Business Process Management

A Practical Approach to Organizational Governance

Organizations of all sizes and types are generating more and more data. And most organizations instinctually or intentionally consolidate and save the data. It makes sense: data can be converted into information that aids decision-making in support of the organization’s goals.

But for many organizations, reality isn’t matching that theory. Are you putting a lot of effort into bringing a lot of data in…and seeing little value coming out? An organizational governance program will turn it around.

When data isn’t being gathered or organized efficiently, you know. It’s in the form of:

  • Managers complaining about the need for automation, better processes, or system modifications due to timeliness, accuracy, and consistency of manually-entered data.
  • IT pointing out security weaknesses or monitoring gaps.
  • Reports taking days or weeks to prepare because data needs to be manually normalized and verified.
  • Legal and compliance demanding controls to mitigate risk.

Your company is likely in the midst of a digital transformation. From adding or upgrading enterprise resource planning (ERP) software, building out a content management system, or implementing IT Service Management (ITSM) tools, there are so many opportunities for digitizing and automating tasks and data.

These installations and upgrades often expose the sheer amount of data an organization is collecting – and that its governance is lacking. The good news is that your digital transformation will allow the opportunity for better governance. Mundane tasks can be improved or automated, processes can be updated, and controls established to improve data quality and create time and cost improvements. Establishing organizational governance enables faster data-driven decision-making and forecasting; process improvement; and compliance, security, and auditability standards.

What is Organizational Governance?

Every organization performs activities intended to help it achieve its objectives. An effective organization carefully designs its activities as processes that are governed, data-driven, meet regulatory standards, and create efficiency.

Organizational governance is a holistic approach encompassing the processes, standards, rules, and practices an organization follows. It guides operations and administration, ethics, risk management, compliance, and more.

Organizational governance supports companies’ compliance with regulations such as Europe’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), Generally Accepted Accounting Principles (GAAP), labor and environmental laws, and other industry and company-specific guidelines.

It is also a tangible demonstration of a company putting its values into action – important to customers, communities, and investors. Governance can also be created to ensure attainment of internal quality and ethical standards such as confidentiality, data or production quality, and diversity and inclusivity.

Following organizational governance standards produces reliable data and information. These enable company leaders to knowledgeably and confidently set objectives, monitor performance to identify opportunities for improvement and innovation, audit and report on compliance with internal and external regulations, and forecast material and personnel needs and future performance.

Making Organizational Governance a Strategic Business Approach

Formal organizational governance dictates what is governed, who does the governing, and how the governance is executed. Carefully-placed controls monitor the most important points in a system or process. The points in which something is created or maintained – data, a component or product, or a key decision, for example – are particularly important.

The design and documentation of governance standards and controls signals a strategic business approach to the two groups of people who are responsible, accountable, consume and informed about governance:

  • Stakeholders are people who care about the content and results of a company’s governance: leadership, business owners, advisors, investors and stockholders, and, depending on the company’s size and industry, clients, consumers, and the media.
  • Executors are people who perform work related to governance. They include in groups like Controls and Compliance, Data Stewardship, Data Management and Data Strategy, Legal, Reporting and Analytics, Process and Project Management, and Monitoring.

We recommend that companies organize their execution teams into domain-specific tactical governance councils, to enable quick issue management and resolution. Councils answer policy questions, create new governance controls, and review issues above the decision-making power of a single individual. Depending on the size of the organization, the leader from each council may form a strategic council that reports to an executive council.

Characteristics of Successful Governance

Effective organizational governance systems support their company’s goals. They are thorough, documented, and available to all relevant stakeholders. Here are some important characteristics:

Accountable

Accountability is the cornerstone of good governance. In general, your company is accountable to those who will be affected by its decisions or actions as well as the applicable rules of law. Your governance should commit to this external accountability and document the corresponding functional groups or roles whose work must adhere to the standards documented.

Transparent

Transparency means that information should be provided in the medium best suited to the audience; that it should be freely available and directly accessible to those who will be affected by governance policies and practices and the resulting outcomes; and that any decisions taken and their enforcement are in compliance with established rules and regulations.

Participatory, Inclusive, and Consensus-Based

Governance requires research to identify and understand stakeholders’ interests. The information gathered should be sorted, combined, and discussed to reach consensus about the practices and standards that are in the best interest of the company and its stakeholders, and how they can be achieved in a sustainable and prudent manner.

Responsive

Good governance requires that organizations and their processes are designed to serve the present and future best interests of stakeholders within a reasonable timeframe.

Effective

Good governance means that the processes implemented by the organization are holistic and realistic. They encourage the best use of the resources – human, technological, financial, natural and environmental – at a company’s disposal. They encourage – or even require – quality and innovation and produce favorable results that meet the needs of its stakeholders.

Improving Your Organization’s Governance

Organizational governance is typically formalized and optimized in phases, often beginning with an initial governance structure that reflects or meets the needs of the company today. As a company grows and matures their governance framework, more controls should be added: councils, processes, measurement and reporting tools, and performance indicators. Disciplined governance only becomes more important for driving decision-making to identify opportunities, maintain healthy operations, and ensure internal and external compliance.

Thought Logic’s Business Transformation and Technology group enables continuous improvement and transformation so your organization can maintain and expand its competitive edge. We understand organizational improvement is not a one-time activity: it is a discipline. We help analyze, design, and measure business processes to optimize the interconnection of people, process, and technology. The end result is a cohesive, agile system that can respond to, or lead, market forces while maintaining a healthy ROI.

More Thought Logic Thinking
2020-03-24T15:30:19-04:00