Good Governance Compendium

Category: 2getherYesterday someone drew my attention to a “Compendium of Best Practice” setting out the “Foundations of Good Governance” for NHS foundation trusts, and in particular a short appendix on accountability and holding non-executive directors to account. As this is a subject that I’ve been giving a lot of thought to recently, I was intrigued. But I was also a little suspicious — and with good reason, it turns out.

I was a little suspicious because the document is published by the Foundation Trust Network (FTN), effectively a trade association for NHS trusts and a lobby group for their interests. Despite the name, it doesn’t only include foundation trusts. No one would expect the FTN to make life harder for its members by arguing for more accountability than is absolutely necessary in the narrowest interpretation of the law. On the other hand, no one would expect the FTN to make a fool of itself by publishing advice that is blatantly wrong.

The current version of the document, The foundations of good governance — A compendium of best practice (PDF) is the second edition, published in October 2013. A web version of the text is also available, but I’m not certain that it’s exactly the same as the PDF. The document is slightly strange in that the main text is only a dozen pages long, so that most of the document consists of appendices.

Although I only intended to review Appendix 22 on accountability, I had a quick look at some other sections too.

LOL

I must admit I laughed out loud at this remark in a section on board minutes and councils of governors (p. 7):

“The intention is that governors are informed of the board’s decisions and the reasons for them quite quickly after the board meeting. This should be a relatively straightforward and uncontroversial process.”

The process can become convoluted and controversial because the board can exclude the public from parts of its meetings. For example, it might need to discuss commercially sensitive matters. The minutes of those discussions would also be confidential. It is not obvious whether the board can exclude governors from access to those minutes.

Monitor’s view, and mine, is that there is no legal basis for excluding governors from access to confidential agendas and minutes. Governors’ code of conduct can include a requirement to maintain confidentiality.

In the 2gether trust, the Constitution (PDF) currently provides that governors may see only the agendas for public meetings, and it is ambiguous about minutes. In my view this is an error that will need to be corrected.

The FTN is clearer in its section on the board agenda and governors (p. 6):

“Equally clear is the need for foundation trusts to be transparent in the way in which they conduct their business and to be as open as patient and business confidentiality allow. Where relationships are harmonious it should be possible to achieve this objective through discussion with a view to consensus.”

According to the FTN, patient and business confidentiality should trump transparency, and anyone who disagrees is not being harmonious.

Defining accountability

After getting sidetracked by agendas and minutes, I turned to Appendix 22, which was the part I had originally intended to review.

There’s a nice definition of what it is to be accountable (p. 96):

“We suggest that the following captures the essence of what it is to be accountable:

  • to be responsible for the delivery of a specific task or outcome;
  • to be liable to explain and justify to another party;
  • to be subject to judgement and possible sanction or reward.”

But the following sentence softens the definition when it describes what the FTN thinks governors should do:

“So to hold to account is to receive an account or explanation and a justification for actions taken or not taken; to test the account through questioning, to form a judgement and to feed back.”

The responsibility part has been thrown away entirely, and the possible sanction or reward has been watered down to mere feedback.

Appraisal

A section on “what holding to account is not” digresses to discuss the appraisal of individual non-executive directors’ performance in the role. Although longer than it needed to be, this section is actually quite useful, because some people (and not just governors, as the FTN claims) have indeed become quite confused about the differences between holding to account and appraisal.

“…it is not part of the governor role to appraise directors directly.”

Outcomes

A section on the outcome and benefits of accountability makes some useful, as well as some dangerously weak recommendations (p. 97):

“For governors the outcome that they should be seeking from holding the non-executive directors to account is assurance about the performance of the board. Specifically they will be looking for assurance, confidence backed by sufficient evidence…”

It is useful to understand that assurance is the final outcome of successful holding to account, and that it is not enough simply for a director to announce, “I assure you that everything’s fine.” There needs to be sufficient evidence to give governors confidence about the performance of the board.

However, the same paragraph continues:

“…that the board is setting strategy, controlling the trust, establishing the right culture and delivering accountability.”

This is dangerously weak. It’s not enough that the board is setting strategy, controlling the trust, etc. It has in addition to perform these roles effectively in terms of the benefits for members and the public. Going through the motions is insufficient. Any governors who accept the FTN’s view of this are in danger of letting their directors off far too easily.

