Governance Dos and Don'ts

Episode 18: Governance

[00:00:00] James: hello, I'm James.

[00:00:04] Jimmy: Hi, I'm Jimmy.

[00:00:05] James: Welcome to A Job Done Well,

[00:00:08] Jimmy: the podcast about the world of work and how to improve the daily grind

[00:00:12] James: Good afternoon, how are you doing? Good

[00:00:16] Jimmy: Good afternoon, James. How are you?

[00:00:17] James: I'm very good, thank you very much. What exciting, I know the answer to this, what exciting thing are you bringing us to talk about today?

[00:00:24] Jimmy: Today we are covering the exciting subject of governance.

[00:00:28] James: subject of governance.

[00:00:29] Jimmy: governance. It's one of the top things we'd love to hate.

Although, as we talked about in our episode on jargon, it is a kidnap term. In principle, as we'll discuss, in principle it's important. It keeps many people in a job. It's the bane of many people's lives, but it's vital to how teams, companies, cities and countries run.

[00:00:52] James: of many people's lives. But, it's vital to how teams, companies, cities and countries run.

 week I

[00:01:04] Jimmy: this week I can't talk about anything other than We're recording this just after Nottingham Forest played Liverpool where they were robbed by a bad refereeing decision.

[00:01:16] James: Yeah, bad governance then.

[00:01:18] Jimmy: Bad governance of referees, definitely. Anyhow, how's your week been?

[00:01:22] James: Ah, well we are having some landscape, this sounds terribly grand doesn't it, landscape gardening doing.

Although I'm not doing any governance on that at all, I just, I have to make the tea, that is my job.

[00:01:33] Jimmy: has a role to play?

[00:01:34] James: Yeah.

As we like to do, or as I like to do, I have looked up governance , online and this is what I've come back with.

[00:01:40] Jimmy: then. Governance is the process

[00:01:42] James: Governance is the process of making and enforcing decisions within an organization or society. Like it so far?

[00:01:49] Jimmy: do like a good

[00:01:50] James: It encompasses decision making, rule setting and enforcement mechanisms to guide the functioning of an organization or society. I do like a good enforcement

mechanism if I can find one. Effective governance is essential for maintaining order, achieving objectives, and addressing the needs of the community or members within the organization.

[00:02:12] Jimmy: Okay.

[00:02:14] James: And this bit actually I thought was quite interesting. It comes from the Greek term,

um, hang on, I can't pronounce this, verb, kubernetes.

[00:02:25] Jimmy: verb, koubeinai.

[00:02:26] James: What? Which means to steer, but fear not, because I did, I did a secondary bit of research, and somebody online has, very helpfully on YouTube, you can find out how to pronounce it. So here you go, listen to this.

Uber.

[00:02:40] Jimmy: again for pronounce governance in Greek,

[00:02:46] James: We now know how to pronounce governance in Greek. But there's 42 seconds of that. It's thrilling what you can find on YouTube. How Ah, it's beyond me.

So, there you go. That is the definition of governance. But, what does that mean from a business perspective?

[00:03:03] Jimmy: There are different levels of governance. There's lots of things that need governing. So if you think about it, there's , Governance for managing organisations. There's a framework . Which will say, you know, who can make decisions, how do you act.

There's also governance that enables the overall management team for an organisation to operate. effectively, legally, ethically, for the benefit of the organization. So there's that kind of company governance. Then there's also, , project management governance. So, governance frameworks that control how a project or program's going to work, how it's going to deliver, how it's going to have oversight, how it's going to be tracked.

So that's the, the mechanism for, for managing the kind of financial and technical. Yeah. And then the other big one, I think, is risk, and the governance around risk management, which every organization loves to have this. It's a

[00:04:03] James: joy of me not working in the corporate world anymore is I no longer have monthly three hour long risk meetings.

[00:04:09] Jimmy: meetings.

Three hours of your life you'll never

[00:04:11] James: Yeah, all gone up in smoke.

