A Generic Governance Process

Editor's note

The text has to be properly reviewed

Introduction

A party, i.e. an organization or a person, that work to realize a specific set of objectives, will not do everything themselves. For example, a party that sells products may expect another party to deliver them to its customers. Thus, a party will expect other parties to provide products or services that it can subsequently use to realize its objectives. The process that provides assurance to the party that the products or services it gets are an actual contribution to the realization of its objectives, is called 'governance'. We use the term 'governor' to refer to any employees of such a party that is tasked with the governance of a subset of that party's objectives¹.

Governance is not management. The latter is distinct from the first in that the latter process ensures that the party actually and efficiently realizes its obligations (i.e. objectives for which it produces the associated results itself). We use the term 'manager' to refer to any employee of such a party that is tasked with the realization of the results associated with a set of obligation. For a further elaboration on this, see the Governance and Management pattern.

This document specifies a generic process for the governance of objectives (specifically: expectations). It is characteristic of this process that it does not require its governor to know how the party that will be fulfilling these expectations will do so². This characteristic makes the process generically useful.

While some may see this process simply as a means to turn the PDCA-cycle (which in a way, it is), its value lies in the explicit specification of the concrete results that have to be achieved in the various steps, which lacks in most, if not all, descriptions of PDCA processes. Such explicit specifications provide the concrete basis for both the managers of an objective and its governors to do their jobs.

The Governance Process

The generic governance process consists of the following steps:

1. (initial) expectations are set in terms of the results/effects³ that have to be achieved;
2. results/effects are measured through so-called 'effect indicators'⁴;
3. results/effects are judged not only on whether or not the effect indicators have met the applicable norms⁵, but also on any circumstances (increasing insights, unexpected events, etc.) that have influenced such results;
4. results are reflected upon, learning from what happened and/or celebrating the results;
5. decisions are made about altering the expectations, indicators, judgements, etc. – if necessary.

After step 5 is completed, execution continues at step 2, thus making the execution cyclic. That is possible because after completion of step 1 and completion of step 5, the same conditions apply. The following sections describe the individual steps.

Step 1 - Setting of initial Expectations

The purpose of this activity is to provide clarity for all stakeholders with respect to the focus of the governance process.

It is not the purpose of this activity to come to agreement with stakeholders about what is expected of them. That would be another activity.

The results of this activity are that all of the the following criteria are met:

1. for every (focus) area that a party wants its expectations to be governed (e.g. finance, security, ...), a governor has been assigned/appointed that will develop and run the governance process for that focal area.
2. for each expectation in every focus area, a description exists that specifies the results/effects that the expectation aims for, and the party(s) that are expected to produce the results;
3. for every expectation, one or more effect indicators are specified;
4. for every expectation, norms that are based on such effect indicators are specified (implicitly or explicitly), as well as a point in time (that may be repetitive) that the norm must have been met;
5. the (first occurrence of the) point in time has been established by which step 5 must have been completed.
6. there is a decision by the governor stating that these expectations are in fact to be met and the associated results/effects are to be achieved.

Step 2 - Measuring Results/Effects

The purpose of this activity is to ensure that all effect indicators are being assigned values (e.g. measured).

It is not the purpose of this activity to already pass judgements based on such values. Having 'clean' measurements that are unprejudiced is of great value when judging achievements, and therefore measuring and judging results/effects should be distinct. In order to guarantee this distinction, it may be necessary to have third parties execute this activity.

The results of this activity are that all of the the following criteria are met:

1. all effect indicators as specified in step 1 have been assigned a value.

Step 3 - Judging Results/Effects

The purpose of this activity is to obtain clarity about whether or not the expectations have been achieved (in a manner that is sufficiently satisfactory to the governor).

Such judgement should be based on two sources of information. The first is comparing the values of the (measured) effect indicators to the norms set in step 1c. The second source is any progressing insights, unexpected events or other circumstances that might explain any deviations (both positive and negative) from the norms. It is explicitly part of this activity to identify such circumstances. Taking both sources of information into account, judgement must be passed on each expectation; this judgement says whether or not the expected result/effect has been (sufficiently) achieved. A judgement should be justified if its indicator values deviate significantly from the norm (which can go both ways).

