How Do You Define & Build Organisational Governance Capability?

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Define the right governance capabilities to address the complex internal and external factors impacting your organisation

The remit of governance cannot be understated. From physical, psychological and cyber safety all the way through to maintaining ethics and integrity while reducing business risk through compliance, there’s a lot at stake for governance professionals.

Which means that you can’t just create a conceptual framework for what “good governance” is; you need to build robust and airtight governance capability throughout your organisation.

In this guide, we’ll walk through defining clear governance capabilities as well as how to implement and build governance capability throughout your workforce.

What is governance capability?

Governance capability refers to the governance skills, behaviours, knowledge, tools and processes needed within an organisation to achieve its goals. This can be applicable to a board of directors, but most often applies to a central governance team.

3 steps to define governance capabilities

Corporate governance is about as black and white as you can get within a business. There isn’t really room to move, which is why clearly defining governance capabilities is the make-or-break part of the equation. Let us explain, while clearly defining some capabilities.

Step 1: Define the landscape

The first port of call is understanding the environment these capabilities interact with. You need to understand:

Your organisation’s greater mission, purpose and values
The role of governance structures in that mission
The value governance generates, now and into the future.

Starting with business strategy ensures you’re always aligning governance strategy with its north star. This makes it easier to prioritise capabilities for development later, but we’re getting ahead of ourselves for now.

Step 2: Define the purpose

When you understand what role governance plays, you can start to shape the purpose of each capability. Every governance capability should have a unique reason for being. Consider this a bit of risk management up front: You’re figuring out what’s actually valuable to the organisation so as not to waste resources later.

Again, you need to consider if:

The capability will help your organisation achieve its goals in some way
There is market demand or need for it, external to your organisation’s talent needs
You have the right resources to sustain the capability (people, budget, equipment)
A new capability will compete with any existing capabilities
There are any risks involved with creating and sustaining the capability.

Step 3: Define the outcome

Now we reach the point when you can put a name to the capability. These steps aren’t necessarily linear; if anything, it can be helpful to revisit business needs and environment post-naming to ensure the capability is truly reflective of internal and external factors.

To name a capability, you need to effectively describe what work is being done. For example:

If you look at the above and are unsure of our working out, then don’t worry. We’ve got a list of governance capabilities available here, free for you to copy, paste and edit as you see fit. Each capability also has a full description with three levels of competence, so they can be incorporated into professional development from the get-go. We still recommend making some changes to the wording so it makes sense for your workforce.

Strategies for building governance capability

If governance enables and guides the greater organisation, how do you enable and guide governance—especially if governance is a small team? With the same thing governance provides: A structured process.

Start by:

Securing leadership buy-in
Creating co-ownership between HR and business units
Uncovering governance capability gaps
Understanding current governance capability maturity
Designing methods to build capability
Tracking progress.

Engaging leadership

Everything starts with buy-in from senior leaders. Governance professionals should already have close working relationships with leaders, but introducing change means that you often need to rebuild engagement. Not least of all because leaders need to champion governance processes for themselves and their teams—think about digital literacy and capability, for a start.

So, we need to start with what leadership wants and what’s stopping them from getting that. The want can be cold, hard KPIs like operational performance and effectiveness or business process improvement. It may even be the broader integrity of organisational health and revenue.

The hurdles will require you to have conversations. What blocks governance needs to be stamped out quickly, but likely has cultural or systemic roots. That means getting prescriptive with how institutionalising governance capability goes beyond simple compliance, to establishing sustainable and resilient business practices. Resilience underpins each team’s ability to meet their goals, which ensures that the organisation can hit its own strategic goals. Fill in the gaps with your organisation’s context, and you have a template for a solid argument.

Co-ownership between HR and business units

Part of securing buy-in is being clear about what business unit leaders are and aren’t responsible for. It’s not just an attractive selling point, but also indicative of the nature of capability building: It requires an organisation-wide effort.

This is also the step that bridges strategy and performance and accountability and execution. Think about it in terms of responsibilities.

HR (and L&D and/or OD) is focused on organisational capacity and realising capability through performance, not necessarily the dynamic capabilities of each business unit.
Leaders have their fingers on the pulse of what talent they need now and what may be needed in future (at least, subjectively), plus the social capital to embed capability building in the workplace. But they may not always think of terms of a single organisational vision if they’re siloed.

