Public Bodies Governance Conference

8 March 2013

Performance and risk: keeping your finger on

the pulse!

Good Governance Standard for Public Services• “Good governance means focusing on the

organisation’s purpose and on outcomes for citizens and service users”

Three key elements• Clear statement of purpose and intended outcomes

• Shared understanding and effective communication

• Regular review by the board of its decisions to ensure that they further the organisation’s purposes and deliver key outcomes for citizens and users

“One of the main failings of boards”

Do you have clarity of purpose?

Key performance indicators and quality indicators• Clear statement of purpose

• A set of linked corporate objectives

• A few key performance and quality indicators

Common problems• Too many (“a blizzard of information”)

• Failure to link KPIs and QIs to the major risks

• Focusing on quantitative over qualitative

Are you measuring the right things?

Board needs to engage with the executive to specify its information needs• Format, content and frequency

• Does this information give us added assurance?

• “We were kept in the dark!”

Are you getting the right information?

Boards and committees need to satisfy themselves that the information that they receive is accurate• The audit committee needs to be on top of its

game!

• Scrutiny function of non-executives and sometimes the need to see hard evidence

• Role of internal audit and the relationship between the head of internal audit and the chair of the audit committee

• A healthy degree of scepticism

Can you trust the information that you receive?

Do you have the skills?

Do you offer a constructive challenge?• Does the board understand its role?

• Is the chair effective?

• Has complacency set in?

Is there too much trust in the executive team or is the balance right?• Culture and traditional way things have been

done!

Do you use the information provided to scrutinise effectively?

Setting out your expectations to management

Formal scheme of delegation and a schedule of decisions reserved to the board• Any matters of financial or reputational risk or

material issues of principle to be referred to the board

• Test how well the scheme of delegation is working

Other sources of assurance• Staff, users, public

• Triangulation

How do you know when things have gone [badly] wrong?

Ensure that an effective senior management team is in place

Hold senior executives to account for performance• Role of the remuneration committee

• A good performance management system

Recognise good performance but be prepared to deal with poor performance

Have you got the right executive team in place to deliver?

Take decisive action to address problems• “The major challenges being reported to the

board today are the same ones that were being reported two years ago”

Be prepared to take tough and unpopular decisions• Your decisions should be evidence-based

• Take tough decisions but be prepared to explain why

How do you react when things go wrong?

“Only good news from …….”• Be careful to send out the right messages to

staff

• Acknowledge problems and mistakes to Minister and public

Do you really want to be the best?• “The drive to be the best undoubtedly put

the senior management team under pressure to meet and exceed targets….”

• Do not give management a reason to conceal issues from the board

Is there integrity in your performance reporting?

Good Governance Standard• Do you have organisational values and are

they being put into practice at all levels?

• And….. how do you know?

The board should ensure that a set of shared organisational values: • Are developed

• Are operating

• Are periodically tested, breaches are highlighted and dealt with

How do you ensure pressure to deliver does not result in bad behaviours?

Clarity of purpose and a focus on delivering key outcomes for citizens and users

Monitoring/measuring the right things

Getting the right information

Trusting the information you are receiving

Scrutiny: Using the information to hold the executive effectively to account for performance

In summary

Ensuring that you know when something has gone badly wrong (even when nobody wants to tell you)

Having the right executive team in place to deliver

Dealing with problems when they occur

Reporting honestly on performance – good and bad

Ensuring that the pressure to deliver does not drive bad behaviours

In summary