” It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.”
– Thomas Sowell, Economics Guru
If you want to get serious about organizational decision-making then you have to get serious about governance.
What is governance?
Governance is the system of rules, practices, and processes by which decisions are made in an organization to allocate scarce resources. Governance is one of the most overlooked yet essential tools in the strategic leader’s toolkit. I typically organize decisions around budgets, time and people; the main scarce resources of an organization.
When I come into leadership situations one of the first things I assess is the governance of the organization. And, if there are issues with the governance, I quickly address them to get a better hold of the reins on decision making. If the governance is not defined, transparent, and operating a high level of performance, it is often a telltale sign of deeper issues.
How is governance properly implemented in organizations?
Strong governance is not difficult; it just takes implementing best practices and diligence. Typically, finance owns budget governance, HR owns people governance, and the functions own governance tied to time and resources. Let’s go over governance best practices.
1. Rules & process
Strong governance necessitates pre-defined rules and processes. First, create a basic schedule of leadership meetings, outlining the attendees, agenda, and decisions. Then, over time, work on implementing the more formal rules and processes of governance, including decision thresholds that necessitate evaluation, signing authority, voting protocols, necessary documentation, and other important elements tied to the decision-making.
Big decisions are tough. They are the forks in the road for the strategic course of organizations. Strong governance enables the rich debates necessary to understand all of the different important angles and arguments of a big decision. Ensure meetings have a culture of respectful debate, based on facts and sounds arguments.
Strong governance is consistent in getting the necessary approvals to allocate certain resources. It is important to outline how the team makes certain decisions. And, to ensure opportunity cost is properly assessed, implement appropriate checks and balances.
4. Transparent communication
To align and conciliate people provide transparent communication on key decisions. Whether they are in meeting notes, emails, or some other documentation, people want the facts on big decisions, including the salient debate facts, the outcome, and the implications. The more transparent strategic leaders can be with their governance, the more team members will feel involved and committed.
5. Follow Through
Big decisions often trigger the allocation of resources, a momentum shift, and a mountain of action. Make sure there is the appropriate follow through and resources to drive effective execution.
DOWNLOAD THE GOVERNANCE POWERPOINT WORKSHEETS
To get you going on improving your governance and decision making, download the free and editable Governance PowerPoint Worksheets.
1. GOVERNANCE DECISION PORTFOLIO EXERCISE
You and your team need strong governance for your portfolio of important decisions. In this exercise, list out and prioritize the significant decisions you and your team are responsible for and organize them by tier 1 decisions, which need formal governance, versus delegated decisions. You can organize the decisions by people & org, initiatives & plans, and spend & budgets, or you can change the categories to be more specific to you and your team. Once you organize the decisions, lay out the general governance strategy for tier 1 decisions versus tier 2 decisions (delegated). Once you finalize your decision portfolio, share the portfolio with other stakeholders to align everyone on the governance.
2. GOVERNANCE EXERCISE WORKSHEET
Use this to define the governance for important decisions deeply.
3. MEETING CHARTER
Collaboratively defining the charter for important meetings can really improve the overall team performance, problem solving, decision making, and execution.