But it’s counterintuitive not to merge these specialist POVs. Especially as it means HR can be sure they’re creating timely learning interventions since they’ll know what leaders actually need.

Understanding governance capability gaps

Once you’ve laid the groundwork by way of defining governance capabilities, we can get into the nitty gritty. First port of call is assessing gaps in current capability.

Remember that we’re not doing compliance assessments; while we’re talking about governance, there is no pass or fail. The aim is to create a picture of individual capability, so you can build the most relevant training programs.

There are a few ways you can go about this.

The self-assessment calls for employees to evaluate their current competency in a number of capabilities. Most commonly it’s those relating to their job role, but sometimes you can make it an aspirational assessment for career progression.
Manager assessments would be the other side of the self-evaluation coin, given managers provide a more objective and strategic view of performance.
Subject matter expert assessments are highly advisable here, since they are used for more specialist capability sets.

Provide a universal scale for assessment, such as:

Foundational or requires development
Intermediate or meets expectations
Advanced or exceeds expectations.

Assessing governance capability maturity

We zoom out from the individual view of capability to organisational with a maturity assessment. Creating a living, breathing map of capability maturity gives you warrant to prioritise building new capabilities and argue that point to your CEO.

How you assess maturity is really up to you. You may grade capability on availability among the workforce, or its impact on competitive advantage. It’s best to start with an evergreen scale of maturity, though. Think:

Initial, whereby work may not get done effectively
Managed, wherein things are planned, measured and somewhat controlled
Defined, with clear standards in place (e.g. a governance framework)
Quantitatively managed, using data-driven objectives
Optimised, the highest point of maturity that focuses on continuous improvement in the name of agility.

The easiest way to showcase this information is with a visual heatmap. Colour coding may sound juvenile, but it means the data can’t be argued with or misinterpreted.

Methods to build governance capability

This is where you need to get prescriptive. Given the ramifications of poor governance capability, the methods you use to build it must be as iron-clad and air-tight as you can make them.

The easiest win here is creating a central repository of information. Knowledge management systems allow information to be shared and sustained, all the while acting as a central source of truth. (Note: There’d have to be information owners who ensure things are always up to date.) If you use a performance learning management system (PLMS) you can push one-time courses at the right moment in the learning journey as well.

It adds a layer of transparency (key for governance, no?) too, and means that general information can be made on-demand for employees at scale. Consider as well that many governance processes and procedures will be complex, and the various prerogatives of board members and function leaders can unintentionally muddy the waters of understanding at times.

Attitudes and behaviours are an inherently important part of governance processes, so don’t underestimate the need to develop them here. This can be addressed in a couple of ways.

Coaching and mentoring with key SMEs contextualises complicated concepts, while also broadening perspectives and mindsets. Formal programs can strengthen the cultural ties that bind, too.
Communities of practice facilitate best practice sharing. This doesn’t have to be directly tied to a capability, but rather the tasks, tools, behaviours and knowledge that it encapsulates. Think: Leadership for culture, DE&I for integrity, audit tools for internal investigations.

Tracking progress

Building capability does not matter if there’s no way to measure and improve methodology, particularly when it comes to governance. Complex external factors will change often and suddenly, and so governance capability building will need to evolve to match pace.

The name of the game is continuous improvement. Part of this is ensuring that there is consistent value creation through capability building, but a larger part is ensuring your methods are robust, proactive and still in line with business needs.

Re-assessments at opportune times will give you a picture of health.

Perform proactive and ongoing needs analyses to review competency and capability maturity. In short: Don’t wait for the training request.
Make these part of performance management so it’s a) not a shock for employees to be suddenly reviewed and b) so governance procedures are in front of all employees as often as possible.
Review your methods for development. Employee sentiment goes a long way towards understanding learner experience and training design, which directly correlates with learning transfer and the behavioural change that capability building is trying to achieve.

Key takeaways

Governance touches more than most realise. Internal and external brand reputation, culture, DE&I, stakeholder relationships, social responsibility and board performance all come under the umbrella of organisational governance.

Developing strong and universal governance capability requires understanding what governance looks like in your organisation, and then ensuring complete buy-in to build it. In full, that process is:

Engage leaders by getting to the root of their pain points
Establish a co-owned process between HR and business units
Uncover the existing gaps in governance capability
Identify the maturity of existing capabilities to prioritise development
Design training methods that best match the skills, knowledge, behaviours, tools and processes being taught
Consistently review and review your capability building methodology.