Ten key actions for excellent corporate governance

The credibility of the NHS is under threat as never before. At the heart of both the Francis report and the inspection of University Hospitals of Morecambe Bay Foundation Trust is a fundamental breakdown in corporate governance. 

During this crucial period for the NHS, with hundreds of new organisations in their infancy and trusts and foundation trusts facing significant challenges, the NHS must take corporate governance seriously if it is to remain focused on the core business of delivering high quality healthcare.

‘Regulatory and assurance processes are too often focused on box ticking’

Many clinical commissioning groups are only now beginning to understand the scale of their responsibilities and the sheer number of statutory functions they are accountable for, while many experienced governance leads have been replaced by less senior individuals who are still getting to grips with their new roles. To address these challenges, they can turn to just two independent members of the governing body to provide support for assurance and oversight.

Public confidence

The Guardian reported that 36 per cent of the family doctors on the boards of 211 clinical commissioning groups in England have an interest in for-profit firms, including those providing common NHS services such as diagnostics, minor surgery and out of hours GP care. There is a real risk of a loss of public confidence in their decision making processes.  

The situation is equally challenging in the acute sector. Only a very small number of NHS trusts have been licensed as foundation trusts in the past two years. Many others face significant corporate governance challenges as they try to deliver ever more demanding cost improvement programmes; and meet national standards on patient access.

• Best of 2013: Leadership and governance

All NHS organisations have a board or governing body, made up of executive and non-executive directors, led by a chair, whose job it is to ensure the organisation delivers its strategic vision. It is accountable for ensuring the organisation operates effectively and with openness, transparency and candour.

‘How many NHS boards undertake a rigorous review of board effectiveness? Such a review should raise uncomfortable questions’

So why is none of this preventing the organisational failings like those at Mid Staffordshire and Morecambe Bay? Having spent the past eight years as a director of corporate affairs in a large acute NHS trust, a primary care trust and a strategic health authority cluster, my sense is that there are a number of factors at play.

A key one is that regulatory and assurance processes are too often focused on box ticking as opposed to getting a deep understanding of how corporate governance is actually operating in the organisation.

A further problem is that board secretaries are often marginalised and their expertise is not sought on how good corporate governance can support the effective running of the organisation. They are sometimes seen as simply the person to get the monthly board papers out rather than recognising, as the Institute of Chartered Secretaries and Administrators does, that “the most effective company secretary is one who is regarded by the board as its trusted adviser”.

Then there is the issue of board reviews. How many NHS boards undertake a rigorous review of board effectiveness? Such a review should raise a number of challenging, and sometimes uncomfortable, questions, including:

• What is the extent of challenge at boards?
• Who seriously contributes to the discussion and debate and who just makes up the numbers?
• What does the board talk about when it meets and is there a balance between the strategic and the operational?
• Does the board review a patient story when it meets, so it not only sets the right tone for the meeting but makes clear that patients are at the heart of the organisation’s business?
• Is the board open and transparent or is the serious business done behind closed doors?
• Have board members read their papers before they come to the meeting or are they seeing them for the first time as they sit down at the start of the board meeting?
• How long are the papers; how well are they written, do they contain clear and concise information or is lost in a mass of words and confusing tables?
• How well is the meeting chaired − does the chair see this as their opportunity to “strut their stuff” or do they ensure robust discussion, challenge and scrutiny?
• Do executive directors see board meetings as a chore?
• When was the committee structure last reviewed?

One size doesn’t fit all

So what is to be done? Good corporate governance does not have a one size fits all solution. That said, there are 10 key actions all organisations can take to ensure high quality corporate governance prevails in their organisation.

• Board capacity, capability and effectiveness should be reviewed annually. The size of a board of directors is a very important factor here. A number of studies have determined that a board of more than 11 people starts losing effectiveness and, if much larger, becomes essentially ineffective, except as a rubber stamp for management initiatives^.
• Conduct an annual review of corporate governance focused on enhancing the way the organisation’s corporate governance arrangements operate and ensure they are fit for purpose and out of which there is a clear plan of action to improve arrangements.
• Ensure the board committee structure is kept under review, remembering that, as governance expert John Carver said, “Committees are established only to help the board do its job.”
• Employ a fearless board secretary, whose role is prominent across the organisation and whose advice is sought on key matters of corporate governance and who is not afraid to speak out when they see corporate governance wrongdoing in the organisation. This is a skilled, senior position and will need a salary that reflects this. 
• The chair, chief executive and the board secretary or equivalent need to give serious consideration to board meeting content to ensure the board is looking at the issues that really matter to the organisation and not those that are within their comfort zone
• The board needs to show demonstrable leadership in establishing, modelling and promoting the right ethical and moral values and standards of conduct for the organisation and its staff.
• Conduct board business in an open and transparent manner. Private meeting agendas need to be kept to a minimum.
• Get out into other NHS organisations and see how other boards operate and what high performing NHS and private sector organisations are talking about when they meet. Getting an external perspective is essential.
• Boards need to be visible. They need to listen to staff and patients and get out into the organisation − however bad their experiences or views might be. Boards need to see patient complaints and hear patient experiences and staff survey results, warts and all.  Burying these items in a private board paper or simply not talking about them does no one any favours. If the board fails to do that, surely it is divorced from its two principle constituents.
• Seek assurance on the systems of control within the organisation and ensure they are robust and reliable and in particular have oversight of effective risk management.

When things go wrong, the stock response of the NHS is to think that corporate governance transformation will just happen with a flick of the switch. The reality could not be more different.

If we look to the governance of UK banks, David Walker’s review said: “Board conformity with laid down procedures… will not alone provide better corporate governance overall if the chairman is weak, if the composition and dynamic of the board is inadequate… the behavioural changes that may be needed are unlikely to be fostered by regulatory fiat…behavioural improvement is more likely to be achieved through clearer identification of best practice.”

This is a seminal moment for the NHS. Now is the time for boards to stand up and be counted. If they do not, they have to step aside for those who are.

Moosa Patel is governance consultant at Capsticks