I went to a fascinating talk by Adam Hoyle, Managing Director, Tradax Group Ltd, on Corporate Best Practice in Public Sector Bidding. I thought there were a number of lessons that apply more generally to running all kinds of projects that would be worth sharing.
Seven best practice tips
- Don’t start projects unless they align with your overall strategy
- Make sure you have thought through exactly what decision-making authority each person involved should have, and that this has been clearly communicated and understood
- Give everyone involved a clear written briefing pack at the start, providing them with all the basic information about the project that they will require
- Standardise what you can – but everything that is standardised needs an owner who takes their ownership seriously
- Think hard about what information would really make a difference to your performance if you had it, and work creatively (legally of course) to get it – for example using FoI requests
- Use the information you have intelligently – there is probably much more that you can learn than is immediately obvious, if you put it all together
- Transitions between teams – for example on winning a bid, or starting to operate an asset – are high-risk boundaries, which need careful planning to make sure they go smoothly
So, seven articles later, where does that leave us? We have talked about 15 principles for designing your internal governance, and I have listed them all together for you below for convenience. However, I do want to re-emphasise one thing I said at the beginning:
“What good governance is NOT about is bureaucracy, box-ticking and delays. It requires finding balances – between control and practical delivery; between the risks of delegation and the cost of control; between wide ownership of decisions and strong accountability for them; between a simple structure and efficient decision-making; between minimum overhead and an effective audit trail – which provide the optimum basis for success. Every organisation has different arrangements because the optimum trade-offs depend on the context.”
The principles for internal governance are just the things you should have in mind when you design your system. That does not mean that the result has to be complicated. It should be ONLY as complicated as you need it to be in your particular circumstances. If you are a large public sector organisation, it may be necessary to be at the high-control end of the spectrum. If you are a small development company, you probably need something much lighter-weight and more flexible – but that is not a reason for not thinking about it. Some principles are good-practice rules which are likely to apply everywhere. Others are choices you need to make. The important thing is that the choices you make should be deliberate, and should be consistent. By deciding exactly what principles for internal governance you are going to work to before you start, you give yourself the best chance of success.
15 Principles for Internal Governance
- Authority and accountability must go together.
- No-one will have authority to ‘mark their own homework’ (i.e. conflicts of interest will be avoided).
- Collective and Individual Authority are different. What will their respective roles and interfaces be in the structure you will create?
- The governance structure should be strictly hierarchical. All bodies which have Collective Authority must have a place within that hierarchy.
- Individual Authority is delegated through the line management arrangements, but it forms part of the overall governance structure and must join up seamlessly with the rest of it.
- The design should start by establishing those areas where the Board should make delegations (starting by noting the matters already reserved to the Board), and how they should be grouped.
- What (if any) dual-key approval arrangements are desirable?
- The authority grid should include qualitative as well as quantitative delegation limits, and should not be restricted to areas where a financial limit can be set.
- Escalation levels will be set to provide an appropriate volume of requirements to escalate, decided on the basis of business need and practical delivery.
- Decisions about committee membership should be made in the light of the delegation levels set, not the other way round.
- The list of staff (or roles) to be included as members of the Collective Authority bodies will balance the need for ownership of decisions with minimum meeting membership.
- Clear rules for meeting attendance will be agreed and maintained.
- What formal documentation (e.g. Terms of Reference, Letters of Appointment) will be mandated?
- In what circumstances will formal authorisation and/or acceptance of documentation be mandated?
- How widely will the arrangements be communicated?
- The Midas Touch - what is Governance for?
- The Midas Touch again - Starting to build Internal Governance
- The Midas Touch again - Authority and Accountability in Internal Governance
- How many ways can you design a tree? - Hierarchy in Internal Governance
- Snakes and Ladders - Delegation and Escalation in Internal Governance
- Why are YOU here? Choosing members of Internal Governance Meetings
- What's in a word? Documentation for Governance
Reading reports on the meeting on complexity in organisations that took place in Vienna last week, I started reflecting on my own experiences of complexity. As a lapsed physicist, I know that it is a fundamental law of nature that disorder (which is often much the same as complexity) tends to increase with time. The only way to reverse this trend is to do work – and even then the reduction in disorder is only local. I can’t think of any experiences that suggest that this is not just as true for organisations as for nature in general!
Most managers focus mainly on what their own areas need. They seek to improve their areas by doing work (designing and introducing changes of many kinds), and often succeed – but frequently the local success may be at the expense of making the joining up with neighbouring areas worse: overall, complexity may have increased as a result of their work, just as the laws of thermodynamics say it should!
Agree key principles to manage complexity
Avoiding that problem is not easy, and only partial solutions are possible – managers have to be trusted to manage. It can help, however, to provide a top-down framework designed to fix key principles organisation-wide, and then to allow managers the freedom to develop local solutions to problems within that framework. A self-consistent set of- Vision and values
- Strategic objectives
- Simple and clear structure for decision making
- Delegated authorities and accountabilities
- Key metrics
[caption id="" align="alignright" width="300"] English: Corporate Governance (Photo credit: Wikipedia)[/caption]
All organisations have to find an appropriate balance between central control and local freedom to act. Governance provides the framework and checks and balances within which this is established and managed. It ensures that the process by which decisions are made is appropriately managed. It allows them to be seen to have been taken in the best interests of the shareholders, taking account of all the demands on the organisation, the risks, and the information available at the time.
Review your governance
If several of the following statements are true of your organisation, it may well be a good idea to review your governance arrangements.- The governance structure (meetings and delegations) does not constitute a simple hierarchy underneath the Board, with clear parent-child relationships and information cascaded up and down the hierarchy
- The governance structure is not clearly documented (e.g. including a consistent set of Terms of Reference), communicated and understood
- People do not have clear written instructions as to the limits of the authority that they have been given, or these are ignored
- Committees are allowed to approve their own Terms of Reference and/or memberships
- Governance meetings happen irregularly, or with papers which are poor quality or issued late
- Senior staff are allowed to ignore the rules which apply to others
- Decisions are often taken late because of papers missing submission dates, inadequate information, wrong attendance, submission to the wrong meeting, unexpected need for escalation, etc
- There is a feeling that the governance process is too bureaucratic