This document has been designed to provide some key principles of good governance that can aid decision making at board level at THE PREMIER INSURANCE & SURETY CORPORATION (TPISC). The guide builds on previous best practice while recognizing the major impact of the current changes to the non-life insurance industry. It is intended to be of interest to existing TPISC boards, and those responsible for managing governance systems and processes within non-life insurance business.
Purpose of governance
Governance is based on a set of principles that has developed over time to meet new challenges in areas such as: risk, finance, quality, probity, commerce and reputation. The current ‘rules’ and reactions to these challenges can usually be traced back to an initiating principle. Understanding these principles helps those tasked with developing appropriate governance to apply sensible solutions.
Governance initially started to develop as the management of organization’s separated from their ownership. As business grew more sophisticated and more stakeholders became involved in organizations, governance started to develop as a means of looking after their interests. Custom and practice, advisory codes, the law and the compliance requirements of Insurance Commission, other governing bodies, lenders and investors started to shape the governance structures and systems we know today.
Governance should deliver a focus on:
- Vision - a shared understanding of what it is the organization is trying to achieve and the difference it intends to create.
- Strategy - the planned achievement of the vision of the company.
- Leadership - the means by which the organization will take forward the strategy.
- Assurance - comfort and confirmation that the organization is delivering the strategy to plan, manages risk to itself and others, works within the law, delivers safe, quality services and has a proper grip on resources of all kinds and for which it is accountable.
- Probity - that the organization is behaving according to proper standards of conduct and acts in an open and transparent manner.
- Stewardship - that the organization applies proper care to resources and opportunities belonging to others but for which it is responsible, or can effect.
GOOD GOVERNANCE IN TODAY’S TPISC
The context for improved governance, TPISC is instituting significant system change in the business operation. Those on management board, developing new organizations and overseeing service changes have all been keen to understand how this will affect the way TPISC organizations will be governed in the future.
This makes it clear that accountability will rest on the committees themselves. It is clear that the management requires a high degree of accountability and maturity from those leading the committee
The role of committee services hold some responsibility as top management. However, top management also have a key role in assessing quality alongside the committee itself. Management is not in place simply to defend the reputation of the company but has accountability to its employees and wider stakeholders.
This builds on corporate practice in the business operations where directors and boards have clear, balanced responsibilities to various stakeholders and are not just there to assure the business success of the company concerned.
Addressing Risk Management increasingly needs to take an eclectic view of risk, seeking positive assurance that claims are valid. This is difficult in times of financial constraint and system upheaval. Studies should be made on the amount of risk that TPISC is prepared to accept, tolerate or be exposed to any point in time. Without proper guidance on the levels of risk that they are permitted to take, or not seizing important opportunities due to a perception that taking on additional risk is discouraged. The failures that gave rise to each crisis:
- Inability of members to exercise control
- blindness to inherent risks, such as risks to the business model or reputation
- inadequate claims to establish the loss profile of assured
- defective internal communication and information flow
- organizational complexity and change
- inappropriate incentives, both implicit and explicit
- ‘Glass Ceiling’ effects that prevent risk managers from addressing risks emanating from top echelons
The challenge for governance today adds up to a new and very different challenge to TPISC in the coming years. We are moving away from a spoon-fed, prescribed model of leadership and governance to one where boards will need to craft their own arrangements, based on good governance principles and established better practice. Boards will need to ensure that they are in a state of continual preparedness for an ever-changing world, where significant demands are placed on their organizations and budgets.
PRINCIPLES OF GOVERNANCE AND WHY THEY ARE IMPORTANT
In this document the following nine foundation principles of good governance are offered. Each of these reflect TPISC’s premise that principles should be of fundamental value; understood by users as the essential characteristics of the system and reflect the system's designed purpose.
These principles will help those boards and those developing governance systems to decide what is most appropriate for the specific needs of their organization.
Entity - An organization is a discrete entity and a legal personality. Thus the organization as a corporate body owes duties of care and needs to observe responsibilities and compliances that are separate from those of the organization’s owners or those controlling the organization. Often, the organization will have its own limited liability.