A more subtle difficulty arises later (p. 97):

“…the first step in being held to account is to actually give an account; to relate to governors what actions the board has taken to lead and govern the trust to deliver effective healthcare. This might include how the board manages risk and risk appetite; how the board gains assurance; how directors triangulate to gain assurance, use of external assurance and stress testing. Boards will want to tell governors about trust performance and quality: what has gone well and badly – and why. Examples of where the board has intervened to deal with issues of performance can provide governors with evidence leading to assurance far more readily than undiluted performance information.”

If your eyes glazed over in the middle of that quote, it illustrates my point. The problem here is that giving a full account of the board’s actions, complete with examples, is a huge task. Governors have very limited time, and we’ll be utterly ineffective unless we focus on key issues. The FTN’s plan for deliberate information overload would ensure that the directors of failing trusts can hide their failings behind avalanches of bland presentations about board processes and cherry-picked success stories.

Relationships

A final section on making the relationship work contains some sound advice. I particularly liked to see this (p. 97):

“Governors will need the right level of information and support to carry out their role effectively, but just as importantly will need time and space to question, challenge and to reflect on and debate what they have heard so that they are able to form a conclusion and feed back to the board.”

The time and space requirement is all too easily forgotten when there’s pressure to include many complex items in every agenda. A council of governors often needs a lot of time and space to form a conclusion because of the size of the group.

But the very next paragraph again runs into trouble:

“…boards could misinform or mislead their governors with relative ease. This is undoubtedly true, but any short term advantage in doing so would be outweighed by the disadvantages that would accrue once the issue became public, as it inevitably would.”

It is unrealistic to imagine that examples of governors being misled inevitably become public. What usually happens is that months have passed by the time of the next council meeting, and by then the agenda has moved on. Other things seem important. That issue is old news. Why return to it? The agenda is packed and we have a lot to get through!

Most councils of governors are poor at creating and managing public issues, often having no relationship with the Press and other media and forums independently of the trust. This means that even if an issue did become public, it’s unlikely that any real disadvantages would accrue to the board or to individual directors.

The advantage in misleading governors is not necessarily short term. If the council of governors is mislead effectively enough, it might not return to the issue for a year or more, by which time that data will be different, there might have been restructuring in the organisation, changes in personnel, different regulatory guidance, and so forth. It might be easy to build on the previous year’s disinformation and mislead governors yet again. There’s not necessarily any time limit.

Finally, it’s not just governors who are at risk of being misled. Non-executive directors are part-time outsiders, too. If there’s something to be less than honest about, a good tactic would be to mislead the non-execs and let them mislead the governors.

The FTN’s advice on this matter is itself an attempt to mislead. Any council of governors that believes it is being lulled into a false sense of security.

The trust’s performance

A list of points relating to holding the non-executive directors to account appears in Appendix 21: terms of reference for the council of governors. This list is somewhat different from Appendix 22, and I was struck by the last bullet point (p. 95):

“If considered necessary (as a last resort), in the fulfilment of this duty, obtain information about the foundation trust’s performance or the directors’ performance by requiring one or more directors to attend a council of governor meeting.”

In the small print there’s a reference to paragraph 10C of Schedule 7 to the National Health Service Act 2006 (as amended). The fun starts if you actually read paragraph 10C:

“For the purpose of obtaining information about the corporation’s performance of its functions or the directors’ performance of their duties (and deciding whether to propose a vote on the corporation’s or directors’ performance), the council of governors may require one or more of the directors to attend a meeting.”

It doesn’t say “if considered necessary” or “as a last resort” at all. The FTN just made these phrases up. In reality the council has the power to obtain information in this way routinely.

It doesn’t say “in the fulfilment of this duty” either. Paragraph 10C is a separate provision that grants this power to the council of governors regardless of whether or not it is used in connection with the duty of holding to account, which is paragraph 10A(a). The FTN just made up the connection. (In practice, councils are very likely to use this power mainly in connection with the public interest, which is paragraph 10A(b), but even that connection is not a legal requirement.)

It doesn’t say “a council of governor [sic] meeting”. It just says “a meeting”. The council can require directors to attend a subcommittee, a task group, or a members’ meeting if they want to. It doesn’t have to be a full council meeting. The FTN just made that bit up, too.

And the FTN evidently didn’t like the idea of “a vote on the corporation’s or directors’ performance”, so it just left that bit out.

I started this review by writing “no one would expect the FTN to make a fool of itself by publishing advice that is blatantly wrong” and it hasn’t exactly done that. Its advice contains grains of wisdom but is at the same time subtly misleading in parts. Governors should take it with a large pinch of salt.

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About Rod

Chairman of the Gloucestershire charity Suicide Crisis, Vice Chair of Relate Gloucestershire & Swindon, and an enthusiast for public involvement in the NHS.
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