1. Good Governance in Government Entities
Governance Matters
Kate Costello

2. Effective Governance understand the role of the Board
get the right skills and encourage the right behaviour
introduce effective processes

3. Understand the Role of the Board
Governance is what the Board does or should do to be a “value-adder” to the organisation rather than just a “cost-centre”.
It is different from what management does or should do.

4. What is Governance?
“The Board’s role is to create the future of the organisation, not just mind the shop”.
John Carver

5. Monitoring and Supervision
The Role of the Board
Strategy Formulation
Outward Looking
Accountability
Compliance
Roles
Appoint CEO
Performance Roles
Inward Looking
Monitoring and Supervision
Policy Making
Past & Present
Future
*adapted from Tricker, RI: International Corporate Governance (1994) p149

6. Those you can’t say no to!
Accountability
Those you can’t say no to!
the law and regulation
constituent document or
empowering legislation
creditors (eg. bank; suppliers)
other contractors (eg government
funding; sponsors)

7. Those you need to listen to!
Accountability
Those you need to listen to!
owners (shareholders; members; government)
customers
staff
the community

8. Good Governance in Accountability
“listening” to stakeholders
risk management
organisational culture

9. Strategy Formulation what is “Strategy”? – Michael Porter
the gut, the head, the heart
answer the hard questions

10. Good Governance in Strategy
longer term strategic plan (with measures)
aligned operational/business/annual plan (with measures)
aligned budgets

11. Good Governance in Strategy
dedicate some board meetings to strategic matters
spend the first hour on a strategic issue
reorganise the agenda (decision; discussion; noting)

12. Policy
“I define policy as the value or perspective that underlies action. Of course that means everyone in the organisation makes policy including staff members, but boards must make the broadest and most inclusive policies in order to control the organisation. The trick is for the board to make distinctions between the types and sizes of policy, so that what is delegated is clear”.
Carver J: Reinventing Your Board, P41

13. Good Governance in Policy
Carver argues that the board only has one employee, the CEO.
“The board will:
instruct only the CEO
view all organisational performance as that of the CEO
view any organisational failure to comply with board policy as the failure of the CEO
require that the CEO keep the organisational performance within policy criteria and restore it to this state should there be policy violations
never in its official capacity, help the CEO manage”
John Carver

14. Good Governance in Policy
Matters reserved for the board
Policy separated from minutes
Board Manual

15. Monitoring and Supervision
By strategic KPIs
By annual KPIs
By compliance with board policy
By agreeing what information will
come to the board, in what format

16. CEO and Succession “hire and fire” the CEO remunerate and reward
assess performance
plan for succession

17. Get the Right Skills size of the board board skill set committees
the right ones?
clear terms of reference?
reviewed, or task forces?
amend constituent document to
make right

18. Board Member Knowledge
induction
management update sessions
expert reports
expert development sessions
Board and director
performance evaluation

19. Encourage the Right Behaviour Board Effectiveness Research
Shey Newitt
Compliant but not contributing: why Australian boards are being under-utilised

20. Working Relationships
Chair – CEO relationship critical
behaviour and teamwork
a “living” Code of Conduct

21. Introduce Effective Processes
calendar
papers before meeting
clear, concise, precise papers
duration of meetings
calibre of minutes plus action list
receipt of minutes after meeting

22. Effective Governance understand the role of the Board
get the right skills and encourage the right behaviour
introduce effective processes

23. Good Governance in Government Entities

24. Structure Varies: department
statutory authority – advisory or decision-making
wholly-owned or partly-owned company

25. Structure Commonwealth and states have their own classifications
nomenclature may be confusing:
the entity called “the Board”
the entity has a “board”
often two “owners”: portfolio and shareholder ministers

26. Structure skill mix on board if nominees
Chair/board to influence Minister to create the right skill–mix on the board
conflicts may arise where board members appointed because of expertise from operating in the field

27. Structure Audit Committee – Auditor-General as auditor
Remuneration Committee – where board sets remuneration of CEO and other senior executives
other committees?

28. Legislative compliance:
Accountability
Legislative compliance:
specific purpose legislation
legislation applying to certain types of government entities
legislation applying to all government entities

29. Accountability
prescriptive content and timing of reporting and disclosure obligations
triple bottom line reporting

30. Accountability relationship with Minister: department CE and Chair
Formal charter (or MOU) clearly setting out role, responsibilities and relationships between department and entity (and its board)
Ministerial direction: in writing; recorded in minutes; referenced in annual report

31. Strategy tension between financial and social objectives
Chair must agree with Minister the long term objective of the government
Statement of Corporate Intent – may contain high-level policy on, eg. asset acquisition, capital structure, accounting policies

32. Strategy
Corporate Plan: 3 plus years – lots of analysis and information
Business Plan and Budget: 1 year

33. Policy may be tied to government policy eg. purchasing and tendering
grants for programs will require certain policies and processes
but, entity needs the freedom to develop policies without interference from department or Minister’s staffers

34. In Summary Influence the right skill-mix Define who does what
Maintain a relationship with the
Minister
Your checklist

35. Good Governance in Government Entities
Governance Matters
governancematters.com.au