CORPORATE GOVERNANCE

Published: 06/01/2005, Volume II5, No. 5937 Page 24 25

Why do trust boards seem to operate outside the realms of performance review? Jay Bevington, Paul Stanton and Phil Glanfield show how it should be done

We cannot think of a single group in the NHS that has its performance reviewed less regularly or rigorously than the trust board. Although the performance of the trust as a whole is constantly under the spotlight, the performance of the board - which has ultimate accountability - remains in the shadows.

This lack of regular and meaningful feedback is destructive.

It significantly hinders the board's ability to respond and adapt to what is going on both within and outside the boardroom. This quickly leads to problems. For instance, board meetings become 'bored' meetings, staff start to perceive the board as out of touch and the trust is increasingly seen as remote from their local health and social care community. Frequent and intelligent reviews of board performance are vital if a trust is to prosper.

The boardroom crises at major US corporations have shown that safe or high performance is not merely determined by the structural architecture of committees and procedural manuals - all of these organisations were able to tick most of the boxes of good corporate governance - but rather determined by the way board members work together as a unit. In short, it is board behaviour that seems to matter.

From our work with over 250 NHS boards we have found that there are five inter-connected aspects of board behaviour that seem to be critical to high performance in most contexts most of the time. Although we will give a brief overview of each aspect, we have focused on 'identity and cohesion' and 'power and authority' because, in our experience, these areas are seldom explicitly addressed.

Capability of the chair

An effective chair must:

clearly articulate the vision and strategy for the trust that has been corporately agreed;

support the chief executive/ professional executive committee chair without interfering in the dayto-day running of the organisation;

articulate and model the values of public service;

be seen within the trust and the local health and social care community.

They must also ensure that board meetings are productive. This means ensuring the agenda is strategically focused and the business of the board is balanced and does not become dominated by one or two major themes that might cause members to take their eyes off the ball (eg private finance initiatives and mergers) or overburdened by proliferating trivia.

Focus on core business

NHS boards work within a statutory framework that requires them by law to discharge five primary duties - quality, care for their workforce, patient and public involvement, partnership and the duty to achieve financial balance.

In our experience, not all boards are initially conscious of, or actively attentive to, all of these duties and the inter-connections between them.

Outward connections Corporate success increasingly depends on the actions of others in the local health and social care community. For instance, choice means that NHS boards will have to be much more attentive to the quality of patients' experience and be vigilant to trends and fundamental shifts in an increasingly diverse and competitive marketplace.

Boards that insulate themselves from what is going on around them and have poor external relationships will fail.

A fortress mentality, or even arrogance, at board level often coexists with a failure to deliver key performance targets, a poor media image, low staff morale and high turnover and recruitment problems.

Identity and cohesion

All too often when we work with boards there is a 'them and us' feeling between executives and nonexecutives. This lack of an identity as a corporate board is worrying, especially since there is no legal distinction between their board duties for the direction and control of the organisation. All directors are required to act in the best interests of the NHS and their local community.

For a board to become a corporate board it must be a cohesive group.

Cohesion, in turn, depends on high levels of trust between board members. There is robust research which shows that trust helps to retain employees, reduce transaction costs and build morale.

If people trust one another and their leaders they are more likely to share information, work through disagreements, take smarter risks, be more innovative, admit mistakes, and give and receive constructive feedback. Therefore a key task for the chair then is to maintain high levels of trust in the boardroom.

Power and authority Boards assure themselves that the decisions they make are robust, reasonable and legal by challenging one another. Although how and if the process of challenge and debate occurs varies significantly from board to board.

In most of the NHS boards we have worked with, debate usually amounts to non-executives challenging executives. This is necessary but not sufficient to secure high performance. Ideal decisionmaking occurs when all board members challenge one another, irrespective of role.

In NHS boards where constructive challenge is the norm rather than the exception, individual roles and responsibilities are understood and information is accurate, timely and clear. Also, and perhaps most importantly, the chief executive and the chair have a constructive relationship.

Social psychology has taught us that people work out which behaviours are acceptable through observing the actions of others, particularly those that they perceive to be more powerful.

For the most part, board members take their cues on how to behave from the verbal and non-verbal behaviours of the chair and chief executive and observing the dynamic between them. So how these two important leaders interact is critical to how directors experience power and authority on the board.

Keeping the plates spinning

NHS boards, and chairs in particular, need to be ever attentive to these five aspects of board performance.

Excelling at one at the expense of another can spell disaster.

Take, for example, identity and cohesion, and power and authority.

From our experience, too much challenge in the absence of trust can force people to cover up mistakes and suppress innovation.

But building and maintaining trust and ignoring the need for constructive challenge can lead to confusion over responsibilities and communication blind spots, a climate of complacency, an absence of due diligence and standards not being met.

Boards need to review regularly and intelligently how they are performing in relation to each of these five critical success factors and their inter-dependency. Time, energy and resources invested here will produce a board that is fit for purpose in the new world of choice, payment by results and foundation trusts.

Dr Jay Bevington is associate director and Paul Stanton is director of the Clinical Governance Support Team's board development team. Phil Glanfield is director of the CGST's performance development team.

See Working Lives, pages 32-34, for the Bevington Brief, Dr Bevington's review of the latest management literature on organisational development.

Key points

Performance reviews for trust boards are rare, despite their strategic importance.

Cohesion between executives and non-executives, and willingness for board members to challenge one another, are critical.

Too much challenge and too little trust can suppress innovation.