Recent Developments in Governance
The past 20 years has seen ever-increasing interest in the integrity and effectiveness of corporate governance, firstly in the business sector with various reports that are now integrated into the UK Corporate Code, and in governmental organisations starting with the Nolan Committee leading to codes for different types of public bodies. In the civil society sector, organisations including NCVO in the UK and BoardSource in the US have driven the establishment of standards, good practice advice and training programmes for trustees.
The emphasis has been on how to increase the effectiveness of boards and their crucial roles of setting strategy, appointing and supporting management and holding them accountable for delivering impact.
The spotlight has been firmly placed on the performance of boards and therefore of individual board members, including the chair. Boards need to be able to demonstrate that they add value, that they have the skills and expertise to steer their organisations through a rapidly changing world and that they listen, understand and respond to all their stakeholders. Meanwhile, organisations are expected to work hard to attract and keep good board members, with the skills, commitment and time to devote to the increasingly complex job of governance.
Trends in governance
The civil society sector is diverse and the governance arrangements adopted by different organisations are therefore very varied. There is no one model that can be applied to all organisations. However, there have been some observable trends over recent years:
- Smaller Boards (10-14 people)
- Fewer formal sub-committees and more time limited working groups or
advisory groups with clear remits
- Greater distinction between the job of governance and mechanisms for
consulting members or other stakeholders
- Adoption of more rigorous processes for attracting and recruiting
- Higher expectation around diversity and user involvement on Boards
- Increased attention to reviewing the performance of boards and
individual board members
- Recognition of the importance of partnership and complementarity
between the Chair and Chief Executive
- More codes of practice and written terms of reference.
Governance – theory and practice
Compass Partnership’s experience with over 80 boards demonstrates that ‘models’ and ‘textbook solutions’ can prove very useful in enabling organisations to understand and develop their governance systems. However, every organisation and every board also has its own unique characteristics that need to be reflected in its governance arrangements.
Organisations can experience a sense of frustration with their governance system and a realisation that there is a gap between the desired roles of boards and what happens in practice.
In seeking to improve existing governance arrangements, or develop new ones, experience tells us that as much time and effort should go into developing the behaviours, skills and shared understanding amongst board members and senior managers as is put into finding an appropriate governance structure.
Moreover, we have found that every individual brings their own particular
beliefs or mental pictures about how Boards should work and what their roles
are – and that it is critically important that these beliefs are brought
to the surface.
To summarise, experience tells us that successful boards tend to:
- Clarify their critical functions
- Ensure that their role is strategic and outward-looking
- Create appropriate decision-making processes
- Choose their members for both skills and representation
- Manage their governance processes tightly
- Develop effective Chair – CEO relationships
- Discuss board behaviours openly
- Develop the trust and respect that is necessary for constructive debate and creative tension
- Take responsibility for reviewing their own performance and developing their governance skills.