[00:04:13] Jimmy: smoke. And then, , the, the most recent theme around governance has been, uh, ESG. For those of you who don't know, that means environmental, societal and governance. So this is a recent trend, but organizations have to work, have to

look at and report on their environmental and societal impacts.

And the G here is how they oversee that and how they run their business.

[00:04:38] James: That ES and G, is the G about the E and S, or is the G a separate thing?

[00:04:43] Jimmy: Well I think it depends. If you are, you know, I think it is about the EN and S, so how are you managing your environmental and societal impacts, but if you are in governance, it will be about everything, because that's how, um, governance people are.

[00:04:57] James: yes.

[00:05:00] Jimmy: about your, uh, experience of Governance, James, and why do you love it so

[00:05:05] James: Well, I am

Um, I

like to think of myself as being sort of innovative and fast thinking and people no doubt say I'm random, so I'm not Mr. Governance, it must be said,

but I think I have three problems with governance in organizations.

[00:05:21] Jimmy: Yeah, go on.

[00:05:22] James: The

first of is, it's quite often just corporate treacle. As I said, sitting in risk meetings,

I remember on one occasion looking at some charts, and this bloke, he produced some beautiful graphs.

They were circular. And, , everybody in the room was looking at these charts, with their head kinked over to one side so they could work out what the hell the chart meant. It was just pointless. Um, the other thing there is this whole sort of wood from the trees issue. You've got issues coming out of your ears, people can't get through on the phone, and you're sitting there talking about risk.

I mean, really, is it focusing on the right thing, would be my first question.

Then the next thing is, I suppose, if you've just got this, um,

is

it governance or is it control? And if it's control, it's just about lack of trust in organizations.

So, I don't know if you work in an organization, but, you know, trying to get a new piece of software, just to test it, to see if it works, is

desperate in some companies.

So is it micromanagement or is it withholding information? There's my next challenge.

And then the final issue I have with it is sometimes it is just disingenuous. For example, I worked for one organization, they had a big ESG push and their whole thing was about getting people to volunteer , in the community. ,

[00:06:36] Jimmy: Nothing wrong with

[00:06:36] James: with that. Nope.

bad. Ah,

[00:06:38] Jimmy: good. CSR days, can't beat them.

[00:06:40] James: Sundays? Yeah. But what they did was they said that 5 percent of all days would be given to charity, which is great.

And they said that if they weren't going to achieve that 5 percent they would pay the difference to a charity.

And of course what they discovered was they were nowhere near that 5 percent and all of a sudden they got a dirty great big cost line coming up on their budget where they were going to have to Fork out. At which point they started handing out targets left, right and center for everybody to go and do these, , charity days.

Well, it isn't really a charity day if you've been targeted and told you've got to go on it, is it, very cleverly, some of the graduate trainees decided they were going to volunteer and they went and volunteered at a festival.

So not only did they get some days off work for free to hit their targets, but they got to go and see a festival as well. I was just farcical. So there you go.

[00:07:25] Jimmy: value. It reminds me of the, day that we did helping out an, or a charity where they had a cupboard full of, , paint pots and they asked us to move the paint pots from there.

They're, they're one store cupboard to another store cupboard at the other end of their complex.

[00:07:42] James: Yeah. I do remember

[00:07:43] Jimmy: when we, we talked to them about it, they were saying that, , the next lot, move it from that store cupboard back to the original store cupboard and everyone keeps moving it.

But we were like, well, that's no value. And he said, yeah, but it keeps you happy, doesn't it?

[00:07:56] James: So there you go. That is my problem with governance, quite often just pointless.

[00:08:01] Jimmy: not, as many people will know, Mr. Governance, but I do think there is a lot of value that you get from governance.

I think that's the thing, is really not too much, not too little. It is about a balance. I joined one organisation, That were in real, trouble and they had loads and loads of governance, , but nothing was moving because the governance was stifling

[00:08:24] James: it tied everything up.

