Top five reasons why good governance is hard to implement -- and how to overcome them: Part 2

3)      Make governance data a corporate asset: there’s a lot of conversation about reducing redundant work between different compliance teams supporting different initiatives, but it rarely happens.  Why?  Because when a new regulation or corporate objective pops up, it’s often easier for the owner of that initiative to operate in a silo and just get the job done.  We’ve all been there.  But, see point 2 – if you build the index the right way, there’s at least a foundation for the owner of a new initiative to start with.  And that subsequent initiative owner should be incented to use that foundation and add to it – whether that’s through a bonus for not creating new data and content or a penalty for redundancy.  The situation is really not that different from where things were in the 70s and 80s with regard to financial data: it took weeks to close the financials in a large corporation because all of the subledgers came in on a combination of spreadsheets and incompatible system outputs.  Clearly, no company would stand for that today, yet the situation is being repeated in the realm of corporate governance, arguably one of the most difficult reporting areas facing companies today.

4)      Decentralize the effort: so you’ve got one owner, a foundation to start with and the right plan for leveraging what you’ve already done – by all means DO involve others throughout the organization, but don’t waste their time.  Good governance is a corporate-wide initiative and 99.99% of people in organizations want to behave in the right way.  There’s the argument that even with SOX, ERM and other frameworks, an Enron could still happen.  Absolutely true, but more true is that while most people don’t love their jobs, they like what their jobs provide (paycheck, fulfillment, etc.) and don’t want to see that go away.  So they’ll participate willingly if you involve them in the right way.  Make it easy for them to respond to surveys or provide testing evidence or report incidents.  Make it easy for them to get information they need to show compliance at their level.  Some organizations have put in place compliance goals, objectives and measurements similar to quality control metrics.  These help individuals at all levels to stay focused on what’s critical to the organization and participate in the process.

5)      Don’t do too much: finally, I can’t recall the number of times I’ve heard an auditor say that a company did too much, but contrary to what you might think, it’s been a lot.  Not only that, but the too much in some ways can actually put the company at risk by highlighting problems that don’t actually exist.  Most companies are pretty well run.  Sure, people will cut corners, but they generally want to do their jobs the right way.  So spending extra hours over-documenting that people are doing what they are supposed to be doing is counterproductive and leaves a bad taste in everyone’s mouth.  Sure, auditors are enjoying a heyday right now, but the most effective auditors are not interested in padding their bills by reviewing reams of irrelevant evidence supporting a conclusion that could have been gotten to with 10% of the evidence provided.  Essentially, companies throw up their hands and say, “we don’t know what the heck we need to provide for this regulation, so here are a hundred boxes of data Mr. and Ms. Auditor: you figure it out.”  Or you get the well-meaning department head who makes good governance a crusade, and, again, you wind up with a hundred boxes to sift through instead of ten.  And some hefty bills.  And a disgruntled, over-documented staff who can’t keep track of this week’s policy and procedure updates and whether or not they’ve filled out their TPS reports correctly.

Governance is not easy, but the effort can be simplified and leveraged to build a much more effective organization.  So, while I don’t want to over-emphasize the approach that VP of Audit took a few years back, since a binder and some spreadsheets probably won’t work these days, I do want to remind you that common sense does prevail in governance as in anything, and companies that do a few key things to organize their governance effort are going to have a much easier time adjusting to—and taking advantage of—this new well-governed world as it continues to evolve.