Management or governance?

If we were to list the principal sins of governance, the mix-up between management and governance responsibilities would rank high. Today, we explore some key differences.

Today’s illumination builds on some of the ideas explored in an earlier piece in the series about The role of managers in NHS good governance.

If we were to list the principal sins of governance, the mix-up between management and governance responsibilities would rank high.

This separation of powers allows those on the board to focus on the big picture while leaving the running of the day-to-day of the organisation to managers.

Governance works on the basis of a separation of powers, so that those running the organisation day-to-day are internally accountable to themselves and others who have a focused governing role.

This ensures that the broader interests of the organisation, investors, owners and other stakeholders are balanced, and that the organisation is not run in the interests of those staffing it.

Those governing an organisation (the board) are additionally charged with ensuring that they recruit a skilled team (management) to run the organisation successfully.

The board has privy knowledge of the organisation that is unique and so is the best forum for ensuring that the way the organisation is managed meets the requirements of all stakeholders.

The difference between management and governance

The major obstacle in understanding the difference between management and the governing body (both executive and non-executive) is the difficulty in delineating their different responsibilities.

• The board of directors, as the governing body, is responsible for setting the strategic task of setting the organisation's goals, direction, limitations and accountability frameworks.

• Management is responsible for the allocation of resources and overseeing the day-to-day operations of the organisation.

In other words, the board is responsible for defining the what and management is responsible for the how:

• What are the organisation’s priorities and what it should become in the future?

• How the organisation will reach those goals and aspirations?

However, directors may, in addition to their governance responsibilities, also have a portfolio of day-to-day management responsibilities. Directors need to separate themselves from their management role when they are acting as part of the controlling mind of the organisation (governing body) and as overall guardian to stakeholder interests.

Decision taking vs decision making

The purpose of governance is to ensure better decisions. Another key element in defining the difference between the board and management is the role each has in decisions.

Management makes (or crafts) decisions. By this we mean it identifies an issue, gathers and analyses the data, identifies and weights options consults and comes up with recommendations.

Directors in their governance role then take decisions, and move at that point from being responsible to accountable.

If you’d like to explore these themes further, GGI’s Good Governance Handbook is the best place to start.

Back in 2012, we collaborated with the Healthcare Quality Improvement Partnership (HQIP) to produce this report about the founding principles of good governance.

Understanding these principles is key to being able to apply good governance to organisations across the public sector – and for working through partnership and hosting arrangements, which may be of particular interest to integrated care system leaders.

The handbook identifies nine principles of governance and explains how to apply them within organisations.

Although it was written nearly a decade ago, the handbook’s conclusion is as relevant in 2021, as we move into the era of integrated care, as it was in 2012:

“Good governance needs to be at the heart of the current reforms of the NHS. It is vital for the development of a vibrant healthcare market that will continue to provide high quality healthcare. […]

“The opportunities that come with getting the right governance system in place is that a useful balance will be struck between flexibility and proper risk management, and between control and freedom to innovate.

Illuminations

• Governance works on the basis of a separation of powers.

• Management makes decisions while directors (or governing body) take decisions.

• The board is responsible to define the what and management is responsible for the how.

• Directors must separate themselves from their management role when they are acting as part of the controlling mind of the organisation.

If you have any questions or comments about this briefing, please call us on 07732 681120 or email advice@good-governance.org.uk.