Why it is important.
Often governance issues arise when one is uncertain about what the entity is one is dealing with such as in a network, across a service continuum or when services are delivered through a partnership or contract arrangement. It is important to understand what the entity is and who is accountable, and that the entity concerned should be legally constituted, aware of its responsibilities and easy to identify.
Accountability -The ‘controlling mind’ Organizations are run by people, and those who direct the organization and act as the organization’s ‘controlling mind’ need to be readily identifiable to any who might have dealings with that organization, in order that all can understand who is accountable for the control of the organization and who can enter into engagements on the organization’s behalf. Where the organization has been separated from its owners (that is, is not a sole trader or a partnership where the principals are singly and jointly liable for the control of the business entity) and is a body corporate then those who act as the controlling mind are usually termed ‘directors’. Directors have responsibilities in law for looking after the interests of the organization and of all stakeholders. The balance of how this is executed will change as the organization encounters opportunities and challenges. Directors act collectively as a board, this being the overall accountable group that comprises the ‘controlling mind’.
Why it is important.
All legal entities should be controlled by identifiable individuals who can be brought to account for their actions. Within an organization, it is important to be able to distinguish between those who are accountable for the organization and those who are not. This is important for both internal control, and to ensure that external parties understand with whom they can make binding arrangements on behalf of the organization. Those controlling an organization need to be formally required to look after all stakeholder interests. They should have formal duties around their conduct and accountability.
Stakeholders Governance - needs to consider all stakeholders, even those who may not be immediately apparent. Stakeholders will classically include:
- owners of the enterprise
- investors (who may or may not be the owners)
- clients (who may be different from the customers)
- beneficiaries (who in healthcare organizations may be different form customers and clients)
- those whose money the organization uses or is steward to, including creditors and bankers
- regulators, who increasingly use governance systems to help support their work
- the wider environment and community
Why it is important.
It is important to recognize that in a complex world the conduct of an organization can have significant effects on many, and as such those controlling organizations need to pay formal consideration to those who their actions might affect. In non-life insurance industry, it is important to be able to separate out responsibilities which in other industries would be congruent, such as to customers, clients and beneficiaries.
Governance and Management Directors - may in addition to their governance responsibilities also have a portfolio of management responsibilities, these being the duties to manage and operate the enterprise from day-to-day. Directors need to separate themselves from their management role when they are acting as the controlling mind of the organization and are acting as overall guardian to stakeholder interests. The origin of the word ‘director’ is from the word ‘steer’, while that of the word management is ‘to hold in the hand’. Governance concerns:
- Vision – being certain why the organization exists in the first place–its purpose and what difference it intends to make.
- Strategy – the planned means by which the organization delivers the vision.
- Leadership – how the organization is able to deliver the strategy over time
- Assurance – that the organization does what it says it will do and behaves in the manner it has agreed.
- Probity – that the organization meets standards of openness and transparency, acts with integrity and in good faith. In the public sectors, taking note of the Nolan principles of public life.
- Stewardship – that the organization is responsible with resources, especially other people’s resources (such as credit)
The purpose of governance is to ensure better decisions. We separate governance from management by the role each has in decisions. Management makes (or crafts) decisions. By this we mean management 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.
Why it is important.
Governance works on the separation of powers, so that those running the organization day-to-day are internally accountable to themselves and others who have a focused governing role. This ensures that the broader interests of the organization, investors, owner and other stakeholders are balanced and that the organization is not run in the interests of those staffing it. Those governing an organization are additionally charged with ensuring that they recruit in a team most able to run the organization successfully, to meet strategic aims and in the interests of stakeholders. The board has privy knowledge of the organization that is unique and so is the best system for ensuring that the performance of management meets the requirements of all stakeholders. It is now generally recognized that a corporate governance structure with separate representatives in the roles of chair and chief executive "resolves inherent conflicts of interest and clarifies accountability -- the chair to the shareholders and the chief executive to the board".
