Process governance is a hot topic in Financial Services since the Hayne Royal Commission. Unfortunately many organisations seem to be missing the point and the opportunity good process governance presents.

Trial by Kafka

The Trial by Franz Kafka is one of my favourite books. It tells the story of a man who is arrested, but not imprisoned. Neither the charges, nor any evidence that might hint at the charges are ever revealed. As with many of Kafka’s works, there’s an element of absurdity about it.

Which is where we come to the main point of this blog. The title of the book in German is Der Prozess and Prozess, as well as translating into English as the word for trial also translates as the word for process. It seems that since the Hayne Royal Commission, many organisations in financial services have a renewed focus on process governance. 

They have established process governance forums, licensed some software and then set about documenting their processes. And then given themselves a pat on the back. Job done! This is where the absurdity comes in.

Apart from ticking a compliance box, simply documenting your processes adds little to no value. One of the few things you can say for certain is that the process documented will not be the process that is executed day-to-day. Another is that the majority of these organisations are not measuring this fact. They are not checking whether what the delivery team actually does is what the process documentation says they should be doing. And if you’re not measuring conformance, how do you know whether your process is meeting your regulatory or customer obligations? The answer is you don’t. And if you don’t know the answer to this question, you don’t know where to look to improve. So it’s likely that a lot of the improvement resources you are deploying are being misdirected.

In short, establishing good process governance really should include the following steps:

  1. Define the services you deliver.
  2. Determine the processes required to deliver these services end-to-end.
  3. Understand how these processes create value for customers, regulators, shareholders and other stakeholders.
  4. Set and document the specifications for these processes that will ensure this value is created.
  5. Monitor execution of the processes to ensure that they are performing in line with these specifications.
  6. Target your improvement efforts to plug the gaps when they invariably are not.

Wile the principle is simple, in service businesses, execution is challenging due to the many, many variants that tend to exist for each process. You may have defined a “happy path” but it’s highly likely that there are many more acceptable, alternative paths depending on the specific nature of the service request and the inputs you have to work with. And tomorrow the process will be different. This is all part of the fun and why process governance can never be treated as a project.

Unlike Kafka’s novel, there is no start and there is no end. Process governance will always be required. You cannot improve effectively and sustainably without it. It’s absurd to think otherwise.

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