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Say the word “governance” and what springs to mind? 

For a lot of people, the first thing is “bureaucracy”. Some central body to define a thick manual full of policies. Endless reviews and compliance checks. Long-winded approval processes. 

The next thing they think about is finding ways to bypass all the controls so they can actually get some work done.

It doesn’t have to be that way…

Governance is about making good decisions, ones that balance the priorities and demands of multiple different stakeholders. Tangling everyone up in red tape rarely meets anyone’s needs. 

The red tape simply emerges because it’s a tough balancing act and we make poor trade-offs.

One of the classic problems of governance is balancing the benefits of central versus devolved oversight. Central oversight makes it easier to ensure that policies are interpreted and applied in a consistent way across the organisation. 

It provides a single point for managing quality and standards. It can help optimise utilisation of scarce skills and resources – we put them all in one place, where they can be managed carefully and deployed in a way that aligns to corporate priorities.

Most of all, central governance gives the illusion of control, it lets corporate executives feel like they can make things happen their way. That helps them sleep at night.

Devolved oversight, on the other hand, pushes decision-making to the periphery, where people are more closely attuned to local circumstances and individual customer needs.  

There’s no long chain of command, so decisions can be made faster. But we may not be able to bring so much specialist expertise to bear, and different units may start to make inconsistent or even conflicting decisions.

Devolved governance can be a little scary. Things move quickly, and not always in the way you expect.  Not so good for sleep, but in an unpredictable world it might just be the only way to survive.

Consistency. Quality. Efficient use of specialist expertise and local knowledge. Alignment to corporate and customer needs. Speed of decision-making. These are all good goals. The problem is finding the point that best balances all perspectives.

There is no simple answer here: that point will be different in every organisation.

I find it often helps to divide the problem into separate concerns. For example, it can help a lot to think about who defines policies versus who implements them.  

Map this onto a two-by-two and you have four options:

Again, there are no fixed answers, and each of these approaches can work in the right circumstances. And they’re points on a continuum.

You can devolve some decisions and not others. Or you can consult locally before deciding centrally. And so on.

Finally, the balancing point doesn’t need to be static. You could move from devolved to centralised as standards stabilise in a new market, for example.  

You could even rotate between the two poles in order to transfer knowledge: people bring knowledge from the field and share it when they centralise; they take specialist skills and understanding of organisational objectives back out into the field when they decentralise.  

Few organisations are smart enough to do this consciously, but it might be just about the only real benefit of most corporate reorganisations.

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