This is the first part of a series on Governance by Terence O’Donnell. Terence is a Project Management industry veteran of 35 years and a former Professor of Project Management. He is a founding member of the Ireland Project Management Institute’s PMI chapter and a past president of the Irish chapter. This series will cover Project & Programme Governance, Corporate Governance, and Data Governance.
Aside from Agile, which has led to various groups wanting to change how companies and projects are managed, governance is the other domain that has emerged as a key priority across the management landscape in recent years. Better governance seems to be the answer to a lot of management challenges and there are a variety of best practice standards that are on offer to address poor governance across the management domains.
Governance and the application of good governance has surfaced across a number of areas over the last 20–30 years. The three that have lasted the course, i.e. that have taken root in companies and made it past the initial ‘fad phase,’ include corporate governance, project governance (including programme and portfolio) and, of late, data governance, which has now emerged as a key concern in corporate corridors.
While issues that prompt corporate governance responses are now endemic to the corporate form, the term ‘corporate governance’ only began to feature with any regularity in discussions of public companies around the beginning of the 1990s. It emerged in part because of challenges in certain sectors, particularly financial services and utilities (remember ENRON!) along with the need for additional transparency in how companies- especially publicly listed entities- conduct their business.
Standards & Legislation
Standards and legislation have emerged along with best practices (e.g. Sabens Oxley) in the corporate governance domain and now encapsulate ethics, sustainability, diversity, climate action and others.
Perhaps it is worth having a clear understanding of what governance actually is and how it relates to management practices. They are in fact two sides of the same coin and governance frameworks have emerged to complement corporate management processes and practices. Corporate governance, in short, provides an oversight function to ensure that things are done right when it comes to corporate management. This includes having the ability to intervene if transgressions emerge in how companies are managed.
From a best practice perspective, good governance should cover the following:
- The principles or credo to which the company subscribes
- Company structures, functions and the roles and responsibilities of each level
- Decision rights, decision making and transparency
- Assurance, audit, and performance reports relating to the company’s adherence to the various aspects of corporate governance
All of this has resulted in the need for consultants and experts who can provide advice and analysis to companies seeking to improve various aspects of corporate governance, from board structures to ethical policies and indeed more specialised functions including financial accounting etc., etc. Add to this the need for independence, especially for the public and semi-state sector, and what emerges is a significant demand for expertise and advice across this landscape.
The recent OGP framework tender process highlighted this demand in government circles and it is also noteworthy that positions on boards now have governance experience as a requirement. In recent years, this has moved from being irrelevant, to desirable, to a requisite for any board member in both the public and corporate sectors.
What good governance is and what makes a good corporate governance consultant are two questions that I’m not sure have been fully answered yet, but there is now a definite maturity and a build-up of good practices that are being applied and leveraged more consistently. However, there is always room for improvement.
In the next blog in this series, I will discuss the world of project governance and how this has emerged onto the stage in recent years.
You can download Auxilion's Governance & IT Insights 2022 report here.