Governance from the perspective of Systems Theory

A brief overview of Systems Theory

Systems theory is the study of systems in general, with the goal of elucidating principles that can be applied to all types of systems at all nesting levels. The basic concept is that any organised group constitutes a system, which is composed of regularly interacting or interrelating groups of activities or people performing activities. . (For more on systems thinking see: WP1044, Systems Thinking)

Any single system consists of sub-systems and is itself part of a higher level system. The system being discussed or examined cannot function without its constituent sub-systems and its behaviours and outputs influence the higher level systems. These concepts are closely aligned with the ideas in Complexity Theory (see: A Simple View of ‘Complexity’ in Project Management)

Organisational Governance from a Systems Theory perspective

Organisational governance or to be more precise but explicit the governance of the organisation (ie, the governance of the corporation), is the explicit and exclusive responsibility of the Board of Directors in commercial organisation and their equivalent in other types of organisation (the Board). Organisational governance does not come in different types; it is a single system, the responsibility of a single entity, the Board. But this system relies on sub-systems to be effective. A framework focused on project management is suggested below, there are of course many other sub-systems:

Taking each system in turn:

  • The Governance System is responsible for setting strategy and ensuring resources are used effectively (for more on this see: WP1033 – Corporate Governance). To achieve this, it is heavily reliant on the organisation’s management system and additionally, the Board may have some involvement in the management processes (eg, approving very large projects).
     
  • The Management System manages the entire organisation within, and supporting the governance framework. Executive management are responsible for creating an organisation capable of achieving the objectives defined by the governance system and also capable of providing assurances to the governance system that resources of all types are being effectively and ethically used. Middle and front line managers are responsible for implementing the work.
     
  • The Project Delivery System is a sub-set of the overall management system, this specialised area of management is responsible for all aspects of the ‘management of project management’ as described in our White Paper: WP1079 – Project Delivery Capability
     
  • And naturally, a core component of the Project Delivery System are the individual Project Management Systems (and Program Management Systems), each system responsible for creating the ‘deliverables’ the project or program was initiated to ‘deliver’, for the organisation’s management to make effective use of, and generate value.
     
  • Specialist sub-systems such as a Project Control Board (PCB) operate within this overall structure to fulfil specific purposes.

Our previous post, Management -v- Governance described the functions of the three key levels of management, the Board, Executive Management and Middle / Front Line Management (or General Management); whilst these three levels of ‘management’ have quite distinctly different roles and responsibilities, in a well governed and well managed organisation each ‘system’ is integral to and supports the objectives of the higher system.

However, in dysfunctional organisations, the different responsibilities become merged or blurred to the detriment of all. Possibly one of the key reasons middle managers working in IT and Project Management feel they are involved in ‘governance’ is the simple fact that the Board responsible for the governance of the organisation has failed in its responsibility to provide effective governance to the IT and Project Management functions, and the middle management level is trying to fill the void? More on this in my next post!

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2 responses to “Governance from the perspective of Systems Theory

  1. I fully support a systems approach to organisational analysis.

    I wonder whether your Venn diagram should also show some of the other systems that operate in and around organizations, such as the technology sub-system, the cultural sub-systems and the STEEPLE external context. I accept that these might be implied in your diagram and that their specific inclusion would overly complicate your message hear, but if we are to take a systems approach we should include all significant systems.

    My second comment is that we should distinguish between Directing and Managing. Most Boards are bad at Directing, but that is their main function, so let us show that management is really for the Executive. hence the first component in Directing Change is Portfolio Direction, not Portfolio Management.

    Lastly other players have roles in Governance, eg shareholders have a duty of stewardship and regulators have a duty regarding compliance. So diagrams of Governance should indicate that it operates within and outside the organization. It is well defined by the OECD as involving a set or relationships.

    Enjoyed your blog, I will visit again.

  2. Pingback: Governance -v- Management: A Functional Perspective | Mosaicproject’s Blog

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