The RSS Series
RANA is launching a series of 12 articles under the title RSS. In case you haven’t run across this acronym, it’s short for “Really Short-Sighted Stuff.” So, the full title of the series is Really Short-Sighted Stuff in Management (and what you can do to fix it…) This is based on over 25 years of observation and experience compiled by RANA Consultants in working with a broad variety of organizations.
Article 1: Have you aligned your Management to your Governance?
What happens when Management and Governance are misaligned?
Horror stories on broken Board-Management relations are plentiful:
One story talks to a Board that exists only for image and nothing else; another sees Board Chairs wanting to manage the organization; and yet another is where the top manager decides to take over the enterprise.
The latter is the fairly common situation where Boards have executed senior management executives – organizationally speaking – for thinking that they run the entire show of the enterprise. Well yes, senior managers do: but they are meant to conduct operations under the strategic direction of the elected Board of Directors (sometimes wrongly called Board of Management, to add to the confusion).
The essential distinction between Governance and Management is: “Boards govern, Managers manage”. Having said that, some fundamental issues arise such as:
1. The enterprise was not set up to distinguish between and harmonize its Governance and Management.
2. The Board in many organizations is a set of names on a document and for all intents and purposes, doesn’t exist.
3. The good folks who accept to be on Boards don’t realize that they are accountable for setting the strategic vision and direction for the organization’s Managers to contribute content to, salute and implement.
We have even seen situations where one person is the all-singing, all dancing Chairman of the Board, President of the Company and Chief Executive Officer. Under such a regime, everybody else may as well stay home…
This kind of confusion on roles inevitably yields confusion throughout the organization. For example, few folks understand the meaning of “Chief Executive Officer”. Think about its meaning for a moment: ok, so the person is the “Chief”, i.e., the top person in management; but she is also the “Executive”, meaning that she “executes” the will of the Board of Directors; the word “officer” just comes along to reinforce that the person “officiates” on behalf of the enterprise. Meanwhile, many organizational structures are just thrown together with dated materials available online, including “stock” by-laws because the organizers are so excited about the start-up content that they forget that people need clarity on their roles to work together productively and in reasonable harmony.
What are three things you can do?
1. For start-up organizations, ensuring an organizational design that will work well into the future is essential; time invested in the design of the enterprise will pay off hugely in the future.
2. Also essential is setting up a real and fully functional Board of Directors whose members know their roles and accountabilities related to due diligence.
3. Ensuring that the President (aka, General Manager, Executive Director, etc.) and Chief Executive Officer is hired with a full understanding of the role and the limits to management prerogative. This will yield a clear, visible and cordial relationship between governance and management, i.e., between the Governors and the Managers of the organization.
Meanwhile, if your organization is suffering from Governance-Management confusion, it is always appropriate to take the time and energy to sort it out. Such sorting prevents issues such as conflict at the senior level and confusion over the direction of the enterprise.
If you would like to chat some more, perhaps even argue, please be in touch through the RANA website at www.ranaprocess.com or via my LinkedIn contact info.
