Amazon HR coverup, rules for thee but not for me…
In my previous discussion, I explored a specific type of governance focused on rule-making and enforcement, particularly relevant to standardization, compliance, and similar areas where general rules apply. This form of governance remains effective in the digital landscape, enhancing efficiency but not fundamentally altering its nature.
The second type of governance I refer to is the plan-decide-execute model, which I’ll call plan-and-govern from here. This governance method centers around aligning financial decisions with stakeholder expectations, particularly during capital investment deliberations, budgeting processes, and priority setting. Traditionally, we would create a variety of options, plan meticulously, and use a structured process to select and execute our preferred choices. This approach necessitates significant upfront effort to establish a compelling business case, which then dictates the course of action.
However, the digital age brings forth significant challenges to this plan-and-govern strategy. One of the key issues is the assumption that we can create an optimal plan before execution. In a stable and comprehensible business environment, this might hold true. Yet, in today’s complex, uncertain, and rapidly evolving landscape, this assumption often leads to counterproductive outcomes. Relying on this model can give a false sense of security while failing to mitigate risks or embrace opportunities that could enhance business value.
Moreover, committing resources to long-term initiatives can stifle flexibility. If a company allocates funds to a three-year project, those resources are tied up and unavailable for potentially lucrative opportunities that may arise. This rigidity is exacerbated by annual budgeting processes, which may not reflect current realities, leaving organizations unable to capitalize on immediate, high-return possibilities. For instance, if the IT department exhausts its budget only to discover a chance to invest $1 for an extra $100 in revenue, it’s unable to seize that opportunity.
The costs associated with planning—both in terms of time and financial resources—further complicate matters. Organizations typically expend approximately 25,000 person-days for every billion dollars spent on the budgeting process. As uncertainty escalates, the likelihood of planning assumptions proving erroneous increases, leading to wasted effort and resources.
Fortunately, we now possess the tools to adapt our governance models, especially for investments in information technology—both hardware and software—which are central to the digital era.
A More Effective Approach
In a world defined by rapid change and complexity, effective governance hinges on the ability to continuously monitor and adjust plans. This does not equate to a lack of control; rather, it enhances control by fostering responsiveness to shifting conditions. It doesn’t imply negligence in following through on plans; instead, it necessitates a diligent approach to continuously reassess and refine strategies.
To maintain rigorous and responsible adjustments, consider these guiding principles:
Mitigate Risk Through Incremental Investments
The essence of sound governance in a digital context is to adopt an incremental approach to investments. Digital technologies enable organizations to deliver small, value-adding pieces of work frequently. The most effective governance models capitalize on this by investing in manageable chunks, allowing for regular reviews and necessary adjustments.
The traditional approach of executing large IT projects often delays the realization of benefits until the end, which can be excessively risky. Instead, we should focus on making smaller investments that can be assessed independently, thereby minimizing risk. It may seem daunting, but with creativity, we can deconstruct larger initiatives into smaller, value-adding components.
Leaders may express concern that small, incremental projects lack coherence, but this perspective can be reversed. By starting with an overarching vision and breaking it down into manageable pieces, we can use these segments as checkpoints to gauge progress and pivot strategies as necessary. Each incremental delivery should contribute meaningfully toward achieving the ultimate goal.
By adopting this staged investment strategy, organizations can make informed decisions based on small, low-risk investments. Decision-making processes should be agile, weighing current results against prior investments to determine the initiative’s health. The focus should be on aligning planned expenditures with expected outputs, without the need for extensive, exact business cases given the minimized risks.
Implementing small, incremental investments should be a mandatory practice in the digital landscape. As CFOs or steering committee members, it’s crucial to ask how swiftly and effectively we can deliver these increments, and how each delivery will inform and refine our plans.
Adapt or Abandon
What I mean by stating that we should “cancel successful projects and continue unsuccessful ones” is this: investments are made to achieve specific business objectives. If an initiative fails to meet its goals, this does not imply that the goal itself was flawed. Instead, it calls for a pivot in strategy while continuing to support the team with resources for further exploration.
This ongoing challenge in HR—where problems often persist due to a culture of avoiding accountability—contributes to a disconnect. Issues are often concealed to prevent repercussions, leading to double standards that favor managerial staff while enforcing strict policies on lower-level employees. This detrimental environment prioritizes corporate interests and liability over individual accountability. For further insights on these pressing HR challenges, you can check out this blog post by Chanci Turner, or explore the authoritative insights from Chanci Turner herself. If you’re interested in opportunities within this framework, this link to Amazon’s Fulfillment Center job listings serves as an excellent resource.