Responsibility Without Control

When responsibility and decision-making authority diverge

A company has a board of directors, a CFO, experienced executives and external advisers. There are organisational charts, guidelines and regular management meetings. On paper, everything a professionally managed group of companies needs is in place.

Nevertheless, the crucial question remains: can these individuals actually fulfil their roles?

In my work as a board member and governance adviser, I repeatedly encounter the same pattern: companies establish professional structures but fail to delegate the corresponding decision-making powers. Executives bear the responsibility, whilst the decisions remain with the founder or owner. I call this Responsibility Without Control.

This pattern is particularly common in unregulated, owner-managed companies. Whilst all companies are subject to statutory organisational and supervisory obligations, institutions supervised by FINMA are also subject to additional regulatory requirements regarding organisation and safeguards, compliance with which is continuously monitored. Outside this framework, this additional control is lacking – even though the risks are no less significant.

A familiar pattern

Many companies go through the same development. During the start-up phase, short decision-making processes are the founder’s greatest advantage. As the company grows, structures, markets and financing become more complex, and experienced managers for finance and operational areas are brought on board.

However, decision-making habits rarely change at the same pace. Key issues continue to land on the desks of just a few people, and management can only act as quickly as decisions are made there. This is hardly ever a question of goodwill, but usually a natural consequence of success: what was right in the start-up phase becomes a bottleneck as the company grows.

Responsibility has been delegated, but control has not.

Activity is not progress

Meetings, project presentations, negotiations, external consultants: an organisation can be very busy without creating value. Anyone wishing to assess a management team’s performance should therefore not only ask whether tasks were completed, but also why they were not. Was there a lack of information, resources or clear lines of responsibility? Only then does it become clear where the bottleneck actually lies.

Governance on paper

The same applies to guidelines. Many companies have investment policies, due diligence procedures and rules on areas of responsibility. However, their value only becomes apparent when they are applied to crucial transactions – particularly during phases of rapid growth, when speed is often prioritised over thoroughness.

Good governance does not prevent business risk. It ensures that such risks are taken on a conscious basis and on a sound footing.

What this means for the board of directors

The duties of the board of directors apply regardless of how a company is actually managed. It does not have to make every operational decision itself, but must ensure that the organisational structure is appropriate and that oversight is effective.

This also includes the question of what happens to identified risks: who decides on proposed measures, who implements them, and who consciously accepts a risk? If this clarity is lacking, a gap arises between risk identification and risk management.

Five starting points

1. Understand the actual decision-making processes. The organisation chart shows who should make decisions – not who actually does. Where do projects get stuck?

2. Aligning responsibility and authority. Every management role requires a clear area of responsibility and the appropriate powers, set out in a binding framework of authority.

3. Systematising investment decisions. Consistent criteria, due diligence appropriate to the project, defined approval processes and transparent documentation.

4. Make implementation transparent. Track not only tasks and deadlines, but also pending decisions and missing resources. This reveals whether delays are due to performance or structural issues.

5. Regularly review effectiveness. A policy that nobody applies is not governance.

Delegation does not mean a loss of control

Many owners fear that delegating will mean relinquishing control. The opposite is true: a clear division of responsibilities and regular reporting provide a better overview than personal involvement in every single decision ever could. Overall management and non-delegable tasks remain with the board of directors, through which the owner also exercises their influence. Management is given the leeway to implement decisions.

At Wegmann Advisory, we support companies and boards of directors precisely at this interface: with governance assessments, practical competence and investment processes, and management monitoring that reveals where an organisation actually stands. In doing so, we apply tried-and-tested standards from the regulated financial sector, in an appropriate form, to companies that are not subject to supervision.

After all, the quality of corporate governance is not measured by the number of guidelines, but by whether they actually shape a company’s actions.

Joachim G. Wegmann Wegmann Advisory Corporate Governance | Risk Management | Compliance