Archiv der Kategorie: Governance

Governance covers regulations and control aspects.

The dark side of the standards

Standards are requirements, specifications, guidelines or properties that are intended to ensure the quality of materials, products, processes and services.*1 They facilitate the production and exchange of goods, the provision of services and the collaboration. Examples are units of measurement (e.g. the International Prototype Meter; see picture), the DIN paper measures (e.g. A4, A5), computer standards (e.g. Unicode, HTML, UML) or quality standards (e.g. the ISO 900x standard) *2. All agreements between contracting parties would have to be negotiated and agreed in detail without standards. Thus, standards are actually useful for everybody, because they

  • reduce the variety,
  • improve the structures and the procedures,
  • increase the efficiency,
  • secure the compatibility,
  • protect people’s health and the environment,
  • determine the characteristics for the quality, security and usability,
  • make the requirements comparable,
  • increase the satisfaction of the customers,
  • simplify the compliance to regulations and
  • facilitate the negotiations as well as the collaboration.

However, there is a dark side of the standards that undermine the advantages.

Urmeter

The following aspects undermine the advantages of standards.

  • National standard
    Standards that are only developed for the local market, can lead quickly to trade barriers. For example, cars are not allowed to be used in a certain market, because they do not fulfill the local standards.
  • Certifications cost time and money
    Certificationsneed external and, above all, internal capacities for the first certification and the regular renewals. It is difficult for small companies to provide continuously the necessary capacities for certifications.
  • Flexibility gets lost
    Standardsrequire defined procedures, even if a need-oriented variant would be better. This limits the flexibility, for example, if the requests of the customers require a quick reaction.
  • Variety is limited
    The strengths of standardization is at the same time a disadvantage, since products and services become more and more interchangeable. The properties of the products and the related operational procedures always follow the same standards.
  • Pro-active thinking is not supported
    Over time the work becomes a prosaic observance of the standards. Thus, the employees lose their natural creativity. The ability of the enterprise will suffer on a long-term basis to create new solutions.
  • Improvements are difficult
    Bettersolutions are hard to establish, even if the current standards do not meet the state of the art technology. This leads even that far that the company does not take care of improving, but rather hopes for further development of the standards and waits.

In today’s technical and organizational complexity, it will not work any longer without standards. It is important to establish worldwide standards, since otherwise the compatibility of the various systems will not be ensured internationally. However, we should not forget the dark side of the standards.

*1: http://www.iso.org/iso/home/standards.htm

*2: http://en.wikipedia.org/wiki/List_of_technical_standard_organisations

Legal sphere

Globalization does not only mobilize goods and people, but also values and laws. This brings up the question of the scope and the validity of a legal sphere.

 Rechtsraum

As soon as somebody (x) makes business outside of the native legal sphere, the common sense tells us that local laws are valid. Exceptions are defined by the term extraterritoriality (http://en.wikipedia.org/wiki/Extraterritoriality).

However, international companies and retail chains export with their business model often their moral concepts and rules. It can happen that the employee cannot recognize the imported rules. In this case, this can result in unintentional misbehavior of the employees that will be sanctioned. The company is responsible for appropriate regulations. Therefore, the following questions should be answered.

  • Which laws are valid where?
  • Are laws valid for citizens outside their homeland?
  • Is it possible that a foreign law can be above local law in a foreign legal sphere?
  • Which law is valid for trans-national enterprises?
  • Do outdated laws become an injustice?
  • What makes right binding?

At first sight, these questions seem to be abstract and not very useful. As soon as corporations are active in different legal spheres, it is necessary that they answer these questions. Through governance, the company can create legal certainty.

Bottom line: Create legal clarity for yourself and your staff.