Risking review

11 July 2022

Why is it that all codes of governance stipulate that boards should, every three years, undertake an externally facilitated governance review? And why is it that boards that don’t are red-flagged?

A little like how engineers will check and recalibrate sensitive equipment, externally facilitated governance reviews give boards an invaluable, indeed necessary, view of themselves. A worthwhile review gives an independent perspective on how they operate, offering insight into best practice from within their own sector and beyond. They provide assurance where it’s appropriate, and a clear path for improvement towards becoming better decision-makers. Reviews can disturb unconscious group-think and provide a framework for boards to make an honest appraisal of how effectively they are adding value to their organisation.

Strong organisations with great boards are learning organisations and always looking to improve. They embrace opportunities for third-party scrutiny because they know it gives them precious insights about their own strengths and weaknesses. They know that opening themselves up to a governance review every three years is a hallmark of good practice. But more than this, they know it will provide them with external validation and perhaps peace of mind. Indeed sometimes ‘great’ boards get a surprise and find their operating approach has drifted and they are having less impact than they thought. For the chair leading a learning organisation, what can be more useful than that?

Alternatively, organisations might seek a governance review because the board knows they are facing real challenges in delivering good governance, and perhaps they are under pressure from their regulator, governors, or other stakeholders.

There may have been serious issues that led to a breakdown – weak leaders who have made poor decisions, a challenging culture impacting on the morale of the staff, or a collapse in relationships between the board and senior management.

In this situation an independent governance review will help to set the board on a path to improvement, and the review can be used to help develop the action plan and prioritise the next steps.  

Head in the sand

 What are the risks of commissioning a review? Yes, there are costs involved, in money and time spent in interviews or in providing documents and support to your reviewers. But these will be far outweighed by the benefits further down the line, with improved governance arrangements and a more effective organisation. 

Some are concerned about what a review might find. “Ignorance is bliss”, the saying goes. But it’s far better to find out where there are gaps in governance arrangements, so you can address them, than to let them become more deeply entrenched and thus harder to fix.  

Some boards will understand the benefits of a review but will nevertheless seek reasons to delay commissioning one. Their governance arrangements may not be outstanding, but they are not failing either. Commissioning a governance review feels risky, the timing doesn’t feel quite right just now… perhaps next year? By then we’ll have a year’s more experience as a board… we’ll have finished our strategy… we’ll have worked out the best way to go forward.  

This approach calls to mind the proverbial ostrich with its head in the sand. It has consequences. If action isn’t taken then issues, known or unknown, can snowball. This has resourcing implications – demanding time, focus and energy that could otherwise be spent on core activities, or on developing the organisation. Your regulator or stakeholder might find problems before you get a chance to fix them. Falling in their estimations will come at a reputational cost, which could impact on your ability to recruit and retain staff, win contracts, and ultimately could impact service users. And in the health and care sectors, that means people’s health and wellbeing.  

A fresh look

If you find your thoughts straying into this dangerous territory, we suggest reframing the way you see reviews. Perhaps you could begin to see a governance review as:  

  • an independent sense check as to whether the board members have the right mix of skills and experience and see how they are working together
  • an opportunity for a third party to speak to staff and gather views on the culture, morale, and whether there’s a shared understanding of the organisation’s vision and strategy
  • a view on whether the governance structure is working effectively, with a flow of assurance going through to the board, and with appropriate resourcing and support.

Review mechanics

Once you’ve taken the step to commission a governance review, you can expect to be taken through the following stages:  

  1. Agree the scope of the review, and any specific focus areas.
  2. Gather evidence through interviews, focus groups, meeting observations and document review.
  3. Triangulate the evidence – looking for emerging themes and confirming them using evidence.
  4. Assess the organisation’s governance arrangements against the relevant governance code or other guidance, and to good practice that we have seen elsewhere, both within your sector and across other sectors.
  5. Share recommendations for improvement. This can be a delicate process that calls for careful management, for example where there are tensions between senior leaders.
  6. Report back, which will often include facilitating board workshops as a way of sharing findings and developing action plans.

The organisations that get most value from reviews are those that welcome the process and embrace the opportunity to have their governance arrangements assessed against a relevant governance code and best practice.

Poor reviews

It should go without saying that not all board reviews are as good as they need to be. Here are some tells for a poor review:

  • The reviewer is a singleton, and therefore will be unable to self-challenge and is likely to offer personal and not professional advice.
  • The review team is not populated by individuals who are peers to the board they are reviewing. It is surprising how many well-led review proposals in the NHS fall into this trap.
  • Peer experience in the review team rests with brought-in associates rather than core team members. This is a tell that the review organisation has no real commitment to senior board working.
  • Experience within the review team lies just within one sector. This makes it harder for the reviewers to inhabit the world of non-executives and limits the insights they can provide.
  • The review team is inflexible to answering questions outside a standard review framework.
  • Insufficient time is allocated in the review to understanding the context and strategy of the board. Boards can only be judged in reference to what they are trying to achieve and the market they operate in.
  • The review company themselves cannot give a good account about how they challenge themselves with peer review or learning. They flounder when asked how they challenge themselves and improve the insight they offer. 

An independent governance review isn’t an audit – it’s not just about compliance. It’s something altogether more aspirational. It’s about providing you with expert insight that enables your organisation to be the best it can be.

Meet the author: Joanna Watson

Senior Consultant

Find out more

Prepared by GGI Development and Research LLP for the Good Governance Institute.

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