The results of this activity are that all of the the following criteria are met:

1. for every expectation, it is clear whether or not its norm(s) have been satisfied;
2. for every expectation, there is a judgement stating whether or not it is (sufficiently) achieved;
3. if, for some expectation, the judgement differs from what would be expected given the evaluation of the norms, there is a justification for this judgement.

Step 4 - Reflection/Learning

The purpose of this activity is to provide clarity about the next steps that should be taken.

Quite some time may elapse between setting expectations, the associated effect indicators/norms, and judging the results/effects. Meanwhile, all sorts of things can change (e.g. laws, the market, political situation, competitors, technology, the organization's obligations, etc.). Such changes may cause expectations, effect indicators or norms to become outdated. The experience of having judged the results/effects in the previous step is invaluable, because the person that has done this will have 'felt' any contradiction or discrepancy between the effect indicator values and norms, and his own sense of whether the results/effects have been achieved. This information and feeling allows the governor (and others) to ponder, e.g. about: – fine-tuning or modifying expectations, indicators, norms; – modifying objectives that the organization has committed itself to realize (obligations); – possibilities for influencing circumstances/stakeholders; – celebrating (unexpectedly) well achieved objectives.

The results of this activity are that all of the the following criteria are met:

1. for every expectation it has been established what should be modified/improved and/or celebrated;
2. for every expectation there is a proposition of how this may be achieved;
3. there is either a proposition for new expectations, each of which satisfies the criteria of step 1, or a statement saying there are no such expectations.
4. for every new or modified expectation, criteria 1

Step 5 - Decision making

The purpose of this activity is to explicitly decide which of the proposals in step 4 will be adopted, and which not.

Doing so shows that you have actually learned. Also, putting all decisions in a single step allows the governor to delegate the work in steps 3 and 4 to others.

The results of this activity are that all of the the following criteria are met:

1. for each expectation for which it was decided (in step 1) that it should be achieved, there is a decision stating whether or not it has been shown to be the case.
2. for each proposal from step 4, there is a (preliminary) decision with respect to whether or not it will be adopted.

Governing the Governance Process itself

Like any other process, the governance process may need to be governed. Here is how to apply the specified governance process on itself. In order to distinguish the governance process that is being governed, from the process that governs that governance process, we will refer to the latter as the meta-governance process.

Step 1 (setting the initial expectations), is as follows:

1. the meta-governance process has 5 expectations that it sets to the governor of the governance process. These expectations are specified by the first sentence of the description of each of the 5 activities of the governance process in the previous section;
2. for every of these expectations, its effect indicator is described by the results specified after the line “The results of this activity are that all of the the following criteria are met:” of each of the 5 activities;
3. an expectation is met if all criteria as mentioned in its effect indicator are met;
4. step 5 of the process has been completed at [set a concrete time, e.g. the end of coming November].

All other steps of the governance process can be followed using the aforementioned objectives, effect indicators and criteria.

Footnotes

Footnotes

1. Only objectives that express an expectation of its owner towards another party are subject of governance. Objectives that express an obligation of its owner are managed. See the Governance and Management pattern for further elaboration on this. ↩

2. This does not preclude it to be used in situations where such knowledge is available. ↩

3. Example: 'Products that a customer has ordered are delivered within one working day' is an effect, whereas 'Products that a customer has ordered will be shipped immediately' is not. ↩

4. An indicator is a number or value that can be decided on (or measured) objectively by following a measuring instruction. An effect indicator measures an effect or result that is the aim of an organization. Example: 'the percentage of deliveries of the last 30 days, that have been received by the customer within 24 hours after his order was accepted.' ↩

5. A norm is a level that the organization aims an indicator to comply with or must reach. Example: [indicator] > 99%. ↩