Social Enterprise Governance

Social Enterprise Governance Policy Development is not Boring
By Garry Claridge

meeting
Steering of the strategy and operations of organizations is commonly called governance. The actions of governing will be influenced by the organizations mission, aims and values. This, collectively agreed upon, governance creation can be termed the Governance Policy. The governance policy will grant rights and privileges, express limits on actions, and assign responsibilities to roles.

The governance policy can be expressed in many ways, it could be a set of written documents, it could be verbal mantras, or even tacit agreements. Generally, the mission, i.e. the type of enterprise, will determine which means of governance policy expression is appropriate and needed. Enterprises which are a significant trading business will usually require written governance policies for the sake of coordination and continuously open communication for all stakeholders, now and into the future.

Styles of governance policy can vary from very prescriptive to lightweight and scant. To describe this a mountaineering analogy comes to mind. Two styles of mountaineering exist; Expedition style and alpine style. Alpine style is described as “light and fast”, whereas expedition style is defined by its significant project management requirements and grandiose goals. Generally, alpine style is used for mountains up to extreme grades, whereas expedition style is used specifically for extreme grades. However, alpine style is sometimes used for extreme grades by very skillful climbers forming a highly functional team. Each style has its advantages and disadvantages, particularly in respect to the grade of mountain being challenged and the inherent dangers.

thumbnailAdvantages of the expedition style include extra safety, enables bigger groups, sustained progression towards the mission for long distances and extreme environments.  Advantages of Alpine style include speed, adaptability, and lower overheads. The Alpine style requires greater trust in each others’ skills, and well rehearsed techniques for climbing and rescue. The expedition style requires greater collective skills in project management and procedures. Yet, both styles still need; a clear mission, skilled climbers, defined communication procedures, safety guidelines, and agreed principles.

We may be able to classify social enterprises in the mountaineering style context by their size and the complexity of their operations. The expedition style equivalent of social enterprise governance can be developed using a number of off-the-shelf frameworks, or alternatively written from scratch. One of these frameworks is the “Carver Policy Governance” model, it is used by the Maple Street Co-op. It is very prescriptive and aims to give clarity for delegation to management, board focus for bigger issues, and evaluation processes of the organization’s performance. The Carver model uses an “Ends” and “Means” paradigm, which is also the core of other frameworks regardless of style.

The alpine style of social enterprise governance may be more suitable for community service types, or groups with a small and long-term membership, or groups with a specific mission of limited duration. However, like in mountaineering, this style of governance policy may be used for large and ongoing enterprises. The ability of members of the board of directors or the management committee to work together will be the key factor for success using this method with larger and more complex organizations.

Communications which are accurate and freely moving, is an important attribute for a healthy organization. Therefore, enabling this type of communication through the governance policy is vital. Effective communication requires active listening, hence it becomes dependant upon the culture of the enterprise, which can be influenced by good governance policy.

Methodologies exist that can compliment governance policy frameworks, particularly the less prescriptive and more dynamic ones. An interesting methodology for enhancing the governance policy is Sociocracy. The sociocracy methodology has a primary attribute requiring democratic communication, and it describes how the principles and structures needed to support it are developed.

Sociocracy extends communication within the enterprise by using a double-linked circular groups meeting system. The aim of this system is to link all levels and groups within an organization, hence enabling multi-directional communication. This is designed to carry information up-and-down and left-and-right throughout the whole organization. One effect of this is to create feedback loops, which are necessary for maintaining self-correcting organizations, which will also assists in developing enterprise resilience.

Human model connectionMethods, such as sociocracy, are significant in their positive effect on an enterprises functionality, so much so, that they can become the core of the style of governance. Hence, governance policy development can be designed from and around this core.

Governance groups can range from a Board of Directors to a Management Committee. Generally, Boards of Directors will separate the responsibilities between themselves and the management. The Board of Directors will usually be responsible for strategic planning and policy compliance monitoring. Whereas a Management Committee may have greater involvement with the operations of the enterprise and share the related roles. This is not saying that the converse cannot be true for some organizations.

Finding and tuning for an optimal mix of prescriptive and lighter form (expedition and alpine) governance policy is on ongoing and dynamic task. Like the mountaineering team’s need to adapt to the changing operating environment for survival, our governance needs to adapt for enterprise sustainability. As many observers note, the load of autocratic management – when all decisions are pushed to the top – causes managers to feel the burden of the organization. Such is the need for delegation and the governance policy tools enabling it.

All governance policies will need to consider this set of generic attributes:

  • Mission/Purpose
  • Values/Principles
  • Ends – aims and objectives
  • Means – boundaries and limitations

In the end, the effectiveness of governance will come down to the ability for people to work together and to effectively communicate. An effective tacit governance policy would be the true test of how well the enterprise’s people can work and communicate together.

Note:

  1. Garry was a member of the Australian Army Alpine Association (decades ago) and a former director of the Maple Street Co-op.

Bibliography:

  1. Roberts, R. (2004) The Modern Firm – Organizational Design for Performance and Growth, Oxford University Press, New York
  2. Buck, J. and Villines, S. (2007) We The People – Consenting to a Deeper Democracy, Sociocracy.info, Washington

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