The question of when to build a governance framework is one Lewis Fairbank gets asked regularly, usually by founders who have grown their business to a point where the informal decision-making that worked at twenty people is starting to cause problems at fifty. This article sets out the signals to look for and what a framework actually involves.
The informal stage works until it does not ¶
In the early years of most businesses, governance is informal and founder-led. The founder makes most significant decisions, everyone knows it, and the speed of that model is genuinely useful. Problems start when the business grows past the point where the founder can be in every conversation. Decisions begin to get made by whoever is available, or they get delayed because nobody is sure who has the authority, or they get made twice by two different people who did not know the other was working on the same question. These are governance failures, even if they do not feel like it at the time.
Three signals that a framework is needed ¶
The first signal is repeated decision delays. Situations where a decision that should take a day takes a week because nobody is sure who should make it. The second is contradictory decisions. Two parts of the business committing to incompatible things because neither knew what the other was doing. The third is escalation overload. The founder or senior leadership team being pulled into decisions that should be made further down the organisation, because there is no documented authority for anyone else to make them. If two of these three are present, a governance framework is worth building.
What the framework contains ¶
A governance framework as built by Hilt Core Vault is a practical document, not a compliance exercise. It covers: the categories of decision the business makes regularly, the authority level required to make each category of decision, the threshold at which a decision must escalate, and the sign-off process for decisions above that threshold. It also covers what happens when the normal authority holder is unavailable. The document is typically twelve to twenty pages. It is written in plain language and tested against real scenarios before it is adopted.
The testing stage matters ¶
The most important part of building a governance framework is testing it against real decisions the business has actually faced. We take six to ten recent decisions. Some that went well, some that did not. And run them through the draft framework to see whether the framework would have produced a better outcome. This almost always surfaces gaps or ambiguities that need to be resolved before the document is finalised. A framework that has not been tested is a framework that will fail the first time it is used under pressure.
If your business is at the point where decisions are getting lost or duplicated, it is worth a conversation. Get in touch and we can talk through whether a governance framework is the right tool.