Tuesday, September 27, 2022


There are varying degrees of understanding of the scope of corporate governance, and it’s important to take cross disciplinary governance practices.

The essence of governance is to steer the organization in the right direction and operate at the premium speed. How to enforce the organizational governance discipline depends on the nature, scale, and complexity of the organization. 

There are both hard components and soft factors that impact governance effectiveness. Solid governance discipline is not to eliminate complexity, but to optimize complexity, in order to reach a state of organizational maturity that has desirable characteristics such as business agility, coherence, synchronization, resilience, etc.

Governance needs to include employee engagement and motivation: The digital era upon us is about people and innovation. One point of struggles is governance taking away liberties that are essential to people doing their work innovatively. Only focus on control and enforcement has the tendency to damage an enterprise's capacity to motivate and engage staff, discourage independent thinking and creativity. Also, if there's a problem with trust, then governance will suffer, because motivations are not aligned across organizational boundaries.

By enhancing governance discipline, “engaging, motivating, innovating” can be embedded in the business policies, processes, cultures, to improve the overall organizational maturity; and governance practice should be shared cross-enterprise collaboratively. You do not implement GRC, you earn it through repeated practices, and you innovate it through the next practices.

Governance enables realization of strategic planning by ensuring alignment tailored for the organization:
Governance disciplines and processes enhance business alignment, connect the strategy to the future and outline all variables that must be accomplished for business initiative implementation. Alignment is a continuous process that demands continuous attention. Strategic alignment is the process of ensuring all organization action is directed to achieving common strategic goals and objectives. It's a great construct to outline the strategy pathways and provides the pivot point for the executive group to promote the level of vision and strategy understanding required to frame the implementation effort.

Governance and management are interdependent approaches to run a high performance organization. Thus, besides processes and mechanisms, it’s important to understand the human element - harden the soft factors for enforcing GRC maturity. The top executives need to ponder: Is it possible for an organization to be highly automated, decentralized and precisely synchronized? Are there ways of combining the freedom and flexibility advantages of self-management with the mixed level of control and coordination advantages of traditional hierarchies? With effective governance, alignment goes beyond conformity and order taking, it needs to include close partnership and strategic alliance.

It's not 'one style fits all' - different styles of governance are required depending on where the piece of work sits on a spectrum:
Organizations are moving from inside out operation-driven to outside-in customer centric. No single governance style fits all cases. There is an ongoing problem with highly structured GRC approaches that seem to overlook the very human and social behavioral factors that underpin real GRC success. Governance is about conformance and performance; by navigating the better path, it can shorten the distance or save the energy to reach the right destination.

High-effective governance is led from the top, defining architecture standards, establishing a rigorous and stable governance process. There is an increasing pace of change; strong governance should focus on enterprise change; shift from mechanistic governance to Agile governance; think of governance as a process, not a committee; have a blended combination of governance styles depending on the decision being made; present analytics capability; risk/complexity tolerance, business agility; harness innovation, change management (symbol, behavior, thought/feeling/belief); appoint people with a high level of professional competency for the lead roles; encourage open leadership style; establish measures to monitor adherence to decisions and policies assurance; avoid defining governance in terms of technologies.

There are varying degrees of understanding of the scope of corporate governance, and it’s important to take cross disciplinary governance practices. So a structural governance approach helps to set rules for safeguarding the status quo, providing a common language, establishing proper standards, appropriate business and use cases, encouraging cross-functional communication, collaboration to improve business performance and enforce compliance, with the goals to increase business effectiveness and maturity.


Post a Comment