Monday 21 November 2022

Governance gardening

Prompted by a random podcast comment and inspired by a productive day in the garden, here's an analogy between governance and gardening. 

Planning the garden: 'governance' is such a broad topic that, even in the most well-governed organisation, there is no shortage of things to do. With finite resources, we can't reasonably do it all at once so we need to prioritise and plan. Do we already have the basics in hand, or are we starting with a bare field? What is the motivation or imperative to do anything in this space? What are the objectives? What is the shape and colour of 'ideal' governance? Without constant attention, unplanned governance changes evolve naturally as the organisation and its people go about the business, potentially increasing entropy or disorder as management controls tend to degrade over time. Senior management has a duty to ensure that adverse governance changes are stopped or reversed before the damage is done. Going beyond the bare minimum may be advantageous, provided things aren't over-done to the point that rigid governance arrangements become costly constraints on business. Strict conformity might suit a formal garden at a stately home or a municipal centrepiece, but not a cottage garden. 

Making space: the organisational stakeholders' appetite for governance changes may be almost palpable if there are clearly issues, problem areas, incidents experienced etc. There may even be corporate initiatives or projects to do governance stuff, perhaps prompted by the auditors, advisors, professional organisations, or standards and legal/regulatory requirements such as Sarbanes Oxley. More often, though, 'someone' spots one or more opportunities for improvement (issues), and then assumes the task of clarifying and refining the requirements, gathering support and perhaps seeking approval to proceed.  

Sowing the seeds: initiating governance changes may involve senior managers proactively seeking out and addressing governance issues through discrete governance improvement projects or initiatives. Alternatively, they may apply subtle influence and pressure on other corporate activities, perhaps incorporating small governance improvements and systematically changing 'the way the corporation works'. Actually, those are not strictly alternatives since both approaches may be combined, with refinements according to the circumstances at hand. For example, if senior management requires improvements to management reporting to increase internal transparency, that may not necessarily be the stated reason for requesting new/different forms of reporting. Opportunistically taking advantage of various corporate changes can be an effective way to improve governance at minimal marginal cost, provided senior management are on-the-ball anyway.

Nurturing: as with other corporate initiatives, governance changes can be quite tender in the early stages. It takes time for people to understand, appreciate, come to terms with, and eventually accept significant changes. Management can help by drip-feeding projects - stopping by from time to time to see how things are going. While it may be tempting to press ahead 'a tout vitesse', that's not necessarily appropriate and may not be optimal. Creative approaches may help here, such as notionally putting a goldfish bowl over a part of the organisation whose governance arrangements are being changed: other parts can see what is going on but cannot interfere.  It's a method of 'unfreezing' in Lewin terms, allowing the target area to break with convention without destroying controls that may still be necessary elsewhere. 

Thinning out: while planning is important, things don't always go to plan. Knowing that governance changes may not work out well in practice, it may pay senior management to retain options, perhaps comparing and contrasting changes in different parts of the organisation to discover the most/least effective approaches. Designing and running trials can be a creative and motivational approach in some cases: regardless of whether the trialled approaches ultimately succeed or fail, the point is to learn and grow. Explicitly setting criteria can help here, and not just in terms of assessing the end result: criteria relate to objectives, goals and anti-goals. Elaborating on and clarifying those has tremendous potential.  

Fertilising: in the context of compliance, there is almost always a focus on identifying and penalising non-compliance, a negative but often necessary control. The converse approach - identifying and rewarding compliance - is, in my opinion, criminally under-played. Senior management has the capability not just to appreciate and encourage sound governance, but to make it plain that good governance is career-enhancing, just as poor governance is career-limiting. Putting a positive spin on governance encourages    

Protecting against pests: governance involves adopting a suite of management controls designed to keep the organisation on the straight and narrow - which is fine for the majority of workers but a problem for the minority that seeks to take advantage of missing or weak controls, perhaps evading, degrading or destroying them for personal gain. It is risky to presume that [governance or other] controls are 100% operational and effective.  Additional assurance measures can approach the 100% level but may never quite make it. Additional detective controls and resilience measures may be appropriate in case important [governance or other] controls fail in practice.   

Weeding: given the pervasive nature of governance, scope-creep can be problematic for governance change initiatives. Seeing updates to corporate structures, reporting relationships, job titles etc. in one part of the organisation, others may wish to follow suit, particularly if the changes are demonstrably beneficial. Senior management may be happy for certain governance improvements to ripple across the organisation, provided things are moving generally in the desired direction at a sensible, manageable pace. If not, putting the brakes on or redirecting them may be a good idea before the ripple becomes an out-of-control storm surge.  

Harvesting: managers don't often consider or talk of reaping the benefits of sound governance. Governance is treated as if it is simply inherent, essential, an implicit and necessary part of business. Drawing out the business benefits can enhance them, for example simply thanking people for bringing significant issues to senior management's attention encourages others to do likewise. Reward them and celebrate for extra impact. Conversely, criticising or penalising whistleblowers is a sure way to stifle bad news and block potentially valuable information conduits. 

Re-planting: reinvesting a proportion of the benefits of governance into further governance-related activities drives the cycle - either sustaining current levels or gradually improving matters depending on the proportion. As with harvesting, explicitly identifying and perhaps measuring the benefits gained makes it easier to justify further investment, while analysis may indicate opportunities that are more or less attractive. Keep doing what works well. Stop doing or modify what doesn't.  

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