PMI’s Voices on Project Management Blog has moved

November 18, 2014

PMI Voices BlogI’ve been a regular contributor to PMI’s Voices on Project Management blog for many years.  Its old home was hidden in the depths of www.pmi.org.  Following PMI’s purchase of www.projectmanagement.com (the old ‘Gantt Head’), the ‘voices’ have moved to join a number of other themed blogs on the site.

The site is open to everyone, you need to register to post comments and download, but reading is free and unrestricted.

 

My first post in this new location is Influence Without Authority. You can read the post at http://www.projectmanagement.com/blog/Voices-on-Project-Management/11149/  and then explore the rest of the site.


The Functions of Governance

November 15, 2014

We have published 3 papers recently that clarify and differentiate the functions of management and the functions of governance.

The widely accepted ‘functions of management’ developed by Henri Fayol and published in his 1916 book Administration Industrielle et Generale, are summarised in: WP1094 The Functions of Management. Fayol’s ‘functions of management are:

  • M1 – To forecast and plan,
  • M2 – To organise
  • M3 – To command or direct (lead)
  • M4 – To coordinate
  • M5 – To control (French: contrôller: in the sense that a manager must receive feedback about a process in order to make necessary adjustments and must analyse the deviations.).

These functions are to be contrasted with my Six Functions of Governance:

  • G1 – Determining the objectives of the organisation
  • G2 – Determining the ethics of the organisation
  • G3 – Creating the culture of the organisation
  • G4 – Designing and implementing the governance framework for the organisation
  • G5 – Ensuring accountability by management
  • G6 – Ensuring compliance by the organisation

The mapping of the relationship between the functions of management and the functions of governance are set out below:

Mapping of the functions

Management functions are assumed to be hierarchal with the governance inputs cascading down to lower level functions.

Management functions are assumed to be hierarchal with the governance inputs cascading down to lower level functions.

These functions of governance were initially proposed in my ‘advisory article’: The Six Functions of Governance. Published in PM World Journal Vol. III, Issue XI – November 2014; download from here.

A more focused discussion paper has been published today in WP1096 The Functions of Governance.

Conclusion

Governance is the action of governing an organisation by using and regulating influence to direct and control the actions and affairs of management and others. It is the exclusive responsibility of the ‘governing body’, the person, or group accountable for the performance and conformance of the organisation (in a commercial organisation, the Board of Directors).

But in many situations, particularly associated with the governance of project and programs, the governing of organisations is far from effective. The amount of time and effort devoted by the ‘governing body’ to compliance and accountability, and the amount of resources wasted by ineffective and ‘competing’ management groups, can be significantly reduced if the organisation’s objectives, ethics and culture are sound.

Six core functions of governance are defined to bridge the gap between the ‘objectives of governance’ defined by Cadbury and others and the practices of governance defined by organisations such as the AICD. Hopefully discussion around the core functions of governance sparked by these papers will encourage improved governance performance.


Sources of Power

November 4, 2014

powerNo sooner had we published WP1095  Power and Authority than one of our regular correspondent pointed out we had missed the concept of ‘structural power’.  Whilst originally seen as being relevant to the discussion of power differences between sovereign nations, the concepts also apply to organisations where the characteristics of a situation can affect or determine power. Important structural sources of power include knowledge, resources, decision making and networks.

Knowledge as Power: Organisations are information processors that must use knowledge to produce goods and services. Intellectual capital represents the knowledge, know-how, and competency that exist in the organisation which can provide an organisation with a competitive edge in the marketplace. Within an organisation, the concept of knowledge as power means that individuals, teams, groups, or departments that possess knowledge that is crucial in attaining the organisation’s goals have power, but only if they use the power to advance the interested of their organisation – hording knowledge to the detriment of the organisation is destructive and self defeating. Outside the organisation, the situation is reversed; protecting the organisations intellectual property is vital to maintaining its competitive power in the market.

Control of Resources as Power: Organisations need a variety of resources, including money, human resources, equipment, materials, and customers to survive. The importance of specific resources to an organisation’s success and the difficulty in obtaining them vary from situation to situation. The departments, groups, or individuals who can provide essential or difficult-to-obtain resources acquire more power in the organisation than others, as do external suppliers in a market where the particular resource is scarce.

