EuroProjex [email protected] © jrt/gpbo/jul08
EuroProjex
Governance, Trust and Ethics in Temporary Organizations
NETLIPSE
Copenhagen, 7th May 2012
Prof Rodney Turner
Professor of Project Management
SKEMA Business School
EuroProjex [email protected] © jrt/gpbo/jul08
Governance, Trust and Ethics in Temporary Organizations
Background
Ethical dilemmas faced by project managers
Ethical implications of different governance structures
Building trust between project managers and governance
Propositions
EuroProjex [email protected] © jrt/gpbo/jul08
Governance and trust
The governance structure is the mechanisms through which governance is executed
procedures, processes, polices
roles, responsibilities, authorities
Trust is a mechanism of governance
reduces transaction costs
and so increases economic value
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Governance of project management
Project governance is a sub-set of corporate governance
The governance of projects influences ethical decision making on projects steering committees, PMOs
programme and portfolio managers
Misreporting is more likely in organizations with a culture of self-interest and less if project managers are expected to follow rules
A culture of silence is created by organizational structures and policies
demographic dissimilarity between hierarchies
shooting the messenger
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Trust and trustworthiness
Trust willingness to be vulnerable to the actions of
another
based on the expectation they will perform an action of importance to us
irrespective of our ability to monitor and control
Trustworthiness based on ability: competence to perform
benevolence: willingness to perform
integrity: likeliness to perform
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Trust and control
Trust is a mechanism of governance it reduces the need to monitor and control
and so reduces transaction costs
Risks of too much trust opportunistic behaviour
non-performance of self-managed teams
Risks of too much governance reduces trust
reducing project performance
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Trust is two sided
Governance
Structure
Individual
Trust of
the governance structure
in the individual
to behave appropriately
Trust of
the individual in
the governance structure
to provide appropriate support
Organizational culture
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Research questions
What ethical dilemmas are faced by project managers?
What are the ethical implications of different governance structures?
How can project governance structures be used to build trust between project managers and the governance structure?
Interviewed 28 people from 9 companies.
EuroProjex [email protected] © jrt/gpbo/jul08
Governance, Trust and Ethics in Temporary Organizations
Background
Ethical dilemmas faced by project managers
Ethical implications of different governance structures
Building trust between project managers and governance
Propositions
EuroProjex [email protected] © jrt/gpbo/jul08
Normative ethics: three orientations
Orientation
Process
Outcome
Character
Category
Deontological ethics:
Rules, norms, principles
Obligation, justice, fairness
Social contract
Consequentialism:
Right conduct, to produce
best outcome for stakeholders
Virtue ethics:
Honesty, integrity, fairness,
courage, care
Management perspective
Ensure processes are just
fair and reasonable
Don’t violate human rights
Maximize utility for
stakeholders
Lead by example
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Behavioural ethics: three reasons for unethical behaviour
Orientation
Bad apples
Bad cases
Bad barrels
Explanation
Development, idealism, relativism,
locus of control, job satisfaction,
demographics, age, education
Consequences, social consensus
probability of effect, immediacy
proximity, concentration of effect
Ethical work climate, ethical culture
ethical codes
From
Individual
Morals
Organizational
environment
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Ethical issues faced by project managers 1: Transparency
Reluctance to report project performance
in the hope of reducing cost
in the hope of recovering in the future
for fear of project termination
in fear of loss of face
in fear of losing their bonus or incentives
because they are unsure when to escalate
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Ethical issues faced by project managers 2: Relationship issues
Impact of interpersonal relationships
closeness between buyer and supplier
borderline between gift and bribe
inappropriate contact between expats and locals
replacing low performing/unaccepted team members
learning of past unethical behaviour of a supplier
reassigning a project manager displaced in a takeover
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Ethical issues faced by project managers 3: Optimization
Do you optimize for the client or contractor? How do you distribute risks and benefit? deliver projects as planned or at best value for customer
switching between existing, low performing suppliers, for new, potentially better suppliers
appropriateness of quality criteria: use planned criteria or possibly better criteria that may not be accepted
