Principle: Governance Alignment

Governance is the way an organization operates. All processes and procedures followed by an organization, eventually rolls up to its governance. Everyone in the organization must align their work according to the governance structure of the entity. Governance structure of an organization is dependent on business needs, shareholder requirements as well as regulatory or legal needs. It is important to include the portfolio management requirements in the organization’s governance structure. Portfolio management itself has a set of processes (most of which, the organization needs to define). These processes should be part of the organization’s overall governance structure, so that everyone knows what they are required to do, and work does not get duplicated.

How is Governance Alignment Achieved

Governance alignment is achieved by the following:

• Create a portfolio governance structure: The first step is to prepare a governance structure for the portfolio. The portfolio governance structure should be aligned with the existing structures as much as possible. If the organization already has a set of processes in place for a certain activity, those should be used if they meet the need. The governance structure will also include role descriptions, reporting structures, composition of committees, and ways of exchanging information.
• Consider global naming conventions: Each industry and every company has its own set of acronyms and terminology. In project management, there are abbreviations like PID (project initiation documentation). What would happen if one part of the business uses the abbreviation PID for “process identifier” or “personal identification device”? It is important for the portfolio team to have uniform naming conventions across the organization. It becomes even more important in organizations that have multiple portfolios or department-level sub-portfolios.
• Understand what to include and what to exclude: One of the biggest pitfalls in portfolio management is including every single initiative in the portfolio. When many non-strategic initiatives are included, portfolio management becomes complex, and its value gets diluted. A good way to avoid this, is to keep threshold criteria to include initiatives in the portfolio. This way, projects that are not required to be in the portfolio, will not get there.

Best Practices to Achieve Governance Alignment

The following are the best practices for achieving governance alignment:

• Consulting process-owners of functional departments: When creating a portfolio governance structure, process owners from other departments must be consulted. Especially the departments that closely work with the portfolio management team, such as finance, human resources and organizational risk management. This will help to get the portfolio management process aligned with organizational processes smoothly.
• Aligning sub-portfolios: Some large organizations have multiple portfolios, usually at a department-level. Departmental portfolios are usually owned by that particular department, which means there’s a tendency for senior management, especially those who are not directly involved, to have little interest in it. This is a pitfall that should be avoided through aligning the organizational portfolio and the sub-portfolios by creating consistency among them, using the same principles and cycles specified in this text.

Written by Inham Hassen

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