[00:08:26] Jimmy: Thinned

out the governance, everything got moving and, you know, sure enough, the results started to flow.

And one of the senior guys said to me, I don't know how you did that, that's amazing. All it did was stop the governance where you've just got a load of senior people asking questions that get everyone running around in circles. Also, I sat on the , board at the , FSCS and when I did that, we had non exec directors as part of the governance, as all organisations do.

I got a tremendous amount of help from the non exec directors, and that help was being able to tap into their expertise and sometimes their challenge. So, and that made me definitely think differently about how I was doing things. That's an example where governance works. , when

you're running transformation programs, , making sure that the governance that you have really is focused on the delivery as opposed to governance for governance sake.

Making sure that you had the right involvement from the business areas that were receiving the change. Helped make the transformation worked effectively. , I've seen first hand governance has actually added value and has really helped delivering.

 If you look wider, there are some, , events over the recent years that if they had the right sort of governance, may, may not have happened. And a few examples to bring up there. We talked about it recently, the post office scandal. One of the, uh, greatest miscarriages in, of justice in the, the UK.

there, The governance around the post office and how it was operating, , and how the government were overseeing it was ineffective. , there's

[00:10:02] James: there's an interesting thought there. A lot of criminal cases have to go via the Crown Prosecution Service and that would have provided a level of governance there which was missing because the Post Office were able to bring private

[00:10:14] Jimmy: And they would bring prosecutions that were in their interest as opposed to the public interest or the

[00:10:21] James: Yeah, yeah, yeah.

[00:10:22] Jimmy: know, so that would have been one.

Another great example I think is the, in COVID, where the government created the VIP lane for acquiring PPE. And that's been the result of many, many scandals. And there you've got the situation where the country was in crisis. It's not actually unreasonable to look around and say, right, who of us knows people to,

[00:10:47] James: I think, yeah, because it's what you do.

[00:10:49] Jimmy: it's what you do.

You'd look for help. Who knows people who could help in that situation? But then the governance of how you then decide and execute that, they threw out. The public sector procurement rules, and it was a free for all, and now we're left with millions and millions of pounds worth of, , PPE that wasn't good enough quality, while people have lined their pockets.

[00:11:13] James: suppose there are a couple of examples of, uh, instances where, uh, you know, the

Organizations have governance, probably covering out their ears, but the governance just rolled over and had its tummy tickled.

The two that occur to me are Lehman Brothers and the whole sort of subprime mortgages scandal. Well, I bet they were being governed left right and center and they still managed to cause global economic mayhem. And then the other ones, the Volkswagen and the Knox scandal.

Yeah. Where they, yeah. So I suppose, yeah, absolutely right. I

can see your point. It is useful if it is done well.

I think for me it's a question of balance. So if you think about, how long it's taken us to implement or not implement HS2 in the country,

[00:11:52] Jimmy: my god, yes.

[00:11:53] James: versus what goes on in China,

[00:11:55] Jimmy: Yeah.

[00:11:56] James: To my understanding, which may not be totally watertight, but in the UK there's been a whole load of delay, and that has been caused by, , NIMBYism and planning, and Lord knows what else.

[00:12:06] Jimmy: not around here you're not doing

[00:12:09] James: Yeah, whereas in China, they rolled out railway lines left, right and centre, um, at a fraction of the cost. However, in China they have got railway lines coming out their ears and they're not using half of them. Yeah, and I'm not entirely sure what it's done for the natural environment.

[00:12:24] Jimmy: so, so there, you're right, there's two different forms of governance that have come out with two very different outcomes, neither of which is quite right, which I think goes back to the point around balance, .

[00:12:36] James: Yeah, so I suppose that takes us to two questions, what are the pitfalls and how do you get around it?

[00:12:41] Jimmy: But before we get into that excitement, James, I think we should a short break.

