Rightsizing organizational governance

Lars Vollmer made me think with his latest book about self organization. There is some sort of a chicken and egg problem – as soon as there is a rule or policy there needs to be some governance to verify its adherence.

“Governance is the way the rules, norms and actions are structured, sustained, regulated and held accountable.”

Many organizations have developed tons of rules and policies. I don’t think that this was planned upfront – it happened over time. Let’s rock an idea and think about what would happen if those rules and policies would be deleted? Would this lead to chaos?

This depends I guess on the organization. If the organization is driven by an external purpose and a mission, then the members of the organizations would continue to do the best to move the organization towards the vision. In a healthy organizations mistakes made by individuals would be corrected by the others on the base of common sense and shared principles. The organization learns by example how to act. It walks the talk.

In some organizations the members must sign that they have read and understood all rules and policies. In a healthy organization this is no issue – there are a few rules only and it is not a problem to keep them consistent and contradiction free. In large bureaucratic organizations such behavior can only have the purpose of ‘backside covering’. Somebody needs arguments he can use in case something goes wrong – look, it was clearly stated in the policy.

An organization which has many rules needs a lot of governance. Somebody needs to train the people on the rules, and track that all the rules have been followed. For the members of the organizations this reduces the amount of personal responsibility – it’s not intended to do what’s outside of policy even if it would make a lot of sense and it is fine to do things which don’t make sense as long as they comply to the rules.

Complexity is one of the key aspects in a world of VUCA (see Dance on the VUCAno) – it is not so difficult for a common sense based organization with a clear purpose and healthy structures to adapt to the increasingly fast changes. But it is impossible for a governance dominated organizations to do so for at least the following reasons.

  • Policies cannot be changed and adapted fast enough and keeping them free of conflict is impossible.
  • Members as a consequence have to react according to policy and will miss important developments and client needs.
  • The ones who define the policies will try to embed all eventualities to be on the safe side – the amount of rules grows.
  • Every mistake tends to result in new or changed rules.

It would be much better to have a small set of principles. Please note that a principle is not a rule – it is a meta rule which helps to identify the right decision. Many organizations have such principles in addition to the rules and policies. Just be careful to really stick to principles and avoid to state the obvious.

So what would be a good approach.

  • Clear vision and external purpose everybody in the organization shares (see Giving Direction)
  • A few guiding principles which help to channel the activities
  • The minimal set of rules and policies required to allow the organization to operate safely

Then let the people create the social structures and norms based on this.

Author: Mad Meier

Exploring the blurring boundaries of the physical and digital realities and the interplay of innovation, technology, and society.

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