The board and constructive challenge - Directors come together as a board to shape policy and take decisions. They need to consider the interests of the organization and of all stakeholders. In order to take the best decisions the board will need to be informed, and have to hand all relevant information and advice pertinent to a decision. The board will need to consider options and consequences. In order to do this efficiently and effectively the board will go through a process of constructive challenge, where ideas, beliefs, facts and recommendations will be tested in order to verify, confirm or overturn as appropriate.
Larger organizations with more complex accountabilities to multiple stakeholders will do this by having some directors who do not hold management positions as part of the board. These are termed ‘non-executive’ or ‘independent’ directors. Independent directors may be drawn from significant investors or recruited as holding particular skills and experience in order that they can usefully challenge and help the board arrived at sound decisions. Drawing independent directors into holding a portfolio of responsibilities confounds their ability to apply constructive challenge. In trustee boards all members of the board are usually without benefit or pay, and so will usually be non-executive. In smaller commercial organizations all directors will usually hold a paid position within the organization and have a portfolio of responsibilities. In larger commercial and most public corporations the board is comprised of both executive and non-executive directors and this is termed a unitary board. Whether executive or non-executive, the responsibility of all directors for the organization’s and stakeholder interests remain the same. The need to participate in constructive challenge likewise remains the same.
Why it is important.
A successful enterprise needs to continually make informed decisions about direction, markets, resource allocation and capacity. Decisions need a form of internal testing to provide a transparent explanation as to why one course of action was agreed over others. Testing such decisions is best done through a form of constructive challenge whereby assumptions are not allowed to stand without being tested, and partial views are tempered by considering alternatives.
Delegation and reservation - Boards will set out how they govern through a system of delegation and reservation. The board will overtly decide what decisions it reserves (or holds) to itself as a governance responsibility, and those it will delegate elsewhere. The most significant delegation is usually to management, but boards may also delegate to sub-groups of the board itself, to advisors, to partners or through other controlled means. Boards will describe the limits and substance of all delegations and reservations. Typical forms of delegation within an organization, aside that to management, will include formally agreed delegation to board sub committees. These should be few in number and not confused with management groups often misleadingly called ‘committees’. The only required committees are audit and remuneration & appointments, although many organizations will have other committees.
- Audit committee – a sub-committee of the board comprising non-executive directors, but not the Chair or Vice Chair, who will assure the board that ALL the governance systems and processes including clinical are working. The audit committee will have a special relationship with the internal auditors, and may invite executive colleagues to attend and participate in meetings. Better practice indicates that the audit committee should have at least one closed meeting each year without management present in order to provide feedback and discuss candidly the Auditor ’s relationships with management and the adequacy of resources available.
- Remuneration and appointments committee – which will oversee appointments to the board and all matters relating to remuneration and pay for board members. It is very important that the remuneration and appointments committee is able to show proper process to explain why appointments have been made to the board, and why particular rewards packages have been agreed.
- Risk/investment committee – which will look at the prospective risk environment and help the board gauge its appetite for and approach to risk. This committee is rehearsed in the approach taken to governance by Sir David Walker’s review of the banks, and the investment committee recommendations by Monitor. This committee will have a key role in developing the organization’s risk appetite.
Why it is important.
Governing boards need to formally agree in and transparent way what role they will take in the detailed direction of an organization. This will be different for each organization and dependent on the level of risk, market forces, the detailed knowledge required to undertake particular tasks and the maturity of management. The controlling mind of the organization needs to plan and be explicit about the level of direction it will need to exert itself, and that which it is comfortable to discharge to others both within and outside the organization. This will help other stakeholder assess risk and control for themselves. The board must be clear in the role and delegated authority of committees, and indeed the use of the term ‘committee’ which we suggest is overused
Openness and transparency TPISC - should have the confidence that their business and decision-making processes would stand exposure to the public eye. This ensures that TPISC meet important legal and compliance requirements, as well as fosters good business practice through building reputational and brand value. Decisions and conduct should be auditable and explainable. A new duty of conduct is to be imposed on all committed, which will include a requirement for boards to meet in public and for any service failings to be dealt with in an open and transparent manner.
