Organizational Governance

Organizational governance is a system by which an organization makes and implements decisions in pursuit of its objectives. They can be influenced by internal parties such as senior management or external parties such as external bodies, the government (through laws and regulations), pressure groups and stock exchanges.

This practice is part of the Portfolio Delivery Cycle.

Purpose

Aligning portfolio management with the organizational structure will ensure relevant internal and external compliance requirements are followed and the portfolio is effectively aligned with the organizational practices.

Implementing

The following activities form the organizational governance practice:

• Vision Alignment: The aim of the portfolio is to achieve the organization’s strategic objectives. Strategic objectives will always be aligned with the organization’s vision (if not, the senior management needs to address that problem first). Both organizational vision and the portfolio vision should be aligned together and signed off by the senior management to ensure the portfolio is geared to deliver the objectives set out in the organizational vision.
• Portfolio Success Criteria and Stage Gates: Success criteria are used for assessing whether things are going according to plan. Metrics need to be designed for assessing the portfolio’s ongoing alignment with the organizational goals. The nature of metrics differs from organization to organization. There are no universally applicable metrics that can be used for any business. Therefore, the portfolio management need to design the metrics in collaboration with the organizational leadership. Stage gates are regular milestones, where assessment will be carried out. Creating regular stage gates is important to create success for the management control practice.
• Role Descriptions: Similar to job descriptions, role descriptions outline what is expected from an individual or a group, which is performing a specific role. An individual may perform more than one role. In portfolio management, some roles are performed by a group (such as the portfolio progress group). Portfolio governance requires clear role descriptions are created for every role to ensure expectations are clarified.
• Escalation Paths: Decisions sometimes need to be escalated to higher levels. Escalations can happen within projects, within the programme or from project/programme to the portfolio. In some cases, escalation can happen from the portfolio to senior corporate management. A part of aligning the portfolio with the business change lifecycle, would be to define the escalation paths and decision-making limits for each individual or group.
• Process Ownership: Portfolio management processes are owned and managed by the portfolio office. The portfolio office will keep checking continuously, whether the processes are operating fine and they are doing the job. It will also check whether the processes are being followed and there are no non-compliances. If there are too many non-compliances or if too many people are bypassing processes, it is also important to find out whether the process is the right one. This is also part of the portfolio office’s responsibility.

Keys to Success

The organizational governance is often seen as a department that attempts to enforce processes on others. Instead, the governance function must be seen as a function that creates efficiency and effectiveness in the organization.

Written by Inham Hassen

This wiki is developed and managed by an accredited trainer, independent of AXELOS. While aligned with their guidelines, it’s not an official resource.