Why Should I Care About Governance?

Imagine this: You manage the web systems for a transport utility.  Bad weather has shut half the roads in the region.  Your services are seriously disrupted.  Traffic to the website is spiking as people try to find out what’s going on.  Your servers are about to fall apart under the load.  And you need to get up a new timetable, some guidance to commuters, notes for the press …

The last thing you need is governance police, talking about compliance and approval processes.  Right?

Right.

But you do need good governance.  You’ve got a lot of decisions to make, and you need to make them fast.  That’s what governance is about—enabling good decision-making.  To do this, it addresses four things:

1. Identifying the important decisions. People make countless decisions every day.  Only a small number of these have a big impact on organizational goals.  Good governance identifies these important decisions and ensures we focus our energy on them.
2. Getting the right people involved in decisions.  Go back to our scenario: You don’t need disputes about who can approve changes to timetables.  In order to act decisively, lines of authority have to be spelled out clearly.  If you need to consult with others, you need to know who they are and how to contact them.
3. Following the agreed process for decisions.  This has two effects.  First, you don’t waste time discussing the decision process in the middle of a crisis – it’s already agreed, so you can get on with analyzing options and making the right decision.  Second, the resulting decision has legitimacy – people can see you’ve followed the agreed process, so they’re less likely to waste time debating the result.
4. Accounting for the outcomes of decisions.  This is about feedback, not blame. No one can make perfect decisions all the time, especially with limited information and under huge time pressure.  But we can monitor and correct for the effects of imperfect decisions.  Good governance gives a clear framework to do this.

Good governance enables organizations to make effective decisions.  It allows them to do this in an efficient way.  And, it ensures they track the results of those decisions and hence steer towards the desired goals.

Conversely, when governance is weak or poorly defined, we see:

• Misdirected effort.  Without a clear framework of authorities and policies, people get pulled into decisions that don’t concern them.  They argue about things that have minimal impact on overall outcomes, leaving little time to think about the important stuff.

• Wasted effort.  People spend time defining a bespoke decision-making process for each decision.  They spend time working out who needs to be consulted.  They argue about decision rights.  This all detracts attention from the decision itself.

• Decisions don’t stick.  People ignore and undermine decisions they consider to be illegitimate.  They appeal to “higher authority”, delaying action and wasting the energy of ever more people.

• Poor decisions.  Decisions are robbed of the time and resources needed for decent analysis.  Key information and stakeholders are ignored.  Options are overlooked.  At worst, decisions are driven by power bases rather than by organizational objectives.

• Lack of feedback.  No one analyzes outcomes, so poor decisions aren’t identified and rectified.  And, the criteria that drove those poor decisions aren’t refined, ensuring that future decisions will be made poorly too.

Organizations that avoid discussing governance ultimately spend a lot of time on it.  They address it over and over again as they argue about decision rights and due process for each decision.  They end up with little energy left for the decision itself.  So, they make bad decisions.

Back to our scenario: You need to decide quickly and act.  This is true in a crisis, and it’s true in day-to-day operations.  That’s why you should care about governance.