How to improve company governance using complexity?

From the board to a group of people, management governance has the same purpose and the same problems. Governance (as defined by ISO 26000) is a “system by which an organization makes and implements decisions in pursuit of its objectives.” It’s the process to ensure that principles, policies, standards, and working instructions set up by a group are used in daily activities. 

Following my previous post about complexity, it’s clear that governance is a complex system that deals with a lot of complex challenges. First of all, governance is not a closed system. It has to interact with many other systems in a company. On top of that governance touch many groups and people that have the ability to make their own decision, they are diverse and see the world in different ways, and they are interlinked. 

Diversity can cause many groups and people to see a given policy in different ways and to implement different solutions that are not necessarily aligned with the intention of the few that wrote the policies. Autonomy enables people to take what they think the right decisions, but in reality, those actions might be contradicting to the policy. 

The main problem with governance is that it is a top-down approach. Several people at the top of the company are setting policies and expect other people to follow them by using a body that should coordinate between the policymaker and those who implement them. Following other top-down approaches like safety or cyber-security, this approach tends to have many challenges when implementation takes place.

Governance can be improved significantly if it is treated as a complex system and the implementation is based on principles that are used to operate successfully in a complex environment.

The first principle is distribution. If a company believes that governance is the way to reduce risks, no one says that this should be a centralized effort. All the activities of governance can be distributed to all levels of an organization together with metrics that can show if each group is reaching the defined governance goals. 

Yes, that means that each group has some autonomy to define how they are going to implement governance. But it also means that each group is accountable and measured how they are doing it as well. There is a huge difference when people decide how to implement something comparing to people asked to follow something else that is enforced by externals to the group.

Distributing governance means that each group should find a way to create, all the time, new group capabilities that individuals in the group are missing. Those new capabilities create several mutations of the same implementation, but eventually, the best implementation will be adopted by all groups. 

Groups should also need to be able to adapt and continuously change the way that they are performing governance based on feedback loops that they are getting from their environment. If groups are rigid in their governance approach, that will have a negative impact on their purpose. Afterall governance is a tool to reduce risks, not to stop a business from running. To reach adaptivity groups need to know how to change the rules and the models that they are currently following to implement governance with new rules and models that still keep governance but adjusted to new feedbacks.

Direct feedback loops from governance stakeholders to teams at all levels are key to keep governance evolving and effective. The stakeholders of governance are part of the team environment and they need to provide positive or negative feedback to the groups.

Last, but not least, Good governance requires a high level of diversity. The open system nature of governance and its impact on any individual in a company required a high level of diversity. This high level of diversity is needed to ensure that any governance direction applies to any person on the organization, and it is defined in a way that any person (regardless of his background) will understand the need in the same way than others. 

If those ideas look too radical for you, it might be the right time to start with a real chance to improve a process that you believe is important. There is no need to implement attributes that are proven to be more successful to deal with complexity to the entire organization. One can always start with one small team and based on their success slowly push it to other parts of the company. 

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