What’s going on in boardrooms?

Joy Allen Image
Joy Allen, Leading Governance

What is the world coming to? The banking crisis has caused lasting pain to every one of us, emerging failings in care services for older people and vulnerable children are truly shocking, we’ve had horsemeat in our burgers, and now Tesco is under investigation for potential criminality (never mind negligence of oversight). The impact of these governance failings has hit each individual company hard. However, in the community and voluntary sector, the resulting backlash can affect not just the organisations whose governance has led to a public scandal. The sector as a whole can suffer as donors and funders lose faith and trust in our ability to properly use their donations and funding. What needs to change?

It seems very simple to me – we need competent, committed and ethical directors in the boardroom, who adopt a ‘learning board’ approach, undertake regular training and development for their role, and use real review processes at board level to learn and continuously develop effective leadership and governance. Bob Garratt’s great book ‘The Fish Rots from the Head’ clearly sets out the case for a focus on board effectiveness to drive organisational effectiveness – whether that’s in a bank, a care home, or a supermarket.

I feel very privileged to spend all of my working life supporting boards to improve their effectiveness. The irony is that most of our clients tend to be the ones that are really committed to governance improvement – going from ‘good to great’. The ‘impending disaster’ boards give us a wide berth. We’re too challenging, and there’s a risk we’ll unseat some powerful players that are happy running their fiefdom with minimal interference and scrutiny. Some don’t know what they don’t know. Some don’t want to know!

From my experience, a really effective board will:

  • Have a boardroom culture that supports both individual and group responsibility. It may be an uncomfortable place sometimes, but differences of opinion are vital if the board is to be ‘the brain of the organisation’. The board should identify opportunities and risks and actively communicate with staff and customers to check their views. The board has a responsibility to really listen, and really learn
  • Ensure that the Chair of the Board and the CEO have regular, open and honest communication, bringing all necessary information into the boardroom, even the bad news on results and the worries for the future
  • Set the tone for the organisation, by describing the values and desired behaviours needed to drive an effective culture, focused on safety and quality in all areas – service provision, financial control, management of risks
  • Attract, recruit, train, support and challenge great managers – and keep them – investing the resources needed, for long term benefit
  • Ensure their managers are managing well. This involves articulating clear standards to staff, coaching and developing them, giving them regular feedback, rewarding good behaviours and nipping bad behaviours in the bud
  • Be open, transparent and really accountable to all stakeholders, welcoming regular feedback to support continued learning and development, to continually improve the service they provide to individual people

Several years ago, I was fortunate to have the opportunity to visit the Bombardier factory in Montreal. As the precision work was carried out on very impressive jet aeroplanes, I was struck by their simple yet effective quality management processes. They demonstrated a real commitment to 100% accuracy at every stage in the process, with checks and counter-checks to ensure safety and quality. On reflection, I sometimes wonder if our boards wait until after a ‘crash’ to capture learning, rather than insisting on top quality from the start. So how can we drive the changes needed?

Since the Prudential Regulation Authority was created by the Financial Services Act in 2012, modern regulation of banks and financial institutions includes examination of board members’

  • Honesty, integrity and reputation
  • Competency and capability
  • Financial soundness

Should a similar approach be adopted in the charity and public sectors? Whether we’re running a bank, a care home, a supermarket or a community organisation, surely a focus on effective leadership and governance, from competent and ethical directors, is the essential foundation for an organisation providing safe and effective services.

When will such an approach be adopted by all in our sector, rather than by the exceptional few?

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