US Saga of Shutdown and lessons for Board of Directors in Governance and Risk mitigation

As I write this blog entry I can’t help but ponder why we are where we are in the US government’s operation or rather (non) operation.  The word Governance is synonymous with Government, the act to lead and manage against a set pf objectives as deemed necessary. To function and survive and thrive.  My purpose is not to analyze how we got here and how US will get out of this mess but rather to explore how Organizations and leaders can learn something from this saga of shutdown.  While organizations can’ t shutdown like this ( they will be out of business more than likely), often time our companies are called into situations which are similar and their causes are similar when the crisis hits the last minute and we are called in to firefight the Governance, Compliance and Risk issues at the last minute.  Following are the ways we get out of the mess in companies where their governance programs are facing shutdown malady or are in such bad shape that the Governance and compliance programs have to be resuscitated into new life.  These ideas have helped us navigate many a Governance log jam over the past fifteen years or so and will continue to guide us;

1.  Communication – I see many times governance is not effective and does not work as intended due to simple lack of communication between the Board about clear expecatations from line of business.  They delegate everything to the CEO but often the communications channels are lacking.  In absence of continuously monitored dialogue, the void is filled by group think and extreme outcomes.  Which is what has been happening in US government.

2.  Crisis Management – is absolutely essential but this should be the back up plan and not the normal way to operate.  The successful companies we see take their governance seriously and tackle long term strategic risks, while the laggards continue to burn the fires out.  Make no mistake, we are specialists in putting these crises and fires aside for companies and organizations and are very successful at it yet that is not our hope why the Boards or CFO or CEO calls us.  I wish companies look at Good Governance as a good way of doing business and of thriving rather than as a means to comply with laws.

3.  Redundancy – when I saw the initial number that 800,000 employees were considered nonessential at the outset of this US shutdown, it blew my mind.   While this number is notional and is subjective, it brings to my mind many companies where they have so many waste and redundant processes, people and departments, all doing same thing in name of complying, securing or governing something.  Some companies spend close to multi million to billion dollars on compliance (think the TBTF global banks) yet their board and CEOs have no clear clarity on a given achilles heel risk or the emerging trends.  While things could be obvious to common sense folks, many companies have fallen victim to throwing more money and resources as answer for better Governance and it almost always bites them.  Good question to ask could be what is Nonessential and how we can trim the fat?  Running two agile startups has taught us few things about being lean and the advantages of it.  That’s why sometimes when it comes to effective Governance simple is better.

4. Accountability – in the tenth day of US shutdown I read some news of a lone man going on US national mall and cutting grass to do his bit as a citizen.  While i don’t know his exact motive, the act symbolically is a great reminder to me that those companies where we see accountability for risk management and good governance delivered as an act of empowerment rather than as an act of compliance. We see a tremendous rate of success in having low cost programs and yet lowest levels of overall risk in their processes.  At the end employees make up companies, citizens make up a country and each individual is a human soul who when they decide to act in the right conscience, will always produce good outcomes.

These are just some of my thoughts but the shutdown saga is far from over.  US faces many fiscal challenges and systemic risks as we evolve as a country and as we evolve as businesses, but one thing remains to be said that as much as we don’t like it, sometimes companies and countries have to go through messy firefights and crisis drills to arrive at a new beginning.  Redesigning security to remove risks in systems is never an easy process but after decades of bad practices it is long overdue in Security, Governance and Compliance processes.

I welcome your thoughts and your comments but one thing is for certain, if you are thinking of infusing “Confidence” in your business and governance processes and systems, you will find no better partner than “Confident Governance” and our award winning “Governance as a service” approach and decades of partnerships to turn around failing situations into success.

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  1 comment for “US Saga of Shutdown and lessons for Board of Directors in Governance and Risk mitigation

  1. Garrett McGhee
    October 18, 2013 at 6:14 am

    I’m glad that you mention communication as the number one way to navigate and/or avoid this issue. The communication can’t stop at the Board or CEO level, it’s a tone that has to permeate the entire business. All too often are areas of risk identified late in the game because the communication wasn’t there from the start.
    To your next point, crisis management must exist as a preventative measure but should absolutely not be the standard means of operating. Again communication on the front end can help avoid hitting crisis management mode.
    Redundancy is all a matter of opinion if there’s never any analysis performed to show facts. Running lean can be a very deceiving idea when you have the wrong people in the wrong jobs and that problem only compounds when your processes are not as efficient as they should be. You start to question what will be done when 800k jobs have been identified as redundant.
    Accountability is a mindset as well as an attitude. It is either pervasive throughout a company or nonexistent, unfortunately. I’d like to know where the accountability is when it comes to the shutdown. Not only have we allowed our government to employ 800k people that probably don’t need to be there, we’ve allowed our congressmen and women to use the shutdown as a power play instead of attacking the real issue at hand.
    The problem I see right now is we can’t evolve as a country or as businesses if communication doesn’t truly flow through the organization, plans aren’t developed instead of constant firefighting, the responsible parties aren’t held accountable, and finally risk and security aren’t addressed on the front end. I really applaud your analysis as it’s insightful and very applicable from lean startups to governments with hundreds of thousands of redundant employees.

    Like

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