Governance — why you need more than a RACI and Decision Rights template to get it right. [Examples and Tools]

It’s rare that I encounter great enthusiasm for governance in the organizations I work with. When it comes to roles and decision-making on change initiatives, people like to keep things fuzzy. Recently, I was thinking about that and wondered —  Is there actually a problem with that? Moreover, can I “prove” there’s a problem?

More specifically, I was wondering what is known about the role of governance in the success of change implementation efforts and which of the tools that aim to help us clarify and enact governance in our change efforts have been found to be more effective than others.

Spoiler alert — I didn’t find direct answers to these questions through my (extensive but certainly not exhaustive) literature search!

So, I broadened my scope to look at the role of governance in the success of projects/programs/portfolios in general. There are some helpful findings in this literature, which I review below. (I feel it’s appropriate to draw learning from this research because projects — or portfolios of projects —  are a crucial mechanism through which organizations bring about change.)

Second, although, I didn’t uncover evidence related to the effectiveness of specific tools (e.g., RACI, RAPID, etc.), I did find a variety of information that I believe will be useful to you in developing a governance approach that best fits your context.

What is governance?

Governance can be defined in many ways, some quite broad, others more narrow, but in essence governance provides “a framework that combines processes, roles, and accountabilities aimed at delivering projects” (Biesenthal, 2014).

More specifically, governance helps us to clarify and manage four things (Beleiu and Nistor, 2015):

  1. The relationship between project objectives and the strategic objectives of the organization
  2. The decision-making process
  3. Existing relationships between project stakeholders
  4. Performance monitoring

Further, it may be most useful to think governance as a system, rather than a single, tangible thing (e.g., a decision matrix). Often change efforts are influenced by various levels of governance that interact to support not only a single project, but the combination of initiatives through which an organization achieves is broader aims (Joslin and Muller, 2016). Thus, when developing governance for your effort, you may wish to identity the level at which you are operating, and work to ensure that what you develop integrates well with other levels of governance. (See figure below).

 
 

 

Finally, it’s also worth emphasizing that governance is not merely about the processes you develop but also your ability to effectively use them to manage the combined efforts of many towards a shared objective. In other words, if you create a RACI but no one refers to it, or you establish that you’ll have monthly project reviews, but they are never scheduled — is that real governance? Probably not.

What role does governance play in success?

When aiming to convince others (or maybe yourself) that putting clear governance in place is worth the effort, it can help to know if it does, in fact, make a difference. To make that case, below I list some of the findings I uncovered that identified a link between governance and implementation success.  

  • Strategy Execution:  Executives at Booz Allen Hamilton offer findings from their survey of 26,000 people at 31 companies, which indicate that decision rights and information flow are the top organizational traits linked to successful strategy execution. (In this study, success was defined as: “an affirmative response to the outcome statement, ‘Important strategic and operational decisions are quickly translated into action.’”)
  • Value creation from IT investments: A researcher at the MIT Sloan School of Business studied IT governance in 256 organizations in 23 countries. He reports that “firms in the study with above-average IT governance performance that followed a specific strategy (such as customer intimacy) had more than 20% higher profitability than firms with poor governance following the same strategy.”  He also noted that top-performing enterprises not only govern IT differently from average performing firms — but also differently from one another, (e.g., centralization versus decentralization). That said, he also found that top performers were similar in that they “design[ed] their IT governance to reinforce their performance goals and link IT governance to the governance of other key enterprise assets and desired behaviors” (Weill, 2004). (In this study success was defined as: “Firm profitability as measured by three-year industry-adjusted average turn on assets (ROA). Governance performance is the effectiveness of governance as assessed by the CIO to deliver on four IT objectives: cost-effective use of IT, effective use of IT for asset utilization, revenue growth, and business flexibility.”)
  • Project Portfolio Management: Many large-scale change efforts in organizations are managed as a portfolio of projects. As such, findings related to governance and portfolio management may be particularly relevant for those leading major change initiatives. Beringer and colleagues studied the links between specific stakeholder roles (senior managers, line managers, project portfolio managers and project managers) and project portfolio success via a review of 197 project portfolios at German, Austrian, and Swiss firms. They found stakeholder engagement affects performance only in environments with sufficiently defined roles and responsibilities. In the absence of clear roles, they found “stakeholder engagement may be misguided.” For example, a line manager operating in an environment without established governance may be inclined to look out for her interests, acting more like a “manorial lord” than in ways that benefit the entire portfolio.

Thus, it seems that governance may be important to ensure that when we engage people in our efforts, we direct their energies in a productive way. (In this study, success was defined as: “Individual project delivery on time, within budget and according to scope specifications; average project success across the entire portfolio of projects; and alignment of project objectives and resource allocation corresponding to the strategic relevance of projects.”) 

