The higher the complexity of the organization, the stronger GRC practices are needed to improve organizational maturity.
Contemporary organizations becoming complex is not for its own sake, but to adapt to the environmental changes, GRC can be used to raise visibility and awareness for many things that are captured at the different levels of the organizational hierarchy.
If it does not address strategically important emerging issues, there is a very real risk that governance as a discipline will begin to lose focus of its prime purpose: In face of “VUCA” reality, governance is steering, with direct links to each business and its processes. It isn’t just about putting restrictions on what you can do; it is also about monitoring and knowing when things are not going to plan, so that you can take care of emerging issues at the right time.
In today’s business dynamic, governance controlling and enforcement takes a new meaning. It takes agile governance practices to address emerging issues, and prevent risks effectively, in order to respond to changing circumstances and fix real problems thoroughly. So the business leaders need to reflect the spirit of their governance discipline, not only from the financial results, but also from the involvement and signs being displayed about corporate guidance, values, and principles governing the company’s commercial activities on a daily basis.
It’s impossible to change rightly or have a good governance model without having a holistic view, or an outside-in perspective: Due to the rapid changing environment, businesses have to overcome unprecedented uncertainty and complexity. Organizations today are more like organic systems that must keep evolving to adapt to the changing environment. There are varying degrees of understanding of the scale and scope of corporate governance; the context for corporate governance includes a wide range of circumstances and capabilities which are subject to constant organizational variability. It’s important to shape a holistic governance prospect to enforce strong corporate culture and values. It’s important to break down the silo mentality and take an outside-in, people-centric perspective, keep optimizing business processes; harness holistic management disciplines structurally.
The holistic governance, or integral governance approaches all have a role to play in driving or scaling business initiatives efforts and building high performance organizations. Business leaders should listen to a wide range of feedback from business users, question the business’s requirements and justifications of business initiatives. The value proposition of holistic governance should be integrated within and across operations not siloed off in a box and improve the success rate of business strategy management.
Governance efforts usually devolve into time-consuming, overbearing bureaucratic constructs, if organizations don’t view governance as “decision-making optimization”: A strong governance model illustrates the governance processes that are used to govern specific activities and establish decision rights. Otherwise, corporate governance perhaps adds a heavy layer of control and enforcement which causes business ineffectiveness or even bureaucracy. Strong governance discipline improves decision intelligence and overall problem-solving competency at the organizational level via embedding governance mechanisms of escalation and resolution.
Governance as a decision optimizer is the act of guiding, influencing and regulating the decisions and behaviors of the entire workforce, management included, to improve decision maturity and drive sustainable value-creation to the shareholders. If effective governance with optimal decision-making mechanisms is put in place, they would be capable of setting the right dose of risk appetite, improve risk intelligence, and ensure decisions occur as fast as they possibly can, to improve decision coherence across the organizational hierarchy.
The higher the complexity of the organization, the stronger GRC practices are needed to improve organizational maturity. It takes a consideration of your current governance maturity – where you are today and how far and fast you might change things, coupled with a good definition of roles, responsibilities wrapped around governance processes to build a high performance, highly intelligent organization.