Anyone taking a thorough view of a financial services firm's immense portfolio of change initiatives — strategic capabilities development, new product launches, work force initiatives, process and technology changes — cannot help being overwhelmed. But in the midst of myriad changes big and small, is your company governing pragmatically or delegating to the point of chaos?
Too often during times of transformational change the governance structure and process is too complicated, involves too many people and delegates responsibility too far down the chain of command. Organizations often exacerbate this problem by attempting to involve seemingly everyone in the organization, regardless of the impact on their staff and processes.
Worse yet, despite the involvement of many people, there's often a consensus needed, so instead of decisive leadership the governance program is influenced by indecisiveness and multiple approval requirements that bog down progress.
These types of problems are prevalent at large banks in particular where the general structure of the organization is already very complex. What often happens in situations where the governance program is too large is that clear authority to make decisions is lost.
The governance program leadership is unable to leverage the authority of the steering committee and senior executives effectively. This is often because senior executives are either not fully engaged with the initiative or may have different points of view regarding the preferred outcome. This lack of executive alignment is often a sign that there was incomplete commitment in the first place and certainly significantly jeopardizes the likelihood of success.
The program's progress begins to wilt and wane as more decisions are discussed over and over, without resolution. If a pure consensus approach is taken and the team involves too many representatives from different groups, the project may go into analysis paralysis following a process that adds minimal value.
While delegation is necessary, a strong and well-designed governance program is needed to drive success to these very complex portfolios of transformation initiatives. In my experience, the most successful programs require full dedication and adoption of these features:
An impassioned and empowered leader: All programs need a passionate leader who is committed to the program's success, is situated at the right place in the organization and can achieve executive and steering committee alignment from the beginning. This is a leader who knows what has to get done and how to do get it done within the context of the organization. Our experience strongly suggests that the right leadership continues to head the list of critical success factors for effectively implemented programs.
Clarity at every point: When roles, responsibilities and authority aren't clearly designed and communicated, the governance organization's ability to make decisions and act is encumbered. The governance structure and processes must be clearly defined and all aspects of the program must be communicated concisely, clearly and persistently.
Rightsize the governance structure: Don't make your governance organization too large, and especially don't include a representative from every department in your company. For example, if you are putting in a new core banking information technology system, does a representative from your purchasing department need to be included in your committee structure? Maybe, but be sure to include those with the most to gain and the resources and knowledge required to focus on the real objectives you are trying to achieve.
Focus on optimizing value: Your transformation probably has some large, critical components that represent the majority of the value of the transformation, and maybe a smaller set of changes that are needed or nice to have but not critical. Don't let the smaller, less critical stuff prevent the whole program from making good progress.
Understand the roles of collaboration and consensus: Sometimes we confuse collaboration (the act of people working together) with consensus (the act of people agreeing with each other). Both are valuable objectives. However, leveraging collaborative experiences and dialogue help speed valuable decisions. Effective collaboration and strong leadership drive the organization toward consensus, without bogging down progress.
These considerations are a good starting point for designing a successful governance program. Once these are done right, everyone can focus on getting critical issues addressed and making those game-changing business transformations that every financial services firm confronts today.
