Start where you’ve got the best chance of success…….
Start where you’ve got the best chance of success … that’s the best bit of advice I can give any organisation setting out on the ‘whole-of-organisation governance’ journey. Nor is it realistic to think you can do it on your own. You have to build support, break down the silos and get everyone on song. For my part, I began where I believed I had the best chance of success; with other leaders in the organisation who had the same passion and drive as I did to put in place the framework and linkages needed to deliver outcomes we want.
Essentially there are two models. The ad hoc approach is organic, can be built over time and works best when there is not full buy-in. Starting with the top priorities you chip away over a longer period to get the outcomes you want. The other option is deliberate, imposed and can be ‘dropped in’. Irrespective of which way you go, apply a business lens to your ‘whole-of-organisation governance’ framework so that it supports your strategy and is not seen simply as red tape. Most importantly, as your business strategy changes, your model will need to adapt also.
Take NRMA as an example. We operate in an increasingly fluid and disruptive environment where consumer preferences in retail and motoring continually change. We have to be agile and responsive and that means our culture, risk profile and the way we perform everyday functions must facilitate those behaviours. Our decision-making processes need to be flat and streamlined. Our communication and feedback loops fast and efficient. And our performance management needs to reward the right achievements. That’s why a whole-of-organisation approach to governance is so important for our organisation.
Once the board has agreed, challenged, tested and approved the strategy you have to ask yourself: Does my organisation have the capabilities and culture as well as the right decision-making structures, accountabilities, communication and reporting processes to deliver on that? A ‘whole-of-organisation’ governance approach integrates and aligns all these elements so they support you in implementing your business objectives. It’s about developing and clarifying policies and processes so that people understand what they have to do to keep the company ‘on strategy’ and are accountable for it. This is not about compliance or red tape — it’s about improving the way you do business.
The key pillars to start with are your strategy, culture, capabilities and risk appetite. The remaining elements, such as delegated authorities, assurance, accountabilities and the like, should fall into place around that. Then once the board and senior executives have the core pillars ‘right’, they need to be cascaded throughout the organisation. This will require ongoing communication, explanation, training and feedback so that they are actually taken on board and reflected in people’s behaviours.
A good starting point is to identify four or five priority components in your governance framework that need changing.
One or two of them may be simple to implement, such as delegations of authority. Others — like culture and risk — may take more time to become ingrained. But the important thing to remember is that it’s not about just writing board charters and new policies and posting them on the internet where they may or may not be read. It needs to be backed by a process to ensure everyone understands what’s expected of them and actually behaves in accordance with the organisation’s desired culture, values and risk stance. This can take time and requires leadership from the top and ongoing, consistent communication to cascade it so that everybody eventually ‘walks the talk’.
If you are considering implementing a whole-of-organisation governance framework, Governance Institute of Australia’s new Guidelines: Whole-of-organisation governance is an excellent implementation roadmap.
How you adapt the Institute’s guidelines will depend on the size of the company, and implementation will obviously be simpler in a smaller outfit. But the value of ‘whole-of-organisation’ governance is that it extends governance from its ‘two-dimensional’ focus on boards to having a ‘three-dimensional’ organisation-wide impact.