Published: 16/06/2005, Volume II5, No. 5960 Page 16 17
Non-executive directors are increasingly taking the f lak for trusts' shortcomings. Are they failing, or just convenient scapegoats. And how can their relationship with executives be more effective? Daloni Carlisle investigates what's wrong with boards
If the typical NHS board were a family, what sort of family might it be? According to a report released this week, it would be conventional, English and middle-class.
The report was commissioned to look at the culture and characteristics of boards in an attempt to understand what makes an effective board. The research was based on close observation and interviews with 12 trust boards picked at random. It paints a picture many will recognise.
In a way not entirely dissimilar to Hyacinth Bucket ('It is Bouquet!'), for many boards appearance is all. Keen to avoid rows in public, board members keep their arguments behind closed doors and present a united face to the outside world.
Or, as the report puts it: 'In our observations, executives rarely challenged each other in public and often kept their contribution to their functional responsibility.' Challenge, some felt, would reflect badly on the organisation.
The more junior members of the family - aka the non-executives - might not be so finely tuned to the nuances of what not to say in public.
But their challenges can always be swept under the carpet. Or they can be sent to bed.
In the words of the report: 'Challenge, when observed, came from the non-executives. However this challenge was sometimes poor, and overlooked or dismissed in subtle ways - often by simply moving the agenda on without fully responding to the points raised.' Like the English middle class family, boards often fall short of members' ideals and expectations.
Members trust each other, says the report, sometimes too much and to the detriment of debate about strategic issues.
Again like a typical family, boards are often bogged down in the daily grind, and somehow do not get around to making key strategic decisions. 'Some board members felt disempowered, even overwhelmed, by the need to deliver a centrallydriven agenda, ' says the report.
Much like a strong mother or father, an effective chair who is able to direct meetings and get the best out of every member is essential to keeping boards sharp and focused.
NHS Appointments Commission chief executive Roger Moore laughs at the family analogy. 'Actually a lot of what this report says is common sense, ' he says.
'Boards do need effective chairs and they do need trust and challenge. Board members have to learn to work together more closely to create trust and have an environment in which challenge can occur, not just between the executives and non-executives but within the team as a whole.' A year ago, Robin Eve, formerly a non-executive director at Surrey and Sussex Healthcare trust, might have agreed with him.
Mr Eve and his fellow former non-executive Janice Turner are skeletons in the family cupboard.
They left the trust board in May having been asked by the strategic health authority to consider their positions in the light of a£30m deficit.
'It is a very good report and it touches on some key issues, ' says Mr Eve, a former investment banker who has sat on more than his fair share of boards. 'If I had read it a year ago I would have said it was a good report full stop. In view of my recent experience, I would have to qualify that. We did challenge the executive and that was the problem.' A little over a year ago, Surrey and Sussex Healthcare trust was trying to balance its books. 'The executives brought a budget before us and the non-executives challenged it, saying you could not make the sort of saving they envisaged with the recovery plan they proposed, ' says Ms Turner. 'Our position was flagged up with the [Surrey and Sussex] SHA'.
By early 2005 the crisis came to a head. A review commissioned by the SHA highlighted governance issues and in February chair Adrian Brown and chief executive Ken Cunningham stood down. The board struggled on. 'We worked our socks off, ' says Ms Turner. 'Then two months later they booted us out.' In April PricewaterhouseCoopers, the trust's auditors, warned the Department of Health that without substantial financial support the trust would fail to balance its books by March 2006.
This is the SHA's description of what happened next, provided by a spokesperson. 'Following the publication of a public interest report by the trust's auditors, which set out the extent of the trust's failure in its financial duty and expressed a need to reinvigorate the trust board, the trust's non-executive directors were asked to consider their positions. Three resigned from their posts and the appointment of one was terminated by the Appointments Commission.' Ms Turner describes being invited into a room and asked to resign. She admits to feeling raw and hurt by the experience. 'What are nonexecutives there for?' she asks. 'If things go well the executives get the credit and if things go badly the non-executives get booted out.' Mr Eve believes the PricewaterhouseCoopers report backed the non-executives' position.
