Corporate governance has increasingly captured the attention of the professional world in these times. Concerns in this area are hot on the heels of considerations of how “green” the organization & its activities are and what is being done to minimize its adverse impact on the environment. And just as initiatives taken at the corporate level to address global warming concerns have an impact on individual projects and project managers, so also an understanding and appreciation of the organizational concerns on accountability and transparency is crucial to today’s project managers. Given recent reported irregularities in the national and international corporate scene and the resultant system of legal and regulatory checks that has been instituted in most countries, businesses and individual managers can ill afford to be caught by surprise in this area.
A cursory study of the main requirements of corporate governance reveals an increasing stress on more explicit, clear and accurate representation of financial and such other information. For even the remotely projectized organization, this implies the communication of project data thus establishing a direct link between key project management information and corporate governance. It would not be incorrect to say that project communication management is the process area that is most affected by the stringent needs of corporate governance. As a result of strict regulatory mandates, senior management and audit teams are increasingly “interested” in individual projects; hence the project manager needs to be doubly sure that the information being shared to all stakeholders is consistent, complete and most importantly, accurate.
Effective corporate governance also aims to ensure that no project that clearly exhibits signs of failure be allowed to continue into the next phase without clear issue resolution. As a result, most projectized organizations impose reporting formats that allow easy determination of the project performance. A format that is increasingly being used is the “Traffic Light” representation where green, yellow or red color is used to indicate if the project is doing well, needs attention or is headed towards disaster (I shamefacedly admit that when I first saw this format, I decided it was one of those “new fangled” ideas of my boss; it is only now that I recognize its popularity and ease of use). In order to ensure uniformity in reporting across the enterprise, managements insist on reports in a format that they are familiar and comfortable with. In some cases, the Project Management Office (PMO) implements guidelines regarding information presentation and distribution that all managers need to adhere to. This may present a deviation from the project manager’s usual “way” of doing things. However she needs to quickly fall in line and comply with the guidelines laid down across the enterprise.
In addition to project communication management, corporate governance also shares a relation with some of the other process areas. Corporate governance monitors the use of organizational resources that are normally shared across projects. Use of large amounts of resource or inconsistency in usage may sound an alarm to the audit team. Project and portfolio managers need to ensure that their resource usage is in line with the governance guidelines. Likewise regulations, such as the Sarbanes Oxley act, require that organizations implement an Enterprise Risk Management Framework. This translates to a more formal and frequent approach towards project risk management than some managers are wont to display today. Frequent and more rigid & detailed audits are here to stay; internal audits scrutinize every inch of the project to ensure that the firm does not receive so much as a slap on the wrist from external auditors. Another increasing point of focus for project managers in the light of corporate accountability requirements is to ensure that their projects align to strategic objectives and goals. Rather than focusing on her individual project, today’s project manager needs to consciously evaluate the impact of her project on the overall business strategies.
Which leads us to a crucial transformation in the role of a project manager today. No longer can a manager narrow her vision to the task in hand and concentrate on its completion oblivious to the bigger picture outside. Corporate governance entails that she be completely aware of the business environment at large, recognize how and where her project fits in, know what information can be shared or solicited and what cannot and understand the legal and ethical implications of deviation from the guidelines. Project managers of most performing organizations handle initiatives for a variety of clients across multiple business domains. Failure to understand the nuances of corporate governance in the client domain or an inability to recognize its impact on her individual project will spell disaster to the client, the performing organization and worst – the individual.