We cover a whole host of topics on this podcast from purpose to corporate jargon, but always focused on one thing, getting the job done well, easier said than done. So if you've got. Unhappy customers or employees, bosses or regulators breathing down your neck. If your backlogs are out of control and your costs are spiraling, and that big IT transformation project that you've been promised just keeps failing to deliver, we can help.

If you need to improve your performance, your team's performance, or your organisation's, get in touch at jimmy at jobdonewell. com or james at jobdonewell. com

[00:13:26] James: I hope you enjoyed our short foray into advertising.

[00:13:29] Jimmy: Fortunately, we're better at improving performance than we are at advertising and marketing.

 

[00:13:35] James: So, go on, talk to me about pitfalls.

[00:13:37] Jimmy: pitfalls.

 Often you see with governance is it's very, it can be very bureaucratic. Yeah. So it's not really focused on progress and outcomes, it's just the bureaucracy of things. Putting

[00:13:47] James: in tables and ticking

[00:13:49] Jimmy: you know,

It doesn't necessarily focus on the right things. How many risk frameworks are there and how many do you need if you could actually measure the value of a risk framework and what's it actually say to you versus the cost of doing it and the, missed opportunity cost,

[00:14:06] James: It gives

[00:14:07] Jimmy: it gives the illusion of control.

It makes you think lots of governance make people, particularly senior people think everything's in control. One of the other things is duplication in governance. So rather than saying, uh, you know, we're going to present one, one story, one deck and that's going to work for our stakeholders.

You have one that you talk to the steering committee about another that you talk to the teams about another, you talk to the project team about and they, they bear, they, they often just duplicate work. I think also they pander to the needs of individuals. So if you've got an individual that is very risk

[00:14:47] James: uh,

[00:14:47] Jimmy: then they will want lots and lots of governance.

Or if you've got somebody like me who's a bit more of a risk taker, I want less and less governance. Neither might be the right answer.

Too streamlined, too little governance, you can completely lose control.

Too much governance, you can stifle

progress. And

you know, make sure it's focused on the right things. At the start of projects , a terms of reference is created. And it's always, , sends a chill down your

[00:15:17] James: It makes me cringe.

[00:15:18] Jimmy: But . Thinking about the , scope of your governance at the outset and writing that down is quite important.

[00:15:25] James: important.

Yeah.

[00:15:26] Jimmy: Sometimes governance is used to, um, create, as work generation. It just creates endless work for people who work in, you know, governance roles, funnily enough., it's in their interest to create more work,

[00:15:40] James: it multiplies, doesn't it? People, on the whole, they don't want to break the rules because it's more than their job's worth. And so therefore they won't challenge the governance, and you just get more and more and more built in.

And there's that old phrase, , processes make good slaves but poor masters, and I think the same is true . Governance makes good slaves but poor masters.

[00:16:00] Jimmy: So, there are some of the pitfalls with, with governance ? What does good governance look

like?

[00:16:05] James: creates. But if you want to good governance comes back to the thing we talk about all the time, which is purpose. one. Yeah.

[00:16:22] Jimmy: And

a constant theme through.

[00:16:24] James: do you

fulfill it? So let me give you an example, and I'm not saying these are right or wrong, but what is the purpose of your organization?

Yeah. Right, is it to maximize shareholder value? And do you see that as a consequence of what you're doing or as an objective of what you're doing?

 Is a manager's duty to the shareholder or to the corporation?

It's quite interesting when you think about it, because if you, go back to, well historically, you look at the Quakers, and Wedgwood and Cadburys, those sort of organizations, and more recently companies like Lever Brothers and Heinz, but they really had huge, um, social responsibility. And so I do think that more important than governance actually is being very clear about the purpose of your organisation and the values that you want it to show, and then the governance will follow from that.

[00:17:11] Jimmy: So I think you're right, James, that should , act as an anchor for you. What does, what is the governance there for? And then once you've got that, I guess some of the attributes that, you know, we've seen in terms of good, good governance,

apart from the fact, yeah, it clearly supports the purpose and that outcome.

