its processes, and those organizations that have a higher mature strategic alignment through integration, collaboration and harmony, etc. will outperform their competitors and tend to be more responsive to the business dynamic and reach the next level of organizational maturity.

The goal of organizational governance is to ensure that businesses work as a whole to improve communication, harness partnership, demonstrate value and engage employees. The cure comes from within the people, as well as the organization as the collective whole, whether individual or a group that we want to change from how they are working by appreciating the right things they are doing.  It’s theoretically and practically possible to get governance discipline without too many disciplinarians, and run a harmonized organization with autonomy to delight people and unlock business performance.


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