Board supports - To enable the board to work well, the board will need to work through the various roles and support systems it needs in place. These include:
- Directors – both executive and non-executive, who jointly comprise the unitary board and who are ultimately responsible for the enterprise.
- Executive directors – who in addition to their director responsibilities hold an executive portfolio.
- Non-executives – who are directors kept separate from the management process and can therefore support the success of TPISC by applying constructive challenge and scrutiny to matters brought before them.
- Chair – responsible for ensuring that the board has proper information with which to carry out its responsibilities, chairs meetings in a way that allows proper debate and scrutiny of all matters brought before it. The Chair may also have an external ambassadorial role. The chair will appraise all directors –in their role as directors -on an annual basis, and provide feedback on their contribution to the work of the board. The Chair should also initiate regular reviews of the collective performance of the Board and address any developmental issues.
- Board Secretary – who will ensure that the proper company processes for the board are followed, and will work with the Chair and the chief executive to plan the annual cycle of business and the agenda and papers for individual board meetings. The board secretary should be available to advise the board that decisions have been properly made.
- Independent Director (ID) – who will be available to all board members wishing to informally discuss their role and contribution to the board and who will conduct the annual appraisal and feedback session for the Chair. In Industry the SID provides the shareholder facing role and with increasing application of a membership model in the TRISCO this may develop as an appropriate SID role.
Why it is important.
A board model of governance requires different individuals to take different roles in order to deliver on the preceding principles of governance. Different actors need to be charged with different parts of the accountability continuum, and there need to be managed systems to ensure that information, advice and challenge are brought together to arrive at the best decisions for all stakeholders. It is important that the different individuals concerned understand their individual roles in making sure the board governance system works and can respond to future needs.
Knowing the organization and the market - Those acting as the controlling mind of an organization have a duty to know and understand the organization they are responsible for, and the market in which the organization operates. Within the organization the board needs to understand and be assured that relevant compliances are being met, and that the organization remains fit for purpose. Externally boards need to understand opportunities and risks. In order to do this, boards should have in place systematic processes so that they remain informed and assured at all times. The most significant of these will be the organized delegation to management, described above, and the setting of tolerances around when and how management should bring matters to the attention of the board. Other systems boards will have in place to remain aware of internal and external issues will be specific governance and information systems, such as performance reports, the board assurance framework, the risk register, decision tracker, audit plans and professional advice. To ensure that these systems are robust and are functioning properly TPISC will have an audit committee, which is a committee of non-executives (without the Chair) who will have an on-going assurance role to the board that all relevant governance systems are working and delivering added value. Boards need to check continually that their knowledge of their own organization and of the market is sufficient for purpose, but do so without delving into the management of the organization itself. Finally, Boards and their members have a responsibility to anticipate and respond to their external environment. This is always dynamic and a good board will spend time future proofing the organization by paying attention to new (or newly appreciated) risks and opportunities. This can be done by directors rehearsing locally what has gone wrong (and right) elsewhere, boundary issues and evaluating their own instincts.
Why it is important.
Skills alone are not enough to discharge accountabilities to stakeholders. Those running an organization must have an intimate knowledge of the organization for themselves before they can assure and act on behalf of other stakeholders. Additionally, those governing an organization need to understand the external environment in order that they know the consequences of their decisions can manage risk and are able to anticipate the outcome of different options. To provide constructive challenge directors need to understand more than generic business practice. In healthcare, when strategic decisions need to be taken the various options themselves will require a degree of professional insight and confidence in order to challenge and add to informed debate. Directors who do not familiarize themselves with the market they operate in are being derelict in regard to their overall responsibilities to stakeholders.
