A minimum of control is required in any organization (as I wrote about in my last blog post).
A key part of a control process is to have a system where you review proposals (such as proposals for new projects or investmentes) – and select the ones that fit your strategy and which have the highest chances of succeeding.
Once the project is underway, there needs to be a system for following up what happens and ensure that the goals are met.
This is basically the meaning of “control” – to ensure that intentions are realized or that standards are followed.
Traditionally, there was mainly one way of doing this: Ask your manager! If the manager approved, you would get the resources necessary, and could go ahead.
In today’s flatter organizations, such “vertical governance” still exists, of course, but it is complemented by “horizontal governance”.
Meaning that people further down in the organization will participate in the governance process.
As two scholars, Child & Rodrigues (2003), put it:
The more that hierarchy is replaced by devolving initiative to employees, the more they will (…) participate in control.
In some organizations that I work with, people use the term “checks and balances” to describe their system. The term is borrowed from political science, and refers to how the three branches of government relate to each other.
So in a firm, it may imply that people at the same level are cross-checking each other.
For example, I did some work with a small oil firm last Fall. In this firm, they had asset managers with responsibility for one (or a group of) oil fields.
If the asset manager wanted to make an investment, say, to upgrade the technology on a platform to increase the recovery rate, he or she would need get the initial approval from two colleagues: One technology advisor (who would verify the technical solution) and one financial controller (who would look at the economic side of it).
Another solution is to create governance bodies of various types (steering groups etc.) and have them review and follow up projects. This may constitute round two: After initial sign-off by people at the same level, a proposal may go to a steering group for final approval.
In principle, it sounds like a good idea that several people – from different functional backgrounds – participate and review proposals.
But in several firms that I have worked with, people complain that everybody is involved in everything. A colleague told me of a well-known Danish firm, where managers needed sign-offs from 19 people before they could proceed with a project.
In other cases, there are multiple committees that are involved in decision making processes, sometimes with unclear authority and overlapping decision domains.
Complicated horizontal governance may be as slow and cumbersome as complicated vertical governance.
As pointed out by Heaslip (2015):
Having multiple secondary committees may significantly impede decision-making agility. Each interaction between a program team and its governance or review committees has the potential not only to produce unanticipated outcomes in the form of recommendations, imposed constraints, or conditional agreements, but also to conflict with the recommendations, decisions, and constraints from other committee interactions.
I once did a fairly detailed mapping (see this conference paper) in an organization where we asked employees who they considered to be superiors that they needed approval from. When we visualized the results as a network diagram, it resulted in a spaghetti of links.
The people that they listed as approvers were quite often someone other than their boss, and could be somebody at the same level and in a different department.
My conclusion was that this created a “hidden matrix” in the organization: In effect, people not only reported to their formal line manager, but also to other employees or managers.
So we need to balance two concerns:
- We want sufficient control and accountabilty, so we do need a “governance” system consisting of roles and committees that review and approve proposals, and monitor progress once a project is underway.
- At the same time, we don’t want to stifle initiative – and create unecessary complexity – by creating too cumbersome processes.
What is your experience with this? I would be interested in hearing how you go about it in your organization.
Linkedin post: Why we need more than RACI to create clear accountabilities
Child, J. and Rodrigues, S.B. (2003) Corporate Governance and New Organizational Forms: Issues of Double and Multiple Agency. Journal of Management and Governance, 7, 337-360.
Heaslip, R. J. (2015). Managing Organizational Complexity: How to Optimize the Governance of Programs and Projects to Improve Decision Making. PMI White Papers.