Assessing Governance - A Critical Step for Successful Change

Perhaps one of the absolute truisms is that we live in a changing world. 

Disruption was something we used to hear about when listening to the traffic reports, now it presents as a challenge to survival in business as new players emerge and start to operate in a way that is not constrained by traditional thinking and long-standing practices.

There are many opportunities that emerge from embracing change and leading a transition from legacy practices to take advantage of new developments.  Full scale transformations (that genuinely foster innovation and streamlining) are hard work - not surprisingly, a significant number fail to deliver the hope and ambition they promise.

Despite the challenges transformations present, as my colleagues in RSM US have highlighted  (4 Considerations when preparing for Digital transformation), it is becoming increasingly clear that if you do not seek to disrupt, you will be disrupted. 

So how do you make sure you don’t miss the boat or take the seemingly safe option of doing nothing and hoping, as the dinosaurs no doubt did, that things will return to normal. 

The successful organisation of the future is one that is closely tapped in to the needs of their customers, that exploits gaps and anticipates emerging requirements.  We encourage our clients to embrace change, to build a culture that encourages and facilitates innovation and that actively nurtures a talent pool to ensure the skills of today and the future are available.

Changing WorldIt is important to:

  • dare to be bold and dare to be different;
  • support speed and agility rather than the slow and deliberate governance;
  • encourage integrated and collaborative teamwork rather than silos; and
  • encourage employee centric practices to capture and enthuse the talent you need.

But the starting point is a laser like focus on customer needs that is supported by client centred data.

Governance is a critical and often overlooked element in successful change.  Much has been written about governance and there are many definitions, often closely linked to compliance obligations, especially in heavily regulated environments.

The simple definition we like to use, is based on the very meaning of the term – governance is about the way we steer.  It includes all the policies, procedures and controls an organisation uses to direct activity and manage resources.  The governance in an organisation speaks very much to the values and culture in place and as Drucker is credited with saying, “culture eats strategy for breakfast”.

The Three Little Pigs story is not just a story for children – this well-known fable masks a powerful lesson on risk assessment and governance.  All three faced the same risk but only one (used RSM and) got it right. 

Have you ever thought about what may have happened if heavily centralised governance had prevented a request to build a house of bricks?  What if some central bureaucratic committee, reviewed the risk assessment and remote from the front line, determined “we don’t do bricks”?

While there may be some lessons in risk assessment (for another day) there are lessons in accountability and enabling local managers, who are best place to read local conditions, make their own decisions – and answer for them.  Perhaps after they had seen off the wolf, the internal investigation would have proceeded and the 2 pigs who misread the risk and were left with nothing, might have been held to account. 

While most local managers are not dealing with a hungry wolf – they may well be facing significant threats to their survival.  Threats that can emerge quickly and that need a swift and decisive response.  But reacting to a threat is not all that needs to be done – organisations need to disrupt others, proactively challenge prevailing norms by closely connecting those closest to the front line with the strategy room.

The governance, including the culture, structure, decision making, reporting routines and accountability and reward structures must all be aligned around reading the signs and rapidly deploying new practices, new technology and new products and services.

To assess whether governance is a road block or enabler of change, we have found it helpful to work with our clients on various aspects of governance.  The way we approach this is to gather a group that represents all levels in the organisation and to work through a self-assessment on key aspects of the governance framework in place.   For each element, we pose a series of questions as “conversation starters” and then encourage dialogue in an open and transparent manner throughout these specially convened workshops. 

Governance While the scope and questions are tailored to meet specific needs we would typically explore the following aspects of governance:

  • Vision, Strategy, Value Proposition
  • Leadership
  • Values and Conduct
  • Decision Making Processes
  • Risk Management
  • People Management

Given that change is the new normal and that change requires new levels of flexibility, agility and leadership, this approach can often be the beginning of a new era.  We have found the sharing of perspective when the C Suite meets the front line to be among the most powerful aspects of our work in this field. 

To ensure you are a disruptor, rather than one of the disrupted, we encourage all our clients to undertake this type of governance health check.  The learnings are remarkable and the impact immediate.

If you have any questions in relation to this article, please contact your local RSM adviser or Danny Casey.