'I was sacked because I refused to resign, ' he says. 'We were exonerated of any culpability by one of the major firms of accountants in the world - never mind this country. Yet we were found guilty by association and pushed out without any recourse.' The SHA is unapologetic. 'NHS organisations are statutory bodies in their own right and the role of the board is to give strong and accountable leadership to the organisation, ' says the spokesperson.
'Each NHS board has a statutory duty to deliver a balanced budget and must therefore be responsible for making difficult decisions to achieve this. These responsibilities cannot be avoided or be transferred to the SHA or any other organisation.' These two are not the only board casualties. There has been a string of chairs and non-executive board members falling on their swords over the last year, mostly because of financial problems (see box, left).
And this is not the only pressure on boards. Rapidly changing expectations of governance coupled with structural changes in the NHS are all putting pressure on board members. Mr Moore says: 'There is a movement to delegate more and more responsibility down to board and community level and that is putting a premium on the way boards work.' The NHS Appointments Commission has admitted that it is having difficulty recruiting high quality non-executives in some areas of the country, most notably rural areas.
Without commenting on any case individually, Mr Moore acknowledges that under current arrangements non-executives can be left vulnerable. 'I think It is the responsibility of the non-executives through the chair to know what is going on, ' he says.
And this is at the heart of one of his criticisms of the way many boards operate today - through subcommittees. 'The huge number of committees is disastrous. It removes things from the board's agenda and means the board cannot get a grip on what's going on, ' he says, A similar point is made by Jan Filochowski, NHS Fellow at the Judge Institute of Management at Cambridge University. He has seen more than his fair share of struggling NHS organisations in his role as a management troubleshooter. While good governance will not stop a problem, it does at least allow board members to see it coming.
He says: 'In my experience of going round the country, I find that boards, chairs and non-executives are sometimes afraid of being challenging enough or do not know how to be challenging enough in order to unearth problems and deal with them.' There is a balance to be struck between supportiveness and scrutiny. 'Boards need to have both.' NHS Confederation policy director Nigel Edwards stresses the increasing importance of boards in the NHS's new financial regime: 'Boards are of very great significance if an organisation is to be successful, and their role will be of even greater importance in the future.' The need for the NHS to have boards whose members work well together yet are not afraid to engage with difficult issues is acknowledged in the report, which is being offered by the NHS Confederation as a means of stimulating the debate on how to make boards more effective.
It concludes that there is a long way to go. Boards need to be more focused on strategic thinking rather than encumbered by day-to-day operational issues and meeting targets.
They need to establish appropriate levels of trust and develop constructive criticism from all sides - executive and nonexecutive. 'It appears there is an unmet need for training, ' it says.
'The environment will be much less stable and there will be a greater need for high quality strategy and leadership. The role of boards of ensuring the executive is held to account will be of increased importance in this uncertain world.' On the brighter side, boards are ready to change. 'It was encouraging that many members of boards recognised the shortcomings of their board meetings and are looking to improve the way they work, ' says the report. Integrated governance, new ideas emerging from foundation trusts and development tools provided by the NHS Clinical Governance Support Team are all providing ways forward.
This is where Ms Turner is hopeful. Although she vows she will never stand as a non-executive director again, she is looking at how the foundation trusts are developing their governance structures.
'I hope foundation trusts' boards will be a little more holistic, ' she says. 'In the trusts I have looked at board members could only be removed by a vote from the board.
There would be a meeting where you could hear the case against you and have a chance to answer. I am not saying it would be fun but it would perhaps be fairer.'
THE BOARD CASUALTIES
December 2004 . Bradford Teaching Hospitals Foundation trust chair John Ryan sacked by Monitor after trust develops a£11.3m deficit.
January 2005 . Non-executive board of Royal Wolverhampton Hospitals trust ordered to stand down after trust amasses a£10m deficit. Chair Professor Mel Chevannes had resigned in November 2004.
May 2005 . Non-executive board of Surrey and Sussex Healthcare trust stand down after being asked to consider their positions. The trust is£30m in the red.
Kensington and Chelsea primary care trust chair Terry Bamford steps down after trust's deficit spirals from£5m to£14.5m.
www. nhsconfed. org See Feedback, page24; Speak Out, page 25.