TYPES OF GOVERNANCE
Mechanics of Governance The main principle of the code is that every institution should be headed by an effective board, which is collectively responsible for the success of the organization. The board’s role is to provide leadership of the organization within a framework of prudent and effective controls which enables risk to be assessed and managed. The board should operate in the round focusing on the business of the organization by
- constructive challenge and shaping proposals on strategy
- scrutinizing the performance of management in meeting agreed goals and objectives
- monitoring the reporting of performance
- satisfying themselves that services are safe and cost effective; on the integrity of financial information and those controls and systems of risk management are robust and defensible.
- There should be just one governance; the use of qualifying adjectives is unhelpful and perpetuates or encourages silos of governance however it is important for boards to understand what is meant by regulators and others introducing terms such as Quality, Clinical, Information and Research Governance specially where compliance is expected or required. It is for the board to seek to align and integrate these components and demonstrate grip over them all.
Quality Governance Everyone expects to receive the highest standard of “Quality Governance: The duty of each body/committee to put and keep in place management for the purpose of monitoring and improving the quality of good governance provided by and for that body and in part in response to the concept of Governance
The programmes of governance will change but this allows the board to ensure that:
- committees of the board are clear by when they must conclude business and scrutiny
- annual surveys of staff
- regulators and audit reports are prepared and presented in a timely manner
- the board can meet to receive and sign off key documents such as the annual accounts
- internal control, compliance against standards and the annual report
- boards and committees can revisit strategies and influence annual plans.
The cycle of business should include assigned and protected time for boards to consider emerging issues and help to shape strategies. The impact of an annual cycle of business is likely to raise more issues than can be accommodated in monthly meetings but this will drive a thoughtful approach to delegated authority to officers and sub committees and encourage more analysis to be put into routine finance, performance and risk reports
The Framework is underpinned by 10 questions:
- Does quality drive the Trust’s strategy?
- Is the Board sufficiently aware of potential risks to quality?
- Does the Board have the necessary leadership and skills?
- Does the Board promote a quality focused culture throughout the Trust?
- Are there clear roles and accountabilities in relation to quality governance?
- Are there clearly defined, well understood processes for escalating and resolving issues and managing performance?
- Does the Board actively engage patients, staff and other key stakeholders on quality?
- Is appropriate quality information being analysed and challenged?
- Is the Board assured of the robustness of the quality information?
- Is quality information being used effectively? The Good Governance Institute has produced a maturity matrix reflecting the 10 Quality Governance challenges but has added an eleventh:
- Is quality governance aligned with other forms of governance?
Integrated Governance Integrated governance was introduced as a response to a number of issues including the devolution of accountability to local services and commissioners and the view that boards are important but must be focused and add value. Also, although it encompasses audit its effectiveness and research risk management; education and training; and public involvement. The separation of corporate governance led to a silo approach in many organizations, where issues were separated from finance, staffing and estates. Integrated governance was described not as a form of governance but rather a movement from uninterrupted to integrated. Integrated Governance provides the umbrella for all TPISC governance approaches. It combines the principles of corporate/financial accountability and it moves towards a single risk sensitivity process which covers all the trust’s objectives, supported by a coordinated source of collecting information and subject to coordinated inspection which set out a process for integration and alignment. It set out ten key elements which were developed as maturity matrices and gave support to the use of such tools as the board assurance framework, annual cycle of business, effective use of dashboard information, annual board review and an overhaul of sub-committees of the board.
Information Governance Information Governance is the way by which management handles all organizational information - in particular the personal and sensitive information of the company. It allows organizations and individuals to ensure that corporate information is dealt with legally, securely, efficiently and effectively. It provides a framework to bringing together the requirements, standards and best practice that apply to the handling of information. It has four fundamental aims:
- To support the provision of high quality management by promoting the effective and appropriate use of information.
- To encourage responsible staff to work closely together, preventing duplication of effort and enabling more efficient use of resources.
- To develop support arrangements and provide staff with appropriate tools and support to enable them to discharge their responsibilities to consistently high standards.
- To enable organizations to understand their own performance and manage improvement in a systematic and effective way.
