Going off-leash: Rethinking controls

Brooke Co-founder Brett Nan Tie explains why it is time to clean up the image of controls and empower front-line decision makers.

In today’s business world we are constantly confronted by the gap between strategy and execution, where high-level concepts sound great in theory, but prove near-impossible to implement.

Why is that? Most of the time it’s because governance (the system of control that enables decisions to be made effectively and efficiently) has been bolted on, rather than consciously designed in. It’s also because controls are either:

  • dictated to employees from the top-down, leaving little elbow room to deal with changing environments and unforeseen opportunities; or
  • largely absent and front line staff are left to do their best on the basis of vague, inconsistent or at times contradictory high-level guidance.
Empowering front-line decision makers

So how do you empower employees to be accountable, to take the initiative and solve problems, and to make decisions in the interest of the organisation as whole?

The secret to success comes in three parts. The first is to ensure that where controls are required, they are outcome-focused. That is, the outcome is defined in a measurable way, but the method of achieving it is left to the person accountable, subject to any specific constraints agreed in advance.

The second part is to make sure that decision rights align with accountabilities. This is not just about financial delegations. It also includes operational decisions and approval processes. Reviewing and clarifying decision rights should be done regularly because external and internal changes can often make existing decision processes ineffective or counterproductive. Complexity also tends to grow over time as ad hoc controls are added in response to specific issues.

The third part is to build in feedback and assurance. All too often implementation of controls is “one-way.” We put them in place, but never check if they are working as intended, or indeed if they are working at all. So it is critical to build in measurement, feedback and assurance as part of the control system from the start. Only then can you have justified confidence that the control system is working as intended. It also provides the basis for improving the system over time and adjusting it to account for external changes.

A governance framework built in this way is able to keep decision-making with the people best placed to make the decisions. It empowers them to make the best possible call in their specific situation as circumstances change. It encourages innovation, while at the same time keeping people mindful of the risks they need to manage, rather than blindly following prescriptive check-lists.

It should also be a fluid framework that adjusts and flexes with change, but always maintains line of sight to the outcomes that matter to the organisation. It should be a lean framework, in which every control is there for a purpose, rather than imposing controls for controls sake.

A high stakes example:
The Australian Defence Force had realised that many of its old approaches to control were not working and had begun to affect the organisation’s ability to deliver maritime capabilities. It was clear that these approaches needed to change to ensure success in a more volatile and uncertain future.

Past approaches to improving the existing system of controls had led to the application of many, many band-aids. As Defence came to realise, this is the fate of any prescriptive approach. Every time a new situation arises a new ruling is required and pretty soon the whole system becomes bureaucratic and unwieldy. Worse still, it tends to transfer accountability away from those doing the work to those making the rules. It makes people less mindful of the outcomes they need to achieve and the risks they need to manage. Instead they gain comfort from “following the procedure” and “ticking the boxes”. They rapidly forget why those procedures and checks were imposed in the first place.

This time Defence decided to take an outcome-focused approach to systems of control for its maritime capabilities. This meant defining the overarching outcome, that of “maximising the operational effect of maritime capabilities while minimising risk to people, public and environment”.

From this primary control – the outcome – a set of outcome-based goals was established to guide action and to provide a framework for governance and assurance.

This means the people delivering the Defence maritime capability now get to say how they will put systems of controls in place to meet their outcome-based goals and achieve the outcome. Assurance then verifies whether the controls are working as intended and achieving the specified goals.

The job of those making the rules, has shifted from telling people what rules they need to comply with to asking “please show me how the controls you said you would put into place are capable of achieving the outcome, and give me evidence they’re actually achieving the outcome”.

While it took a while for people to adjust from the old prescriptive rules-based regime, once they had experienced the outcome-based approach there was no going back.

Embracing new world controls

This new approach inverts the old world of controls to give people the elbow room they need to drive their part of the business in line with the enterprise outcome. The ‘whole’ is alive in every ‘part’ of the enterprise.

As leaders, we need to lead through example, to be the role model for accountability, not the imposer of rules.

Always ask yourself these three questions:

  • Are my controls outcome-focused and are my people’s decision rights aligned with their accountabilities?
  • Is everyone empowered to hold themselves and others (including me) to their accountabilities in a constructive way?
  • Do I have justified confidence that the controls are working as intended?

To learn more about complexity, competency and controls and Brooke’s unique approach to problem solving, contact us today.

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