Decision making as Power: The decision making process in an organisation creates more or less power differences among individuals or groups. Managers exercise considerable power in an organisation simply because of their decision making ability. Although decision making is an important aspect of power in every organisation, cultural differences make for some interesting differences in the relationship.

Networks as Power: The existence of structural and situational power depends not only on access to information, resources and decision making, but also on the ability to get cooperation in carrying out tasks. Managers and individuals that have connecting links with other individuals and managers in the organisation and beyond will be more powerful than those who don’t. The power generated by social media networks is a phenomena that is still emerging and is not well understood.

An additional ‘power source’ is ‘peer pressure’ – the power held by a group over its individual members.

The White Paper has been updated to include these concepts and can be downloaded from: WP1095  Power and Authority


Stakeholders generate profits for shareholders

October 29, 2014

A few months ago I posted on the concept of Understanding stakeholder theory and suggested organisations that focus on providing value to stakeholders do better than those focused on short term rewards for shareholders and the associated benefits flowing to executive bonuses.

A new report: From the stockholder to the stakeholder by Arabseque Asset Management and Oxford University supports this contention.

From the Stockholder to the Stakeholder reviews existing research on environmental, social and governance (ESG) issues. It is a meta-study of over 190 different sources the authors have demonstrated a strong correlation between organizations that take ESG seriously and economic performance. For example:

  • 90% of relevant studies show that sound sustainability standards lower the cost of capital;
  • 88% of relevant studies show a positive correlation between sustainability and operational performance;
  • 80% of relevant studies show a positive correlation between sustainability and financial market performance.

However, to translate superior ESG quality into competitive advantage, sustainability must be deeply rooted in an organisation’s culture and values. The consequences of failing to take ESG seriously continues to be demonstrated by another of my regular topics, BP. The report contains a plot of oil company share prices from 2009 (pre the Deepwater horizon disaster) through to 2014. BP’s share price continues to suffer the consequences of the short sighted cost cutting that precipitated the Gulf of Mexico disaster:

BP-Price

The report concludes that it is in the best economic interests of corporate managers and investors to incorporate ESG considerations into decision-making processes starting at the governance level right down the organisation hierarchy.

The full report can be downloaded from http://www.smithschool.ox.ac.uk/research/library/SSEE_Arabesque_Paper_16Sept14.pdf .


Understanding management

October 26, 2014

Two new White Papers look at the function of management and the sources of power and authority used by managers and leaders.

WP1094 The Functions of Management describes the five functions of management, the supporting principles and the challenges of managing in a post bureaucratic organisation. Download the White Paper.

WP1095 Understanding Power and Authority looks at the sources of power and authority used by management and leaders.  Different sources of personal power underpin different types of authority.

WP1095 Power Autority

Download the White Paper.

Whilst both White Papers are based on general management theory, project managers are by definition managers and are increasingly expected to be effective leaders, so an appreciation of both subjects is useful.


The Evolution of Ethics

October 17, 2014

ethicsOur White Paper on Ethics discusses a number of ethical approaches used to determine what is ethical in the modern world. What is not covered in the White Paper is the evolution of ethical thinking. A blog post by Ricardo I. Guido Lavalle outlining a presentation by Prof. Clovis de Barros, who teaches Ethics at Universidade de Sao Paulo (USP), Brazil; fills this gap.