Research Governance Research Governance can be defined as the broad range of regulations, principles and standards of good practice that exist to achieve, and continuously improve, research quality across all aspects of non-life insurance. By non-life insurance research it is taken to mean any material goods/belongings/possesions research.
Staff Governance Staff governance focuses on how staffs are managed and feel they are managed by one of Non-Life Insurance company’s largest employers. Staff governance is the third pillar of the governance framework within which TPISC Boards, must operate.
The staff governance the employers legally accountable for staff governance, in the same way that they are already responsible for the quality of management and for appropriate financial management. The Staff Governance Standard is the key policy document which defines the five elements that make up staff governance specifying that staff are entitled to be
- well informed;
- appropriately trained
- involved in decisions which affect them
- treated fairly and consistently; and
- provided with an improved and safe working environment
TPISC employers must be able to show that they have systems which not only identify areas for improvement around staff governance, but also develop and monitor action plans. The Staff Governance Standard is monitored in each Board through the staff survey.
BEHAVIOURS, SYSTEMS AND SUPPORTS
Behaviours Good board governance cannot be legislated for but can be built over time. The best bets for success are:
- A climate of trust and candour in which important information is shared with all board members and provided early enough for them to digest and understand.
- A climate in which dissent is not seen as disloyalty and in which mavericks and dissenters are not punished.
- A fluid portfolio of roles for directors so individuals are not typecast into rigid positions on the board.
- Individual accountability with directors given tasks that require them to inform the rest of the board about issues facing the organization.
- Regular evaluation of board performance
- focus on strategic decision-making.
- Board members who trust each other and act cohesively / behave corporately.
- Constructive challenge by board members of each other.
- Effective chairs who ensure meetings have clear and effective processes.
- Attempts at Improving Board Effectiveness.
Behaviours determine the actions of the organization and are a vital element of good governance. Some behaviours are expected and prescribed, others reflect experience, styles and etiquettes adopted or learnt.
Good Governance Standard Good Governance Standard consists of the following:
- Focusing on the organization's purpose and on results
- Performing effectively in clearly defined functions and roles.
- Promoting values for the whole organization and demonstrating the values of good governance through behaviour
- Taking informed, transparent decisions and managing risk.
- Developing the capacity and capability of the governing body to be effective
- Engaging stakeholders and making accountability real.
The only way to be sure that Corporate Officers do the right thing is to keep an eye on them, to challenge them, to hold them to accountable and, above all, to take part in them. Top Management should draw Codes of Conduct or Professional Ethics incorporating the following principles, and that internal systems for maintaining standards should be supported by independent scrutiny.
The Seven Principles of Good Management:
Selflessness: Corporate Officers should take decisions solely in terms of the company’s interest. They should not do so in order to gain financial or other material benefits for themselves, their family or their friends.
Integrity: Corporate Officers should not place themselves under any financial or other obligation to outside individuals or organizations that might influence them in the performance of their official duties.
Objectivity: In carrying out business, including making appointments, awarding contracts, or recommending individuals for rewards and benefits, Corporate Officers should make choices on merit.
Accountability: Corporate Officers accountable for their decisions and actions to the stakeholders and must submit themselves to whatever scrutiny is appropriate to their office.
Openness: Corporate Officers should be as open as possible about all the decisions and actions that they take. They should give reasons for their decisions and restrict information only when the wider interest clearly demands.
Honesty: Corporate Officers have a duty to declare any private interests relating to their duties and to take steps to resolve any conflicts arising in a way that protects the interest.
Leadership: Corporate Officers should promote and support these principles by leadership and example.
Systems integration and alignment
The board’s job is to be strategic, to look forward and up. But it must have confidence that strategies are being delivered, decisions are being acted upon and that all staff understand their roles and responsibilities.
Board members will have a number of systems and supports to build assurance that these are happening but they must be prepared to ask the right questions and support each other in securing an acceptable response.
Key things to look for are:
- Annual Cycle of Business: A planned programme for the year ensuring board meetings cover the key annual events and anticipate critical decision taking.The cycle of business allows boards to plan their away day programme to ensure they cover emerging issues and help to shape national and local strategies.
