Public Bodies Governance Conference 8 March 2013

1. Performance and risk: keeping your finger on the pulse! Public Bodies Governance Conference 8 March 2013

2. Do you have clarity of purpose? • Good Governance Standard for Public Services • “Good governance means focusing on the organisation’s purpose and on outcomes for citizens and service users” • Three key elements • Clear statement of purpose and intended outcomes • Shared understanding and effective communication • Regular review by the board of its decisions to ensure that they further the organisation’s purposes and deliver key outcomes for citizens and users • “One of the main failings of boards”

3. Are you measuring the right things? • Key performance indicators and quality indicators • Clear statement of purpose • A set of linked corporate objectives • A few key performance and quality indicators • Common problems • Too many (“a blizzard of information”) • Failure to link KPIs and QIs to the major risks • Focusing on quantitative over qualitative

4. Are you getting the right information? • Board needs to engage with the executive to specify its information needs • Format, content and frequency • Does this information give us added assurance? • “We were kept in the dark!”

5. Can you trust the information that you receive? • Boards and committees need to satisfy themselves that the information that they receive is accurate • The audit committee needs to be on top of its game! • Scrutiny function of non-executives and sometimes the need to see hard evidence • Role of internal audit and the relationship between the head of internal audit and the chair of the audit committee • A healthy degree of scepticism

6. Do you use the information provided to scrutinise effectively? • Do you have the skills? • Do you offer a constructive challenge? • Does the board understand its role? • Is the chair effective? • Has complacency set in? • Is there too much trust in the executive team or is the balance right? • Culture and traditional way things have been done!

7. How do you know when things have gone [badly] wrong? • Setting out your expectations to management • Formal scheme of delegation and a schedule of decisions reserved to the board • Any matters of financial or reputational risk or material issues of principle to be referred to the board • Test how well the scheme of delegation is working • Other sources of assurance • Staff, users, public • Triangulation

8. Have you got the right executive team in place to deliver? • Ensure that an effective senior management team is in place • Hold senior executives to account for performance • Role of the remuneration committee • A good performance management system • Recognise good performance but be prepared to deal with poor performance

9. How do you react when things go wrong? • Take decisive action to address problems • “The major challenges being reported to the board today are the same ones that were being reported two years ago” • Be prepared to take tough and unpopular decisions • Your decisions should be evidence-based • Take tough decisions but be prepared to explain why

10. Is there integrity in your performance reporting? • “Only good news from …….” • Be careful to send out the right messages to staff • Acknowledge problems and mistakes to Minister and public • Do you really want to be the best? • “The drive to be the best undoubtedly put the senior management team under pressure to meet and exceed targets….” • Do not give management a reason to conceal issues from the board

11. How do you ensure pressure to deliver does not result in bad behaviours? • Good Governance Standard • Do you have organisational values and are they being put into practice at all levels? • And….. how do you know? • The board should ensure that a set of shared organisational values: • Are developed • Are operating • Are periodically tested, breaches are highlighted and dealt with

12. In summary • Clarity of purpose and a focus on delivering key outcomes for citizens and users • Monitoring/measuring the right things • Getting the right information • Trusting the information you are receiving • Scrutiny: Using the information to hold the executive effectively to account for performance

13. In summary • Ensuring that you know when something has gone badly wrong (even when nobody wants to tell you) • Having the right executive team in place to deliver • Dealing with problems when they occur • Reporting honestly on performance – good and bad • Ensuring that the pressure to deliver does not drive bad behaviours