What's your governance personality?

A variety of researchers have put forth governance 'archetypes’ or 'paradigms' that suggest typical organizational dispositions related to governance. Below I share two models that may help you to identify your organization's (likely implicit) priorities for governance. Keep these priorities in mind when developing your governance approach to align with prevailing views (or to ensure when you suggest a divergent approach, you do so intentionally.)

Who has the “D”?

This model suggests that organizations concentrate decision-making in the hands of different groups, based on how they prioritize needs and distribute power. (In its original form, this model, offered Peter Weill at MIT (2004), included six archetypes of IT governance; I have simplified it below).

  • Monarchy (Enterprise): The monarchy concentrates decision-making in the hands of executives; aiming to optimize the enterprise-wide benefits of decisions. Decision-makers often garner input from a diverse group of actors to inform decisions.
  • Feudal (Local): The feudal configuration optimizes decisions to meet the needs of a particular function or region. 
  • Federal (Balanced): The federal configuration aims to balance the interests of the enterprise while also meeting local needs. It often involves shared decision-making across these groups and requires negotiation and tradeoffs. For that reason, it can be a challenging model to implement.
  • Anarchy (Personal): This configuration is a free for all! Decisions are made based on personal preference or to benefit the interests of a micro-group, rather than for the shared benefit of a business unit or the enterprise.
 
 

What’s being “governed”? 

The second model, from Ralf Mueller (2011), illustrates organizational dispositions related to two factors:

  • Does the organization orient more to shareholder returns (costs/ROI) or broader objectives associated with stakeholder satisfaction?
  • What does the organization seek to manage through governance — behavior (adherence to procedures) or outcomes (meeting expectations)?

This model suggests four governance personalities:

  • Conformist: Organizations that aim to maximize control to keep costs down. This may be most useful in straightforward projects with limited uncertainty.
  • Flexible Economist: Organizations that allow adaptation of processes to maximize efficiency.
  • Versatile Performer: Organizations that seek to balance competing stakeholder interests by using novel mechanisms.
  • Agile Pragmatist: Organizations that try to balance various stakeholder demands, while using defined processes. Those using agile methods fall into this category.

Leading change projects in organizations that optimize for outcomes requires a project lead/manager to have the skills necessary to develop methods that meet the unique needs of the project and context. Organizations that optimize for control are likely to provide standardized methods for project managers to use.

Do governance frameworks work with or against “human nature”?

Governance helps us to collectively agree on how decisions will be made — in doing so they may work both with and against aspects of human nature.

We like to make decisions…even when we know we aren’t making good ones

Governance frameworks prescribe delegation — particularly related to decision-making. Such delegation may go against our natural inclinations, in that it forces us to make tradeoffs between what we want personally and the greater good.

In a new study, researchers found that people experience psychological gains when they make a choice — so much so, that even if they may suffer a loss when making a choice, they will do so anyway, rather than to delegate it (Bobadilla-Suarez, 2017). Thus, we should not be surprised if people find it hard to accept governance frameworks that remove their decision-making control.

It’s easier to accept other’s decisions when the process is transparent and fair

However, a more positive view of governance frameworks emerges when we consider their potential contributions to employees’ sense of “procedural justice.” Studies have indicated that people may be willing to give up decision control, if they retain some control over the process, or believe the process used to make decisions is “fair.” Procedural justice has been linked to a variety of positive outcomes, including job satisfaction, organizational commitment, and trust (Colquitt, 2001).

There is, of course, a catch.

Not all procedures or processes will be perceived as just. It depends not only on how they are developed but also how they are used. Gerald Leventhal and colleagues have identified six criteria for procedural justice, (the predictive power of which have been verified, (Colquitt, 2001). Keep these in mind when developing the governance approach for your next change effort. 

Procedures are considered just when they are:

  • applied consistently across people and across time
  • free from bias
  • ensure that accurate information is collected and used in making decisions
  • have some mechanism to correct flawed or inaccurate decisions
  • conform to prevailing standards of ethics or morality
  • account for the opinions of various groups affected by the decisions
 
 

 

Expert Tips

A variety of researchers have investigated what makes for effective governance practices in various projects contexts. From this, we can glean some principles that may be helpful in a broad range of change efforts.

Vision takes the lead in the absence of a clear hierarchy

How do you handle governance in change efforts that cut across internal or external organizational boundaries — when there no obvious source of authority? Brocke and Lippe offer some insights on this dilemma in their systematic review of the management of collaborative research projects involving multiple independent organizations. They found that vision plays a critical role.