- Board assurance framework: A top down listing of key objectives with risks identified together with controls and assurance. Where there are gaps in controls or assurance, action plans will be identified.
- Decision tracking systems: that records decisions taken by the board, its sub committees and partnership boards.
- Internal and external audit: Audit plans will be drawn up with the internal and external auditors to ensure systems are working in all areas of activity and thatthere is a strategy for alignment with clinical audit that includes an annual plan addressing national and local priorities.
- Board Assurance Prompts: that identify key clinical and assurance areas that boards should address and provide some guidance on the kinds of questions that should be asked and what acceptable and unacceptable responses look like. In gaining an overall view of the organization, boards also need to consider the different themes and streams of governance.
There are ten key elements that need to be considered to ensure effective overall and connected governance:
- Clarity of purpose aligned to objectives and intent
- Strategic annual agenda cycle with all agendas integrated encompassing activity, resources and quality
- Board Assurance System in place
- Decision-taking supported by intelligent information
- Streamlined committee structure; clear terms of reference and delegation; time limited
- Audit Committee strengthened to cover all governance issues
- Development & review of board members
- Appointment of a Board Secretary
- Board etiquette agreed
- Annual Board review
Whole system: governance between organizations
Problems often occur at the borders between one organization or team and another. Learning from Investigations In the absence of formal governance arrangements, responsibility for supporting the governance of partnerships falls to partners’ own corporate governance mechanisms.
The NHS works across organizational boundaries and in partnership with other organizations in the interest of patients, local communities and the wider population. The NHS is an integrated system of organizations and services bound together by the principles and values now reflected in the Constitution. The NHS is committed to working jointly with local authorities and a wide range of other private, public and third sector organizations at national and local level to provide and deliver improvements in health and well-being.
Ten simple rules for governance between organizations:
Continuity of Business
- Jointly commission outcomes and connectivity of care pathways from primary through acute, diagnostics, tertiary to community and home.
- Patient referral or data: Take the extra step –have they arrived: what has not arrived?
- Review and apply lessons from investigations elsewhere (NHS and other sectors). Could it happen here? Partnerships and networks
- Jointly audit critical processes across the boundary (clinical, financial, information etc) at appropriate depth & frequency respective to risk.
- Be consistent in telling patients/carers what they are entitled to and when they are holding responsibility for their own care.
- Check your partners/suppliers have the capacity to deliver their obligations. Mutual Aid and business continuity
- Engage with other organizations to support you in case of long term or widespread service collapse.
- Establish and test partner forums and networks to coordinate planning and review progress.
- Include reputational risks and potential failure of partners and suppliers in the Board Assurance Framework (BAF).
- Apply rules for new staff (CRB checks, data handling, competence, qualifications etc) to existing and agency staff.
Annual cycle of business
An effective board will set out a programme for the year ensuring its board meetings cover the key annual events and anticipate critical decision taking. The programme will of course change but this allows the board to ensure that:
- committees of the board are clear by when they must conclude business and scrutiny,
- annual surveys of staff and patients inform plans,
- regulators and audit reports are prepared and presented in a timely manner,
- the board can meet to receive and sign off key documents such as the annual accounts, statement of
- internal control, compliance against standards and the annual report,
- boards and committees can revisit strategies and influence annual plans
The cycle of business should include assigned and protected time for boards to consider emerging issues and help to shape national and local strategies. The impact of an annual cycle of business is likely to raise more issues than can be accommodated in monthly meetings but this will drive a thoughtful approach to delegated authority to officers and sub committees and encourage more analysis to be put into routine finance, performance and risk reports.
Annual board review
The Corporate Governance Code expect the board to undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors. Individual evaluation should aim to show whether each director continues to contribute effectively and to demonstrate commitment to the role (including commitment of time for board and committee meetings and any other duties).