And you keep coming back to that every time. Is it proportionate?

[00:17:33] James: it proportionate?

[00:17:34] Jimmy: Is it not overly controlling or under controlling?

 It isn't just, what does the regulators want, what does the board want, what do the individual on the front line, make sure it's in balance.

I really think how does it accelerate progress or the quality of delivery?

Does it mean that the governance enables you to have access to experts, challenge from experts? Like I was talking about in, in my roles at FSCS, does it give you access to the funding, the budgets that you need in order to drive progress? Does it give the right level of oversight and control?

[00:18:09] James: I think for me, that's the really big point, right? I just repeat what you said, but how can it help accelerate progress or quality of delivery? Because it is all about where you're trying to lead your organization to.

[00:18:21] Jimmy: and I think I would, in setting up the government practically, I'd always avoid templates. Start with nothing and build up from what you actually need. Same with structures, what's actually needed, rather than really heavy structures that just take everyone's time out, and what's actually really

[00:18:41] James: always a bit worried when, um, so I am the process guy, but when somebody turns around to me and says, we need more process.

[00:18:47] Jimmy: Yeah.

[00:18:48] James: you need the right process.

[00:18:49] Jimmy: and I think that's the mistake people make with governance. If the governance isn't working, so what we'll do is put more governance? You know, do what you've always done, you'll get what you've always got.

[00:19:00] James: Yeah.

[00:19:01] Jimmy: Also make sure the right people are involved, the right experts.

So when, delivering a project, rather than just having a project manager deliver a project, it was always good to have a business lead alongside them.

 Considering what your external stakeholders, your regulators and auditors, uh, would, would need is also important. I think in certain circumstances, you have to remember that what you write down may be given in evidence in the future.

[00:19:29] James: that happened to you? It has happened

[00:19:31] Jimmy: has happened to me actually that we, , one organization I was at, we were taken to, Um, a judicial review of a decision that we made and one of the things that we had to do was go back and gather all of the emails and all the communication to do with this and there were a number of emails that a number of us had written that actually, you know, a few years later, you didn't really want them to be saying, you know, just get this done, do it this way, they were things that actually They did become evidence, and they weren't really how you'd want to position things.

So just, , a lesson to be learned there. And always ask, how does this governance help deliver on the overall purpose?

[00:20:14] James: and,

does it align with the values?

So there you go. In summary, where does that take us? Alright, I can see governance is critical, but only if you want to lead people somewhere.

[00:20:28] Jimmy: And importantly, where do you want to lead them to? What's the purpose and values you're trying to support with governance?

[00:20:35] James: And governance for governance's sake is futile, can be bureaucratic, or just disingenuous.

[00:20:42] Jimmy: it is hugely important. So some questions to ask yourself. What is your purpose? Are you governing in the right direction?

Is your governance sufficient? Is it stopping the wrong things from happening?

It? Is it helping the right things to happen?

[00:20:58] James: it helping the right things to happen? So I don't think James that you are ever going

[00:21:09] Jimmy: so I don't think, James, that you are ever going to be Mr. Governance, but at least you've learnt the importance of doing it right, and become a little bit more tolerant about it.

[00:21:19] James: Yeah, and how to lay it on with a trowel.

[00:21:22] Jimmy: Thanks everyone. Hopefully you've enjoyed this week's episode.

If you've got any questions or comments on governance or anything else please feel free to get in touch at jimmy at jobdonewell. com

[00:21:33] James: Yeah, and if you've got questions about governance you need to send it to jimmy at jobdonewell.

com Thank you very much. Have a good week.

[00:21:41] Jimmy: Thanks everyone.

[00:21:42] James: Cheers now.

[00:21:43] Jimmy: If you'd like to find out more about how James and I can help your business, then have a look at our website at ajobdonewell.Com.