Archiv der Kategorie: Governance

Governance covers regulations and control aspects.

Rules rule rules that rule rules

In times of increasing bureaucratization it becomes more difficult to oversee the innumerable rules that must be followed. Since the employees act autonomously and each detail cannot be regulated from the top, they need a clear set of rules. In order to provide the best possible directions, the enterprises use for example COSO and COBIT as a guideline, i.e. standards for implementing the Governance. The trend to a constantly growing number at standards is foreseeable. Let’s remember the different standards in Project Management. Do we have to adjust ourselves to the fact that in the future rules rule rules that rule rules?

Schlangebeisstschwanz

A common denominator in the rules is the fact that they follow certain rules. The following aspects define the quality of the Governance.

  • Transparency
    In this case the decisions, the decision path and the principles of leadership should be made accessible to the employees. They should always be able to understand, for what reasons the top management deploys certain rules. At the same time they should understand the point of control for their own influence.
  • Economy
    In order to create a reasonable handling of scarce means, the procedures should be designed accordingly. These definitions prevent an uncontrolled growth of rules and procedures. Beyond that, they reduce the expenditure for the introduction of guidelines and enable over time an improved use.
  • Participation
    The employees are motivated by personal sharing and participation in the designing of the enterprise. They receive with the regulations the right and the obligation to participate in the decision making and the implementations. For this reason clear points of control for the participation of the employees are inserted in the procedures.
  • Competencies
    Through clear assignments of authority and responsibility defined tasks prevent Muda and friction losses. All areas are considered as well as the overlap of authorities and mutual obstructions are prevented. The employees know through the transferred rights and obligations, what they have to do – and what not.
  • Rule of law
    Through the bindingness to the rules for all, without exception, the individual is reinforced. In order to get a functioning interaction, it must be guaranteed that that all are equally treated. For this purpose it needs in case of conflicts a clear procedure as well as an independent board of arbitration that can be called by everybody.
  • Justice
    Through an adequate and demandable reconciliation of interests, the justice offers a general framework that goes beyond the detailed rules. The values of the enterprise need a common, fundamental understanding about what is right and what not. A respective understanding avoids a variety of detailed regulations.

In order to guarantee that the Governance is adapted to the respective conditions, a clear control model is required for the enterprises. Thus, COSO offers a framework for the financial reporting and Cobit for the IT. The Governance can be introduced correctly at the right place with these frameworks.

Bottom line: The build-up of a control system, the Governance, is an effective means, for steering enterprises or departments. Standards facilitate reliably the implementation. It is however important to resist the regulation craze. More is not necessarily better. Rules rule rules that rule the rules is the end of effective rule sets.

Compliance – Life-threatening thrombosis in organizations

Surprise, surprise. As soon as you offend against the law, you make yourself liable to persecution. This is valid for cartels, bribery, embezzlement and all activities otherwise prohibited by law. Additionally companies afford more and more job positions to take care about the formalization of procedures and the appropriate good behavior. The more global an enterprise acts, the more complex become the rules. How can you prevent a life-threatening thrombosis in the procedures of the enterprise?

Schilderwald01

An organizational thrombosis is a sickness of business processes. In this case internal regulations pollute the free flow of data, information, deliverables and decisions. If the execution of a process is stopped, then a backlog is build that impedes the actual task that produces products or deliverables. In the worst case it will lead through bad results to an economic infarct. In medical science it is helpful to use medicine that prevents clotting as well as compression bandages, which prevent a growing of the thrombus. What are opportunities that you have in business?

  • Make laws obeyable
    Laws are developed in the interplay of the entire juridical system. It is not possible to recognize all influences from other laws in the respective law. For this reason enterprises should make the interpretation of laws easy for the employees. This enables people to act on the one hand compliant to laws and to do it with little expenditure.
  • Simplify decision paths
    The personal responsibility of leaders that results from the regulations of banks and the stock exchanges led to set frameworks on different decision levels, e.g. budget borders and scope restrictions. It is better to drive as few decisions as possible through the escalation ladder. The subsidiarity principle offers an appropriate approach. Decisions are made on the level of execution. Only, if the respective level is not able to decide by itself, the above level has to be called.
  • Focused use of digital media
    The simple usability of the Internet and email makes it easier for the employees to secure their decisions in all possible directions. Colleagues, who would not be involved in the actual decision, are also forced by respective insinuations to grapple with the resolution (example: „… as far as I understood, I assume that … “). An appropriate E-mail-Governance, which for example forbids decision making via CC as well as extensive CC-address lists or a „zero email tolerance “on weekends, purges the flood of messages.
  • Deregulate
    The number of guidelines grew over the years, without eliminating outdated rules. Most enterprises also do not have a central listing of the internal, external and international regulations. They even do not know the number of regulations. A belated listing does not help. It is a good start, if the majority of regulatory departments are reduced. Thus the rampant growth of new stipulations stops immediately. All internal rules that do not serve the compliance of laws and agreements should be replaced by basic rules, which fix the individual responsibility and self-organization. Afterwards, the remaining guidelines are valid any longer. Now the bureaucracy restarts on a low level.

Bottom line: The right moment to act against a thrombosis is always NOW. Laws become easier and obeyable with less expenditure with the help of practical commentaries. Eventually, it is crucial to streamline the bureaucracy and to resist the natural impulse of intending to regulate the regulatory madness with further regulations ;-).