The organization will undertake a formal annual board review covering the whole range of the board’s activities including strategy and operational performance to ensure it has mature processes in place covering:
- purpose and vision
- strategy and planning
- risk and agility
- information, analysis and assurance
- quality, efficiency, innovation and outcomes
- probity and reputation
- decision making and decision taking
- service user, staff, stakeholder and public engagement
- board supports and main committee structures
- appraisal process of trustees, and other feedback.
Clinical audit Clinical audit was originally a process by which clinicians reviewed their own practice, but is now recognized as capable of giving information and assurance about clinical quality as a whole.
Ten simple questions for boards
- Clinical audit can be used as a strategic tool; your organisation’s clinical audit strategy should be allied to the broader interests and targets that the board needs to address.
- There should be direction and focus on how and which clinical audit activity will be supported in the organization.
- There should be appropriate processes for instigating clinical audit as a direct result of adverse clinical events, critical incidents, and breaches in patient safety.
- The clinical audit programme should be checked for relevance to board strategic interests and concerns. It is important that results are turned into action plans, followed through and re-audit completed.
- There should be a lead clinician who manages clinical audit within the organization, and who is clearly accountable at board level.
- Patient involvement should be considered in all elements of clinical audit including priority setting, means of engagement, sharing of results and plans for sustainable improvement.
- Clinical audit should be built into and inform planning, performance management and reporting.
- Clinical audit should cross care boundaries and encompass the whole patient pathway.
- The criteria of prioritisation of clinical audits should balance national and local interests, and the need to address specific local risks, strategic interests and concerns.
- Check if clinical audit results and complaints are evidence based and if so, develop a system whereby complaints act as a stimulus to review and improvement.
GOVERNANCE IN CHALLENGING ECONOMIC TIMES
What are the lessons for leading and managing during difficult times? Boards will need to be explicit in their decision making if they are to avoid reputational risk and judicial review. TPISC Board considered the following Principles for Disinvestment:
- The organization is committed to improving the health of the community and the quality, responsiveness and effectiveness of services.
- The organization nhas limited budgets but will work with others to lever resources from within and outside the community.
- The organization will always seek to do the right thing first, and then take resourcing decisions.
- We will regularly assess our organization's position in terms of financial management, service delivery and strategic change.
- We will seek to speed up system reform and re-engineering.
- We will scenario plan for the future, exploring the impact of decreasing amounts of growth.
- We will critically review our organization's priorities and develop plan Bs for those we cannot put off.
- We will engage with our stakeholders and communities in decision-making and share our decisions taken.
- We will be positive and optimistic.
Straightforward method of checking whether an organization is being proactive:
- Assess your position in terms of financial management, service delivery and strategic change. Where are you delivering and where are you struggling? What are your strengths and weaknesses and those of your key partners?
- Speed up system reform and re-engineering. Do not wait.
- Review your team’s capability and capacity. It needs to be match fit. If you have team weaknesses address them now.
- Assess the strength and depth of your inter-organizational relationships. The first meaningful conversation should not be about the impact of the economic downturn.
- Scenario plan for the future, exploring the impact of decreasing amounts of growth.
- Critically review your organization’s priorities and develop Plan Bs for t hose you cannot put off. Start incorporating risk assessment in planning.
- Be honest and realistic with staff because above all else they will be looking for leadership. Don’t withhold difficult messages. Staff will want the opportunity to contribute to solutions to wicked problems.
- Seek external help if necessary, but be very specific about the outcomes you want.
- Keep your nerve and maintain a balanced perspective. Do not panic. Plan ahead. Future-gazing is an activity that far too few boards spend time on.
- Be positive and optimistic. It is OK for leaders to say they do not always have the answers, but negative emotions are infectious in organizations.
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. Those who are working to further improve existing healthcare organizations or developing the new CCGs and HWBs need to understand and apply the principles of good governance. It is important to think through how these principles should best be applied to their own local situation. 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. Patients and local communities will be confident in the system, and governance will become proportionate, and an asset to an organization rather than an irksome series of tasks. These principles, allied to carefully considering how your organization can be of good governance knowledge, will ensure higher quality healthcare and proper governance.