Governance gets things done
Here is the story, titled “Whose Job Is It, Anyway?”
This is a story about four people named Everybody, Somebody, Anybody and Nobody. There was an important job to be done and Everybody was sure that Somebody would do it. Anybody could have done it, but Nobody did it. Somebody got angry about that because it was Everybody’s job. Everybody thought Anybody could do it, but Nobody realized that Everybody would not do it. It ended up that Everybody blamed Somebody when Nobody did what Anybody could have.
The story may be confusing, but the message is clear: no one took responsibility, so nothing got accomplished.
It is a story that plays out often in organisations and companies and on teams—anywhere there is culture that lacks accountability.
Without governance, which sounds like a reall corporate, unsexy word, nothing gets done, it is essential to have in place but so often we don’t see this in businesses – until it is too late. Listen the the podcast of Pavlo Phitidis discussing this on The Money Show on 702 and CapeTalk:
Why does it happen
There are several reasons and some more common but seldom understood examples include:
- How we start is how we build and finish it. You may start out of necessity, which means there’s enormous pressure to get cash in, to sustain your existence. Often, the idea you start with isn’t what it ends up being. But you’re so busy banging away at it, you don’t see that there are cracks forming between partners.
- Patterns in a relationship start shrouded in expectations not reality. Once set, they are hard to break. It feels ‘unfair’ to change the deliverables years after they were set.
- Inexperience or ill-discipline. Often governance is only implemented when a business partner has been burnt by a lack of governance prior – very often the business would have failed because of it.
- The busyness blur, fragments and mixes the hats – shareholders, board of directors and managing directors, but in a small business you are all three and they all get mixed into one.
Why do you need it?
- Alignment between parties
Pulling in one direction builds momentum; its scientific P=M.V. D ideated by Descartes and calculated by Newton and now us on this call.
- Decision making
There are around 120 decisions you take daily in a business; most are in your head and others are in your activities and work. Some are strategic, some are functional and in that some impact one function, some all functions. In many cases, being clear which hat, you are wearing when deciding a course of action is important. A shareholder disrupting a function is out of line. An operational director, alone taking a decision that impacts the company’s asset value is equally out of line…unless they are one and the same and alone in the business.
Who does what by when and how? These are the things that make things happen. If everybody in the business is not guided by a set of activities, that can be measured, then how can you be sure that what needs to happen is happening when it needs to happen. For example, when you deliver a big job of work and someone else was meant to invoice; them failing to do so because they were not clear as to who was meant to invoice fails the business.
- Play to strengths
Time is scarce and playing to your strength is vital to get the best impact most efficiently. I prefer partnerships because it gets that delivered but partnerships, ungoverned, are sinking ships.
How do you structure a governance framework?
- Recognize the 3 hats
- Understand their interests
- Determine across each domain, wearing the appropriate hat, roles, responsibilities, and actions aligned to the strategy of the business
- Shape remuneration to reflect the value
- Establish a delegation’s framework
- Reduce it to a set of agreements – shareholders and employment
It is of course easier said than done. Mostly, it requires a facilitated process by an objective, dispassionate, experienced third party. Get one and get it done to secure your future in time, money, relationship, self-worth, and value.