use home or local safety standards
require staff to bill 100% utilization when the time was not worked
expectations of sales that underquoted costs will be recovered as change orders
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Four ethical dilemmas
1. Conflict between equally valid ethical choices
2. Conflict between what is ethically correct and company policy
3. Conflict between what is ethically correct and what the law requires
4. Conflict between what the law requires and company policy
EuroProjex [email protected] © jrt/gpbo/jul08
Governance, Trust and Ethics in Temporary Organizations
Background
Ethical dilemmas faced by project managers
Ethical implications of different governance structures
Building trust between project managers and governance
propositions
EuroProjex [email protected] © jrt/gpbo/jul08
Four project governance paradigms
Flexible
economist (maximize value
for sponsor)
Conformist (minimize
costs)
Agile
pragmatist (follow the
process)
Governance orientation
Shareholder Stakeholder
Versatile
artist (balance
requirements) Control
focus
Outcome
Behaviour
EuroProjex [email protected] © jrt/gpbo/jul08
Flexible economist (outcome, shareholder)
Maximise value for sponsors
Dilemmas
1. Transparency, optimization
2. Relationships
Organizational remedies
Sporadic audits and site visits
Policies
Training about expected behaviour
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Versatile artist (outcome, stakeholder)
Balance requirements
Dilemmas 1. Transparency, relationship
2. Transparency
3. Relationship, optimization
4. Relationship
Organization remedies Periodic, formal reporting and meetings
Training, 24 hour hotline
Policies
Interpretation of law
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Conformist (behaviour, shareholder)
Minimize the cost
Dilemmas
4. Optimization
Organizational remedies
process compliance
policies
closed loop control
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Agile pragmatist (behaviour, stakeholder)
Follow the process
Dilemmas
1. Transparency, optimization
2. Optimization, relationship
Organizational remedies
process compliance
escalation
policies
interpretation of laws
EuroProjex [email protected] © jrt/gpbo/jul08
Governance, Trust and Ethics in Temporary Organizations
Background
Ethical dilemmas faced by project managers
Ethical implications of different governance structures
Building trust between project managers and governance
Propositions
EuroProjex [email protected] © jrt/gpbo/jul08
Ex-ante perquisites
Freedom to act allow project managers flexibility
if the system is inflexible, project managers act mechanically
question its legitimacy/buck the system
Appropriateness of the governance structure flexibility to deal with unforeseen dilemmas
(incomplete in its entirety)
address project managers in their language
work to resolve challenges
within the project managers frame of reference
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Ex-post linking governance and project managers
System trust: does the project manager trust the system
trustworthiness of the system (ability, benevolence, integrity)
People trust: does the system trust the project manager
trustworthiness of the project manager (ability, benevolence, integrity)
EuroProjex [email protected] © jrt/gpbo/jul08
Governance, Trust and Ethics in Temporary Organizations
Background
Ethical dilemmas faced by project managers
Ethical implications of different governance structures
Building trust between project managers and governance
Propositions
EuroProjex [email protected] © jrt/gpbo/jul08
Propositions
P1: In order to be able to delegate the taking/facing of challenging situations, the governance structure needs to trust the project manager's ability, benevolence and integrity to take appropriate decisions
P2: In order to act appropriately in the face of challenging situations, project managers need to recognize the challenging situation, evaluate it, decide an appropriate course of action and have the ability, benevolence and integrity to take appropriate action
EuroProjex [email protected] © jrt/gpbo/jul08
Propositions
P3: If staff members feel they cannot act on their own, they need to have trust in the governance structure’s ability, benevolence and integrity to refer the challenging situation back to the governance structure
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Propositions
P4A: If the governance structure works to resolve the challenges, it reinforces trust of the project manager in the governance structure and he or she will continue to use the governance structure
P4B: If the governance structure does not work to resolve the challenges, it damages trust of the project manager in the governance structure. If project managers lose trust n the governance structure they will start to circumvent it and that in turn may damage trust of the governance structure in the project managers.
EuroProjex [email protected] © jrt/gpbo/jul08
Trust is two sided
Governance
Structure
Individual
Trust of
the governance structure
in the individual
to behave appropriately
Trust of
the individual in
the governance structure
to provide appropriate support
Organizational culture
P1
P3
P2
