June 22, 2023

What’s in your Operational Governance?

by Tamara Pomerantz

Does any of this sound familiar?

The “loudest voice” drives the selection and approval of projects and investments.
Project resources are often at or over capacity.
Return on investment for projects is not clear because metrics to measure and confirm value were not defined.
Decisions for future projects and roadmaps are made and managed in silos.
Projects often do not have accurate timelines or consistently have timeline changes.
Project scope creep is the norm.
Projects often do not finish on time or within budget.
The organization’s strategic plan does not include specific measurable goals with line of sight to the initiatives and projects selected for realizing the goals.

These are all indicators of ineffective operational governance.

When effective, operational governance ties together an organization’s strategic and operational goals with the decisions on how to achieve those goals within the limits of the organization’s clinical, business, and IT resources and its competing priorities. An effective governance process:

Guides the evaluation of which projects and initiatives should be approved
Determines how projects and initiatives should be prioritized, and what may need to be delayed or canceled
Monitors and provides oversight to ensure organizational objectives and value are being achieved from the selected projects and initiatives

Realizing value

Like most health systems, your organization is probably running many simultaneous individual initiatives and projects all the time. Often each initiative and the projects supporting them are operating independently with their own governing bodies. Initiatives and projects are not clearly aligned with the organization’s strategic and operational goals and are often competing for the same resources due to challenges with prioritization as part of investment decision-making.

Having effective operational governance ensures the organization’s portfolio of initiatives and projects remains compliant and aligned with the organization’s strategic vision, operational priorities, capabilities, and resource capacity. It ensures that the whole is greater than the sum of its individual parts. And this is when value is fully realized.

The importance of good decision-making — Why operational governance?

The healthcare industry is among the top investors in information and technology. However, many IT enabled healthcare projects struggle or fail. This is often attributed to decision-making processes as well as the increasing complexity of technology.

Healthcare organizations often select technologies and projects arbitrarily or unsystematically as a result of ambiguous or imprecise strategic direction (organizational goals), siloed decision-making processes, department centric practices, uncoordinated management of projects and resources, and limited communication. When this occurs, organizations can experience significant waste in excess cost, resources, and time, as well as face low morale during the implementation of projects. In fact, poor decision-making can be an organization’s biggest barrier to effective planning and initiative success.

As the decision-making structure, operational governance should provide:

Clarity on priorities
Alignment across the organization
Focus on achieving goals
Resource awareness
Communication consistency

What is operational governance?

Operational governance is a sustained process and structure by which decisions are made around healthcare related investments — which projects should be selected.

It includes how decisions are made, who makes the decisions, who is held accountable, and how the results of decisions are measured and monitored.

It is used to evaluate and decide which initiatives and projects the organization should approve and decline, and how they should be prioritized and ranked to achieve the organization’s goals.

Effective governance has:

Aligned processes
Structure and authorized roles
Formal communication

With these ingredients, governance becomes more effective in making good organizational decisions - providing clarity, alignment, focus, resource awareness, and communication.

Effective operational governance provides a framework for bringing stakeholders together to identify the best operational and IT investments that will realize value and meet organizational objectives. Effectiveness requires accountability and commitment to its processes.

Key elements of the operational governance framework

Operational governance is key to determining the organization’s prioritization for how resources are invested and provides oversight to ensure objectives and value are being achieved from those investments. It starts with the organization’s vision and goals, and outlines how operational and IT investments can support the achievement of those objectives.

The organization’s strategy includes long-term goals with strategic and operational tactical plans that detail how the organization will support and achieve it vision and needs. Stated goals and objectives applied to organizational strategy help decision makers within the operational governance process select and prioritize needs and requests that determine and make up the tactical plans.

When making decisions, the operational governance process should help stakeholders evaluate and prioritize efforts that support the established clinical and business objectives. Initiatives and project requests should be selected or approved based on how each can help the organization achieve an objective or address a problem preventing or inhibiting the organization from reaching its goals.

To achieve effective operational governance, it is essential to establish a hybrid, top down and bottom up, framework of aligned workgroups, committees, and councils so they work together collectively and follow consistent processes.

The framework

A hybrid governance framework uses top down, bottom up processes to provide clinically led, business supported, and IT enabled decision-making and oversight of the organizations long-term, mid-term, and short-term initiatives and projects. Applying standards across the framework results in greater operational efficiencies through synergies, economies of scale, and communication while also enabling flexible input and control necessary for agile and efficient response to clinical and business needs.

The image below shows the recommended hierarchical structure for how different workgroups, committees, and councils should align together for coordinated and cohesive organizational planning and value achievement. This alignment creates universal understanding around decisions, resulting in decisions made for the greater good. This model also supports the development of consistent practice and adoption of new strategies, clarifies responsibilities across committees and roles, facilitates communication and prioritization of imperatives, and supports the identification, impact evaluation, and escalation of requests and decisions.

Operational Governance versus Project Governance

It is important to understand operational governance is not the same as project governance. Often these two frameworks are confused with each other. However, for either to be effective they must leverage each other. Operational governance is a sustained framework focused on selecting the right projects at the right time; whereas project governance is temporary and focused on delivering approved projects the right way. It is recommended that project governance report up to operational governance.

Projects or project governance operating independently of the larger, broader operational governance can jeopardize the achievement of organizational objectives by creating conflicts with bigger picture integrated planning. A similar situation can occur when shadow governances, other committees operating outside the operational governance framework, make investment decisions using and requiring the organization’s resources.

Goals for operational governance

To be successful, organizations should establish measurable goals for their operational governance. The effectiveness of governance should be measured by how well its processes achieve these goals.

Operational governance goals often center around the desire to improve strategic alignment, value delivery, compliance to charters and rules of behavior, efficiency in integrated decision-making, and commitment to performance measurement.

If the governance process is not meeting its goals, the process and structure should be re-evaluated and adjusted. This includes forming, merging, or disbanding committees and councils; reviewing and updating charters; changing member selection; and re-educating governance members.

Download our 5-minute Operational Governance Survey

MAKE Solutions offers several services that can assist organizations optimize and achieve effective operational governance.

Self-discovery tools that aid you in exploring how effective your organization’s governance processes are.
Operational governance education workshop for your leaders to establish shared understanding and expectations for what is needed to achieve effective operational governance.
Operational governance assessment where our experts meet with your organization’s leadership to understand current governance processes and provide detailed recommendations with an action plan you can follow to optimize key areas needing support.
Operational governance development workshops where your organization’s leaders come together to understand, evaluate, make decisions, and deliver on a developed action plan to optimize or implement effective operational governance.

For more information contact Tamara Pomerantz, VP Client Operations