Assurance Across Sectors

Assurance Across Sectors

After a day of meetings in the capital city, I start to make the train journey back home and I’m thinking about how interesting it would be to do a study about what different sectors do to get assurance. I’m of course referring to assurance about an organisation’s governance or more specifically, what we as members of the general public, can learn about how those organisations have dealt with their failures.


The overriding question for me is always…are their different approaches to dealing with low probability and high consequence events?

As this thought came to mind, I had an immediate and parallel thought… “Karl, how sad it is if that’s all you can think about, and even worse that you think this is at all interesting!”  But interested I was, and I reasoned that ‘sad’ or not I was going to continue with the thought, nevertheless. This piece provides a commentary of my thoughts during my journey home.


As a result of the nuances of each sector, they would have different risk areas and therefore would spend a higher proportion of their time, resources and expertise dealing with those areas. However, I thought that whatever remedy or solution they come up with, although specific to their sector, with the right lens (or mindset) it could be a great lesson for another sector.


Ok, let’s take a look at the health sector as an example here. As we all know (and are led to believe), patient care is at the centre of all activities and the governance of the health sector has undergone; consultations, improvements and accepted best practices, over a number of years on the back of well known (and I suspect some unknown) catastrophes and poor performance.


Both the recommendations from the 2013 “Francis Report” and the NHS Improvement inspection frameworks, have tried to deal with the poor performance and associated risks in the best way they can. Sir Robert Francis QC’s thorough report outlined failures by individuals, tiers of management and regulators. As a direct result of this, all hospitals now have a “Duty of Candour” this means that hospitals need to tell patients when their care has not been as good as it should have been, and to apologise for it.


The Report also helpfully defined five key responsibilities for hospital boards: –


  • To act as a conscience, checking what is right and wrong in what the hospital does.
  • To act as a shock absorber which means filtering all the tasks and responsibilities of the hospital, rather than giving it to the hospital staff.
  • To work well with many different stakeholders.
  • To gather important information to help the board learn how the hospital is run.
  • To act like a mentor to the people who work in the hospital.


In addition,


  • Boards should be open and transparent and own up to instances of unacceptable levels of service, and
  • Boards should be accountable and gather relevant information in order to ensure the organisation is run well.


My other example (and specialism) is in the Housing sector. In essence, the tenant or customer experience has the government AND the regulator ensuring that governance processes ensure that tenant or customer; safety, concerns, and wellbeing is of paramount consideration. Following the heart-breaking events of Grenfell, we (collectively I would hope) understand that it is much more complicated than the cladding being combustible, although it is more than welcomed that the use of that cladding has been banned and therefore lessons have been learned, however small.


We should remember that although the cladding was combustible, the ‘stay put’ advice given to the residents compounded the situation alongside; compartmentalisation failures, heat and smoke ventilation hindered safe evacuations, and a board that did not fully take into consideration the advance notice of concerns raised by residents!


Following the Inquiry in June 2017, the Inquiry Chair, Sir Martin Moore-Bick has given the government, the London Fire Service, councils and the boards of multi-storey residential blocks, a lot to act upon. It is clear that one of the challenges was around clear lines of communication, information, advice and instruction. Therefore, initial training and refresher courses, for all relevant parties, are clearly key components when dealing effectively with emergencies. Other areas include:


  • The board appropriately engaging, communicating and acting on feedback from all stakeholders.
  • Organisations having clear and tested protocols for emergencies.
  • Board monitoring of training and refresher courses and ensuring advice is up to date and current.


Sir Christopher Kelly’s independent review was commissioned in July 2013 by The Co-operative Group after its banking arm announced the need for an independent review into the events that led to addressing its £1.5bn capital shortfall. Subsequent to this, Lord Myners was also commissioned by the same Board to conduct a comprehensive review of their governance and one of the recommendations is reproduced here;


“These include four particular weaknesses of the current board structure: (a) inadequate collective capabilities and experience; (b) a widespread failure to understand the distinctive governance role of the board, and a tendency for lay directors to act as delegates more than independent representatives; (c) a lack of unified perspectives and shared purpose, given the frequent divergence of Regional concerns and preoccupations; and (d) an excessively complicated structure with an unwieldy board size combined with gaps and overlaps in accountability with Subsidiary Boards and committees.”


Again, as a result of this: –


  • The board must have adequate collective capabilities with specialist expertise in key areas.
  • The board should hold a shared vision and collective values.
  • All members of the board should understand their duty to promote the success of the company and not the individual stakeholder groups that they may have been elected by.
  • The board and governance structure should be uncomplicated and of sufficient size to embrace diversity but small enough to be effective and cohesive.


The golden thread and overall lesson in all of the examples given above is that good governance must be front and central to ensure the success of every organisation, no matter how small, how complex, where it is based or what it does. This is a bold statement for which few people (I hope) would argue with. It is easy to make this point, but it is much more difficult to define it and then get an agreement on what key elements or principles constitute good governance.


Followers of the Carver Policy Governance Model for example, will have a different emphasis on the role of the board and executives in relation to its approach to governance than that of a private sector led agency theory approach.


Society and its citizens can benefit from effective and efficient governance mechanisms but equally, can fall foul of the challenges faced by complicated, sub-optimal, over bureaucratic structures. Greed, nepotism and conflicting motivations have seen catastrophic failures in the private sector, which have spilled over into society at large. There are organisations and institutions that are deemed too big to fail and the governance of these organisations demands sophisticated risk monitoring and assurance gathering to meet the demands of a rapidly changing environment.


Whether you are a local authority juggling housing, education and social care priorities, at the same time as trying to forge relationships and collaborations with NHS trusts, housing associations or private contractors, what shouldn’t be lost is the need to provide the best care, accommodation and security to tenants, patients, pupils and members of society.


Failure at any level in an organisation can normally be traced back to poor governance practice and the overall leadership of that organisation. Governance is not just about adherence to rules and regulations and it also cannot be designated to a function or a department within an organisation.


Governance should be integrated across the whole organisation. It is much more than the management of processes, although that is important. It is much more than having systems in place, although once again that is important. Governance is about the systems and controls in place to ensure an organisation is managed efficiently and effectively. It is about the strategic oversight of the Board and their co-existence with the executive; operational staff; and members within that organisation. It is about the attitudes of Board members and the management of risk and standards in public life.


Is it time to take an objective overview of your board, its composition, skills, experience and its collective capabilities in light of the changing external environment? Is your board capable to undertake an overseeing role that is in line with the complexity and scale of the organisation that you lead?


What all corporate governance principles do is to set out how organisations can arrange (external) or design (internal) the structure and processes necessary to make the best decisions possible. That does not mean that if an organisation adopts best corporate governance principles it is guaranteed to make the best decisions possible, but it should minimise the risk of bad decision making. It is also important that organisations do not just go through the motions of following best practice; the culture and attitude of those involved in the decision-making processes is also important. We can and should learn from different sectors and, taking the good practice and using it to improve what we do.


Until next month ….