They indicate that special focus should be placed on getting agreement on the vision of the project (suggesting a shared decision-making role for vision). They also recommend using that vision to help frame tasks, instead of developing detailed guidelines to control how people execute. Thus, there is “tight” governance around vision but more flexibility and freedom related to how the project is implemented to achieve it.

One-size does not fit all

Based on his review of 89 cross-departmental IT projects, Tiwana (2009) encourages us to avoid providing a single department with full decision control. He found that centralizing decision-making in a single department — such as IT as opposed to a business function — did not enhance efficiency or effectiveness of the effort. This is likely because the domain knowledge necessary for project success rarely exists in a single department. He further suggests that engaging staff from multiple functions in the project can help to ensure requisite knowledge is available.

Also, he posits that different types of decision rights — those related to setting project goals, resourcing, and monitoring progress (decision control) versus technical decisions related to how to execute the project to achieve goals (decision management) — have different impacts on the project. He suggests that decision control is associated more with efficiency; decision management is associated with project effectiveness.

Don’t forget middle management

When investigating how various roles impact the success of project portfolios, Beringer and colleagues (2013) found that line managers significantly affect project portfolio success, as long as their roles are clear.

“Line managers know where problems can occur, know where attention and steering [are] needed most and can identify conflicts first—particularly within their own departments—given their experience, expertise, and function as resource owners. In the absence of clear roles, they may act more like lords of the manor, than team players.”

They also indicate that senior managers should moderate the intensity of their engagement based on the phase of the project. Executives may be most beneficially engaged in shaping the portfolio, deciding which projects are most strategically imperative and ensuring they are resourced appropriately, and delegating operational aspects of execution to others.

Keep context in mind

In their study on how the use of defined project management methodologies impact project success, Mueller and colleagues (2015) found that the overall governance disposition of the organization impacts both the choice of methods and how they are used. Specifically, they found that organizations that focus more on outcomes rather than on behavior are more likely to have more immature project management methodologies. They suggest in such contexts, project managers — aka change leads — may need to take an active role to supplement existing structures to benefit overall project success. 

Which brings us full circle.

Although creating and implementing explicit governance frameworks may not be the “norm” in the organization you are working with, that doesn’t mean you can’t work to develop them within the bounds of your control.

In sum...

  • Governance frameworks that are clear and effectively implemented are associated with success.
  • Remember you are operating within a broader context — consider governance that may exist at other levels of the organization and the overall disposition of the organization towards governance, when developing the governance approach that will guide your immeidate efforts.
  •  Adherence to formal governance roles may not come naturally; it seems, as humans, we may not like to delegate decisions. However, if governance frameworks are transparent, consistently applied and mindful of those impacted by the decisions they govern, they may be better accepted and even encourage favorable views of the organization!
  • Consider different types of decisions (e.g., strategic versus execution) and who is best suited to make them given their domain knowledge. It’s unlikely that one party can effectively make all types of decisions.
  • A strong vision can be a proxy for “control”.  When multiple independent entities are involved in the initiative, prioritize agreement on a shared vision. A clear vision may be more beneficial than detailed guidelines that aim to control task level performance.

 

References

Beleiu, I., & Nistor, R. (2015). PROJECT GOVERNANCE AND ITS CONTRIBUTION TO PROJECTS' SUCCESS. Managerial Challenges of the Contemporary Society. Proceedings, 8(1), 82.

Biesenthal, C., & Wilden, R. (2014). Multi-level project governance: Trends and opportunities. International Journal of Project Management, 32(8), 1291-1308.

Beringer, C., Jonas, D., & Kock, A. (2013). Behavior of internal stakeholders in project portfolio management and its impact on success. International Journal of Project Management, 31, 830-846.

Bobadilla-Suarez, S., Sunstein, C. R., & Sharot, T. (2017). The intrinsic value of choice: The propensity to under-delegate in the face of potential gains and losses. Journal of risk and uncertainty, 54(3), 187-202.

Colquitt, J. A., Conlon, D. E., Wesson, M. J., Porter, C. O., & Ng, K. Y. (2001). Justice at the millennium: a meta-analytic review of 25 years of organizational justice research. Journal of applied psychology, 86(3), 425.

Joslin, R., & Müller, R. (2015). Relationships between a project management methodology and project success in different project governance contexts. International Journal of Project Management, 33(6), 1377-1392.

Neilson, G. L., Martin, K. L., & Powers, E. (2008). The secrets to successful strategy execution. Harvard Business Review, 86(6), 60.

Muller, R. (2011). Project governance. Strategic Direction, 27(2).

Tiwana, A. (2009). Governance-knowledge fit in systems development projects. Information Systems Research, 20(2), 180-197.

Weill, P. (2004). Don’t just lead, govern: How top-performing firms govern IT. MIS Quarterly Executive, 3(1), 1-17.