Maintaining a sound governance system 23 October 2015 – BME National Annual Conference Maintaining a sound governance system Sharron Webster Stephen Bull

Why is governance so important? The changing external environment Regulation new Regulatory Framework emphasis on risk stress testing HCA Code of Practice IDAs NHF New Code of Governance Experience of how the HCA regulates – most issues are seen as governance issues Constant emphasis on role of board

What is the board for? Agreeing the Group’s strategy The future Setting parameters for decisions that have been delegated Risk Identifying and managing Finance Approving budgets and accounts Hiring and firing the chief executive and other executives

How can the board deliver all of that? Defining what its proper role is and the roles of others Effective delegation Being realistic about what board members can be expected to know about Trusting your senior executive Making sure the board gets all necessary assurances that all is “ok”

What do you need to maintain sound governance? Standing orders Operation of meetings Offices and roles, e.g. chair, secretary, CE Delegations/ matters reserved Committees Urgency procedures, sealing, other administrative matters Conflicts of interest Appraisal processes Governance effectiveness review Code compliance

What else do you need? Terms of reference – for boards and committees (NHF Code) Executive terms of reference? Delegatory framework - Who makes what decisions? Suite of policies Rules/articles/ IGA Financial regulations

Regular governance reviews Of internal documentation Of board membership – skills and expertise To assess whether your structure is still right for you What about a more streamlined board and shareholding membership structure? Smaller board Board members selected rather than elected Shareholders and board members co-terminus Revised rules to reflect this streamlined structure

What makes a good board Diversity Well chaired Dynamic Induction Development opportunities Effective and robust appraisal Term and churn  

What makes a good board member? Specific skills are necessary Ability to ask the right questions and understand the answers Common sense Constructive challenge (2 way) Listening See the big picture – be strategic Act in the best interest of the organisation Be risk aware Be self aware – know your strengths and weaknesses and know when to go  

Your role as a board member Can you ensure the success of the business – Strike balance between entrepreneurial and prudent control Short term pressures and long term trends Local vs wider environment Having the correct skills and competencies on the board Do you have a board that can ask the right questions …and understand the answers Do you have a board that adds value to the business Not there to represent

Are you embracing the board appraisal process What training does your board have Are new board members inducted and made to feel welcome – board behaviours Can you access information out there

Code of Governance B2 -Act in best interests of the organisation B4-Board size C1-3 - nod to VFM C7 - Chair leads the board Emphasis on skills needed to run a business D1- Succession planning D2 -Kept max tenure of 9 years - but up to 9 years (flexible) D3 - Re appointment after one term of office

Back to basics Read papers, turn up to meetings and ask questions Make decisions you can justify (incl audit trails and good minutes) Constructive challenge Review skills and competencies Take time in recruiting the chair Keep it strategic - outcome and impact

Back to basics Act wholly in the best interests of the organisation Know the limits – constitutions Appraisal Keep it strategic - outcome and impact Think differently – even for board meeting formats etc Diversity on the board Make time for reflection RISK RISK RISK