Developing Governance & Leadership Performance in the Public Sector

1. Developing Governance & Leadership Performance in the Public Sector John Halligan Professor of Public Administration Deputy Head, Division of Business, Law & Information Sciences University of Canberra John.Halligan@canberra.edu.au

2. Public Sector Governance • Corporate governance to public sector governance • Public sector versus private sector • Governance: corporate & organisational • Developing governance • Advocacy of CG & PSG • Promotion of elements of governance • Demarcating the field • DoFA’s categorisation of 955 govt bodies • Basic models: corporation, dept of state and hybrids

3. Values of Good Public Sector Governance • Accountability • Transparency • Integrity • Stewardship • Leadership • ANAO 2003

4. CG Principles & Elements • Focus on foundations for management & oversight • Eg formalise management/board functions/roles • Structure board to add value • Eg Chair & majority of independent directors • Promoting ethical & responsible decision-making • Eg establish code of conduct • Safeguarding integrity in financial reporting • Eg establish audit committee, • Managing risk • Enhancing performance culture • Recognising stakeholder interests • Sources: ASX Corporate Governance Statement 2003; ANAO 2003

5. Contingent on Type of Organisation • Legislative basis & type of board • Corporate governance roles • Chair, Board, Minister & relationships • Executive boards • Advisory (dependent on CEO) • Mixes of policy, governance etc

6. Corporate Boards v PS Executive Boards • Secretary/CEO/MD has ultimate/shared responsibility? • Board members have consultative/decision-making roles? • Board members have statutory/directors’ duties for which they are personally liable? • Board members are wholly internal/external? • Board members are subject to formal/informal ministerial direction/influence in terms of appointment, decision-making, & dismissal? • Board members have other/ministerial roles? • Board members have little/much control over their Secretary/CEO/MD? • Board members are/aren’t answerable directly to Secretary/CEO/MD? • Horrigan 2004

7. Key Governance Issues: Boards • Different board concepts in FMA agencies & CAC bodies • Board appointments • Conflicts of roles & representational interests for board members • Governance expertise of board appointees • Interaction between government policy & board autonomy • Need for protocols in Minister-Board-Agency comunication • Sources: NIG 2003, CGP 2004

8. Key Governance Issues • Whole-of-government issues • Handling of portfolio agencies under emerging regime • Risk management • Cross-portfolio & cross-governmental policy coordination • Sources: NIG 2003, CGP 2004

9. Two Phases of Howard Govt • 1: Private sectorising dominant • Privatisation, competitive tendering, outsourcing etc • APS arms length & dictates of market or private sector practice • Public-private differences minimised – rise of corporate governance • 2: Strengthen PS capacity & direction • Role of central agencies, oversight & integration • Public-private differences emphasised • Reassertion of public sector governance

10. Post-Uhrig Environment • Implications • Principles for public sector agencies • Focus on binary approach to structure • Corporate board & Executive management • Departmentalisation • Strengths of Uhrig • Recognises limitation of purchaser/provider • Need to streamline range of different organisational types • Appropriate use of board concept

11. Post-Uhrig Issues • Limitations of Uhrig • First principles approach • Emphasis on private sector expertise • Narrow approach to governance • Simplistic dichotomy • Governance questions for bodies eg ABA, ABC, ATSIC etc • Sources: Wettenhall2004

12. Leadership Performance • Different approaches to leadership • Focusing on performance? • Several leaderships • Corporate governance • Organisational

13. Leaders & Performance • Initial observations • Recent review of CG • No rigid adherence to prescriptions • Adapt to agency and its environment • Leadership styles • 1: Compliance • Legality, directives & probity • 2: Instrumentalist • Delivering government objectives • 3: Human relationships • Softer concepts

14. Governance & Performance • Assumptions about relationship between private sector board attributes & organisational performance • Objective (Hard) measures • Separation of roles of chair/CEO? • Independent/non-executive directors? • Board size

15. Governance & Performance2 • ‘Soft’ (qualitative) factors • Roles, responsibilities and relationships? • Board, committee, leadership dynamics • Board cultures, trust and oversight stance • Information & communication flows (Edwards 2004)

16. Building Effective Boards – NDPB • Enhancing effectiveness of independent boards of executive non-departmental bodies • Model • 3 crucial elements of high performing boards • Structure & functions • Actions & behaviours • Performance evaluation • Framework • 8 essential components of high performing boards • Each has key elements of good practice & indicators of strong performance • Barker 2004 (HM Treasury)

17. Elements of High Performing Boards • Structure & functions • Executive function & purpose • Board function & position • Fit for purpose – skills, knowledge etc • Actions & behaviours • Effective board leadership & decision making • Board’s relationships • Performance evaluation • Board & member performance • Source: Barker 2004 (HM Treasury)

18. Corporate Governance ARC Project Overview • Univ. Canberra’s Australian Research Council Linkage Grant: • Corporate Governance in the public sector - the tensions, gaps & potential • Examines structures & processes of public administration of: • Agencies under Commonwealth Authorities & Companies (CAC) Act 1997 • Departments/agencies under Financial Management & Accountability (FMA) Act 1997 • Principal Investigators at University of Canberra: • Professors Meredith Edwards, John Halligan, Bryan Horrigan; Mr Geoff Nicoll • Project Output • Issue papers • Conference & Workshop • Academic books & Handbook

19. Corporate Governance ARC Project Our Industry Partners ________________________ Sponsorship monies have also been provided to the Project from the Australian Public Service Commission

20. Specific Questions • Public-Private Comparisons of governance • Similarities & differences of public & private organisations • How far can you go in adopting private sector governance within the APS? • Public Sector Governance • Different types of governance arrangements within public sector • Is there a separate public sector model? • Selected Issues • What determines the success of Boards in the APS? • How are the interests of stakeholders represented in the different forms of public sector governance? • How are corporate governance elements like accountability, conformance & performance manifested? • Are there principles of design & practice in public sector corporate governance that can guide future decisions in this area?

21. Conclusion: Issues & Directions • Implementing Uhrig? • New governance environment & balance? • Challenges of horizontal governance & participatory governance? • Connecting governance to performance?

22. Corporate Gov Developments in Public Sector: Major Documents • Conflicts and Tensions in Commonwealth Public Sector Boards (NIG, 2003) • Current Issues in Public Sector Governance (NCCLPR & NIG, 2003) • Public Sector Governance Volumes 1 & 2: Better Practice Guides (ANAO, 2003) • Review of Corporate Governance of Statutory Authorities and Office Holders (Uhrig Report), 2003 (released 2004) • Public Sector Governance – Australia (CCH, 2004) • List of Australian Government Bodies 2002-2003 (DoFA 2004) • Building Effective Boards: Enhancing the Effectiveness of Independent Boards in Executive Non-Departmental Public Bodies (UK Treasury, 2004) • ARC-funded public sector corporate governance research project (http://www.blis.canberra.edu.au/corpgov%2Daps/whatsnew/default.htm)