We’re going to go deep behind Executive Lines this week so don’t get left behind. There is quite a bit of regulation out there telling companies how to act, walk, talk, eat, etc, etc, and if you want to raise some capital by selling shares of you company on the market you will have much more to deal with. I will not be providing any opinions on the Sarbanes-Oxley Act, but over the last 30 years Corporate Governance has received plenty of attention especially after Enron, Worldcom, and other situations.
What is corporate governance?
Let’s start with a definition on Corporate Governance. Simply, it is the system by which companies are directed and controlled, (Wikipedia, SEP 2012). It attempts to define the interactions between Board of Director members, management, and shareholders. You could add stakeholders to this list also based on the amount of airplay companies receive. But let’s focus on the basic definition words “system”, and “directed and controlled”.
Much of this addresses the communication path through management, the board, and shareholders. We can see this in the shareholder reports, and on financial websites with the company’s balance sheet, income statement, and statement of cash flow. Inside the company the communication the board and management uses should be a little more action oriented. When I say communication, I mean the metrics.
How good is the company’s delivery?
Oh, it’s good.
Oh, it’s good.
Sound familiar in the office area? Does anyone really know? When the strategic plan is built, there should be some recognition of measurable performance goals. If you don’t know, go ask your customer what is important about the delivery of your product. Oh, it needs to be good. How good? Real good.
What is a Lean System?
Let’s go back to this system. When we talk about a Lean System, we are talking about making our office products at the rate or pull of customer demand. Do we have this thinking in our systems? Yes, that does mean to put Just-In-Time methods in our order systems. Remember, JIT is not just about reducing inventory costs, it puts a glaring spotlight on the problem areas. The same areas where we improve the flow of our information products.
Align the Lean System with the Strategic plan and we begin to provide actionable metrics going to the board and management, and in the right hands of a visionary Leader this can produce transformation that strengthens the company and produces happy customer. How happy? Real happy!
The measures going to management should show how we are affecting the results. These could show that performance is better, worse, or remained the same. If the results have not changed, then the team has not found the root causes, or the improvements are not working and we will hold off the pizza party until we have sustained positive results.
Can we institutionalize continuous improvement?
Improvement can be institutionalized by creating the expectation, and required metrics to review, and growing the people who show aptitude for Leadership out of the ranks of Green Belts and Black belts. I did not say that all Leaders should be belts, but there is a good place to look. Leaders should have their performance measured and Executives do not have a “come-apart” the first time a chart is Red or Yellow. These are indicators of process performance issues that need to be addressed.
ISO and CMMI provide frameworks of systems, but these are dependent on people working within the boundaries and keeping the documentation current. Companies and teams still develop their own methods and processes and these should be measured and reported upon. If you are not going to manage the process, then don’t measure it. And don’t be surprised if you do not receive the performance you think that you are entitled to receive.
As we go through this journey, we should be using road signs and maps to help us see where we are. Working with Leadership and our employees will strengthen the relationships and improve morale. Doing the right things at the right time should result in satisfied customers.
Have you seen a successful transition of practices when Leadership has changed hands?