Prof. Clovis suggests Ethics evolved through five main phases outlined below:

  • Greek times, when ethics were about fitting oneself into the great cosmological order. Right actions were those that helped the Cosmos achieve its maximum order. From this standpoint Greek philosophers (mainly Aristotle) assumed rigid, stable social layers where aristocracy had the most part in the game.
  • Consequentialism, holds that the consequences of one’s conduct are the ultimate basis for any judgment about the rightness or wrongness of that conduct. Niccolo Macchiavelli (The Prince, 1513) is the best known proponent of this school of thought; he strove to maximize prince’s power. Right actions were those that had achieved the most power for the prince. Attention here, the right actions were considered right after they proved to be efficient in achieving the desired outcome – ‘the ends justify the means’.
  • Utilitarianism, holds that the proper course of action is the one that maximises utility, usually defined as maximizing total benefit whilst reducing suffering or the negative consequences. Proposed by Bentham (1780) and John Stuart Mills, is a great justification for liberalism and aims for ‘the greatest happiness of the greatest number’. It is a simple and attractive standpoint, and it even fits with common democratic views. However, it presents some issues regarding minorities.
  • With Immanuel Kant (1781) emerges the inner spiritual origin of ethics. Kant contested utilitarianism with his deontology. An action was right if the very inspiration of it was good, regardless of the consequences. The ultimate goal was to form a corpus of universally valid actions, such they were valid in any context, and forever. The puritan ethics of duty and good purpose is an earlier expression of this long-lasting and very successful ethical view.
  • In contrast to all previous views, post-modernist ethics is about relativism. Ethics has become transactional, an agreement between parties, were openness and transparency of purposes are crucial. Post-modern Ethics is the result of a social contract, and agreement. Professional organisations such as PMI develop an agreed code of ethics to guide their members.

However, the transactional basis of post-modern ethics does not eliminate many of the founding concepts developed over millennia. PMI’s Code of Ethics and Professional Conduct balances many of these themes:

  • Overall the spirit of the Code is Kantian; a code developed by a ‘global’ body should seek to be of universal applicability.
  • Some elements of the Code are a quest for the good intentions inherent in Greek virtues (honour and fairness), (2.4 We make commitments and promises, implied or explicit, in good faith)
  • Others tend to utilitarian (2.1 We make decisions and take actions based on the best interests of society, public safety, and the environment).
  • Whilst others are post-modern ethics (3.1 We proactively and fully disclose any real or potential conflicts of interest to the appropriate stakeholders).

What this brief scan of history highlights is the way the long history of ethical thinking affects the modern definitions of ethics. The White Paper looks at their practical application.


Opportunity Lost

October 3, 2014

RICSThe first edition of the RICS / APM guidance note on Stakeholder Engagement is a missed opportunity. Hopefully the second edition will plug many of the glaring gaps.

The guide is built around ten principles:

  • Principle 1: Communicate
  • Principle 2: Consult early and often
  • Principle 3: Remember they’re only human
  • Principle 4: Plan it
  • Principle 5: Relationships are key
  • Principle 6: Simple, but not easy
  • Principle 7: Just part of managing risk
  • Principle 8: Compromise
  • Principle 9: Understand what success is
  • Principle 10: Take responsibility

All sound principles but in a strange order

Any complex endeavour needs a clear understanding of its objectives and then a plan to achieve the objectives before starting work, but ‘Understand what success is’, is at #9 and ‘Plan it’ at #4.  Surly the whole point of engaging stakeholder is to enhance the probability of success. Which means #1 understand what success is, #2 plan how to achieve success and then move into implementation.

But implementation needs focus, completely missing from the guide is any practical guidance on ways to understand the stakeholder community, prioritising the stakeholders so the communication effort is focused where needed and then managing the overall engagement effort for maximum effect. The best the guide can offer is a simplistic 2×2 matrix. My methodology, the Stakeholder Circle® is one of several that recognise the multiplicity of dimensions needed to understand a stakeholder, the outline is available free of charge from http://www.stakeholdermapping.com/stakeholder-circle-methodology/

The last omission is considering the path to stakeholder management maturity. The path to maturity is mapped at: http://www.stakeholdermapping.com/srmm-maturity-model/

I had hoped stakeholder engagement was moving beyond the soft ‘fluffy’ platitudes of the past into a pragmatic management process, allied to risk management, focused on maximising the aggregate benefit from a project to all of its stakeholders.  These ideas are in the RICS Stakeholder Engagement guide but unfortunately the guide lacks any guidance on how to achieve these objectives, with the exception of the CASE model in Appendix 3.

Hopefully the 2nd Edition will not be too far away.

The 1st Edition is available from http://www.rics.org/shop


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