Friday, September 19, 2008

Thought for the day (and a postscript to yesterday’s posting on good governance)

This morning I stumbled on fairly profound quote that has relevance to the question of what is effective governance and leadership:

Managers are concerned with doing thing rights.
Leaders are concerned with doing the right things.


Thursday, September 18, 2008

Good governance – more than just getting the process right

I’ve been reading the National Housing Federation’s Code of Governance. (I do know how to enjoy myself. Moreover, I am attending a consultation event on changes to the Code so I thought I should do some prep.)

The Code may be four years old but it is hard to fault what it says – its content sets out best practice in governance. (It is probably easier to fault the application of the Code by many housing associations. Several have half-heartedly implemented time limits on board membership in order to avoid applying the spirit of the board renewal requirements. I suspect many others fail on other provisions such as publicising the membership of sub-committees – probably without even knowing.)

I might fault the Code on what it does not say. I would suggest that what is missing from the Code is a full recognition of the importance of board dynamics and organisational leadership.

Moreover, the Code is weak in its overall tone. Good governance is about delivering excellent outcomes as well as getting the process right.

The Code notes:

Good governance is more than good practice – it is good business too … As such good governance enhances organisational reputation, and ensures better results are achieved.

That’s true in so far as the evidence demonstrates an association between governance and performance. But good governance is about focusing on results, outcomes and impact – you can’t just assume that procedural ticks will yield deliver the goods.

Monday, September 15, 2008

Poor governance again: under-achieving governors to blame for poorly performing colleges

The new Ofsted review of colleges' improvement has noted: "Ineffective governance and management lay at the root of many weaknesses seen in underperforming colleges."

It is sad that some governors do not get it. Ofsted found governors who were so absorbed by the financial position of their college that they didn’t pay enough attention to the success of students. As a Chartered Accountant (and someone who has seen the mess left by colleges lacking financial viability), I see the importance of finance - but it is only a means to an end.

The report also found that some governors and managers also avoided making difficult decisions.

The report also noted: "There was no culture, understanding or acceptance of accountability - these managers were not constructively self-critical and frequently looked for something or someone to blame when things went wrong or improvements were not forthcoming.

Friday, September 12, 2008

Some quotations on forecasting the future

As a postscript to my thoughts on the ability of university finance directors to foretell inflation, I thought it might be worth including some quotes on forecasting.

I always avoid prophesying beforehand because it is much better to prophesy after the event has already taken place.
Winston Churchill

Never make forecasts, especially about the future.
Sam Goldwyn

A pessimist is an optimist with more information.

To expect the unexpected shows a thoroughly modern intellect.
Oscar Wilde

Thursday, September 11, 2008

Inflation, risks and the “financial acumen” of university FDs

It’s an ill-wind of high retail price inflation that brings university staff pay rises of more than twice the government's public sector pay norm. The three-year pay deal for universities provided for a rise this year of 2.5% or the September retail prices index - whichever is higher.

Some universities will struggle to pay 5% and may defer its introduction. In response, the University and College Union has argued that the employers have had two years to budget for the settlement. The UCU general secretary has said that she would be “concerned about the financial acumen” of any institution that had failed to budget for the 5%.

As I often work as an interim finance director, I will resist the temptation to leap to the defence of higher education FDs although did anyone foresee that inflation was going to double? (Who wants to bet on inflation in two years time? The Bank of England’s central estimate for consumer price inflation is less than 2% although its range of forecasts ranges from under 1% to well over 3%.)

While no one (or almost no one) really expects FD and university governing bodies to foretell the future and provide for each and every contingency, this situation shows the importance of treating seriously sensitivity analysis – thinking through the “what ifs” of financial planning. Too often risk management is seen as a load of old risk registers – whereas good risk management requires a lot more of management and governance.

Sunday, September 07, 2008

Effective boards: 12 principles

The excellent Healthcare Governance Review blog notes that the recent publication by the Department of Health of a review of healthcare regulators includes an endorsement of the Carver policy governance model for boards.

As an appendix to the DH report, the Council for Healthcare Regulatory Excellence working group sets out the 12 principles for an effective board:

1. The board should determine the purpose and values of the organisation, and review these regularly
2. The board should be forward and outward looking, focussing on the future, assessing the environment, engaging with the outside world, and setting strategy
3. The board should determine the desired outcomes and outputs of the organisation in support of its purpose and values
4. For each of its desired outcomes and outputs, the board should decide the level of detail to which it wishes to set the organisation’s policy
5. Any greater level of detail of policy formulation should then be a matter for the determination of the chief executive and staff
6. The means by which the outcomes and outputs of the organisation are achieved should be a matter for the chief executive and staff; the board should not distract itself with the operational matters
7. The chief executive should be accountable to the board for the achievement of the organisation’s outcomes and outputs
8. In assessing the extent to which the outcomes and outputs have been achieved, the board must have pre-determined criteria which are known to the chief executive and staff
9. The board should engage with its ownership regularly and be confident that it understands its ownership’s views and priorities
10. The membership of the board should be capable and skilled to represent the interests of the ownership; this should not be done in a tokenistic way
11. Information received and considered by the board should support one of two goals - to enable decision making, or to fulfil control and monitoring processes
12. The board must govern itself well, with clear role descriptions for itself, its chair, and its members, with agreed methods of working and self-discipline to ensure that time is used efficiently

Perhaps the report might be read by the boards at Newcastle United and West Ham where there have been some issues around the involvement of boards in operational decision-making.

Glittering prizes? £20k to unleash the power of public information

On this blog I've occasionally moaned about Directgov. (I've moaned even more about the lack of imagination in parts of the third sector.) I was therefore pleased to read that the government is saying: Tell us what you'd build with public information and we could help fund your idea!

The Power of Information Task Force is offering a £20,000 prize. The government is even offering gigabytes of new or previously invisible public information. (You normally only get that much information on a pen drive or a couriered cd). The website reassures us: "Rest assured, this competition does not include personal information about people."

This approach is to be welcomed.

Tuesday, September 02, 2008

Better management reporting: How to make an Impact

I was disappointed yesterday. I saw that the Institute of Chartered Accountants is hosting a lecture by Jon Moon in Birmingham in November but then realised that I had a prior commitment.

Who is Jon Moon? He has written an excellent book on How to make an Impact – basically writing reports that are uncluttered so the message is clear. The report has certainly changed the way that I present information when I am working as an interim Finance Director.

I believe that so much management reporting in the public and third sectors is weak that I am sure that others could learn something.

People can attend the lecture even if they are not members of the ICAEW Finance and Management Faculty. I would also recommend the templates that Jon Moon gives away on his website.