The presentation was part of a workshop called 'Effective governance: Does your board make a difference?' at NCVO's Trustee Conference on Monday 11 November 2013. The presentation was by Anne Moynihan, senior consultant and explores what is meant by 'effective governance' and how it can be achieved. Find out more NCVO's Trustee Conference: http://www.ncvo.org.uk/training-and-events/trustee-conference Find out more about NCVO's work on governance: http://www.ncvo.org.uk/practical-support/governance

1. PM5: Effective governance –
does your Board make a
difference?
Anne Moynihan, Senior Consultant

2. Aims of the session
• To explore what is meant by „effective
governance‟ and how it can be achieved;
• To consider why there is often a gap between
the quality of the written governance systems &
processes and how it is practiced;
• To take a closer look at how individual trustees
can improve the performance of their boards
and add value.

3. Introductions
• Name;
• Organisation & role;
• One thing your board must do in order to
improve the way your organisation is governed
and led.

4. Effective governance
„If charities exist to create a better world (or part of
it) then the whole point of good governance in a
charitable organisation should be to deliver on its
charitable objects and therefore to provide greater
public benefit – not simply to do governance well!‟

5. Effective governance
•
•
•
The definition of board effectiveness keeps shifting
– no clear link between board effectiveness and
organisational performance;
Since the financial crisis of 2008 research
highlights that behavioural dynamics are key & can
make the difference between a bad & good board
or a good or great board;
„Good Governance: A Code for the Voluntary &
Community Sector‟; „Boardroom Behaviours‟
(ICSA), „Guidance on Board Effectiveness‟ (FRC),
„Walker Review of Corporate Governance in the UK
Banking Industry‟ and „The CIMA Boardroom
Leadership Model‟.

6. Effective governance
“The research clearly reinforced the „inconvenient
truth‟ that a Board can have the clearest and the
most robust processes and adherence to
Governance principles, but if its members do not
have the courage and judgement to call out and
deal with the real issues facing the business in a
timely and direct manner, the Board will fail to add
value and may end up destroying it.”
The Behavioural Drivers of Board Effectiveness: A Practitioners
Perspective, MWM Consulting,

7. Delivering effective governance:
insights from the boards of larger
charities
George Levvy, Senior Consultant
Jacinta Ashworth, Research Consultant
Compass Partnership
7

8. Outline of this presentation
 Background to the research
 Selection of findings
 Key drivers of effective governance
 Conclusions
8

9. Background
 First survey of governance of large charities
 Top 500 charities account for 46% of UK charity income
 Over 100 questions
 228 organisations participated (46% response rate)
 Questionnaire completed by CEO, senior staff member, or Chair
 Responses well balanced across different organisation types
 Limitations include:
 self assessment
 no direct comparisons with private and public sectors
9

10. The Compass Cass Governance Model
Governance
Structures
Processes
Meetings
Behaviours
• Governance structure
• Board size
• Terms of office
• Term limits
• Representation
• Committee types
• Committee size
• Task groups
• Advisory groups
• Subsidiaries
• Representation of
nations
• Representation of
stakeholders
• Vice chairs
• Succession planning
• Recruitment
• Appointment
• Diversity
• Induction
• Remuneration
• Skills and experience
• Chair selection
• Committee chair selection
• Committee member selection
• Setting strategy and tracking
organisation performance
• Governance of risk
• CE performance evaluation
• Performance of governance
• Chair performance review
• Member performance review
• Frequency
• Duration
• Attendance
• Agenda planning
• Meeting management
• Quality of papers
• Consent item
• Chief Executive‟s
presence
• Manager‟s presence
• People in the room
• Away days
• Use of members‟ skills
• Listening
• Team working
• Praise and challenge
• Openness and trust
• Strategic focus
• Contact outside
meetings
• Conflicts of interest
• Chair-chief executive
relationship
• Experience of other
boards
10

11. Selection of the findings
11

12. Board size
 On average, boards had 14 members
 Terms of office were usually three years, with a max. of 2-3 terms
2%
Number of members
More than 30
3%
26 to 30
5%
21 to 25
Large 16+
14%
16 to 20
21%
13 to 15
Medium 11-15
11 to 12
26%
6 to 10
26%
1%
1 to 5 members
Base: All (228)
Small <10
0%
5%
10%
15%
20%
25%
30%
12

13. Diversity
 Women, ethnic minorities and disabled people are under-represented
on boards of large charities
Average % of board members who were:
Female
32%
Representative of
beneficiaries
22%
Known to be donors
22%
* For ALL charities the
equivalent is 48%
women (Source: NCVO).
* FTSE100 companies
equivalent is 16%
* FTSE 250 companies
equivalent is 10%
(Source: Cranfield Uni)
14%
Active fundraisers
Representative of volunteers
9%
Ethnic minority
9%
Disabled
0%
6%
10%
20%
30%
40%
13

14. Succession planning and remuneration
 Nearly three quarters only considered skill requirements as each
position arose
 Four in ten used an agreed skills grid for succession planning
 The most effective recruitment methods were board and staff
contacts, followed by public advertisements
 There was generally a good breadth of induction activities
 14% said their Chair was remunerated, and 10% remunerated
other board members
Higher among larger charities, and linked to higher levels
of attendance at board meetings
 Suggestions for improvements: fill skills gaps, improve
diversity, strengthen induction and board member development
14

15. Board meetings
 Boards typically met 3 – 6 times per year, for less than 5 hours
per meeting
 Boards typically achieved 80 – 90% attendance
Those that stated expectations achieved higher attendance
 Two thirds said that Chair and Chief Executive plan board agendas
together „extremely‟ or „very‟ systemically…
 whereas a third were only „quite‟ or „not very‟ systematic
 Two thirds spent some time meeting without executives present
 Three quarters had held at least one Away Day in the last 12 months
 Suggested improvements included better strategic focus,
agenda planning, board papers and delegation to committees
15

16. Board member behaviours
 Team working, praising management and strategic focus were
slightly weaker aspects:
Confident that operate in an atmosphere of
openness, confidence & mutual trust
26%
54%
Good at listening to each other
16%
55%
Good at providing robust challenge
to management
17%
51%
17%
27%
26%
Good at working as a team
12%
50%
32%
Good at praising management
11%
52%
32%
Effective at focussing on strategic
rather than operational matters
13%
48%
0%
Base: (228)
Extremely
33%
50%
Very
Quite
100%
Not very
16

17. Main governance issues facing UK‟s top 500 charities
in next few years
Two thirds made predictions and the responses were grouped by
theme. The top specific issues raised were, in rank order:
 Ensuring financial viability or sustainability in a difficult and






competitive economic climate
Attracting, recruiting and retaining high calibre trustees with
diverse backgrounds and skills
Understanding appetite for and management of risk
Growing regulation and restrictions placed upon charities
Finding board members who can devote sufficient time to the role
Remunerating trustees and the difficulties of recruiting without
remuneration
Responding to a modernising society and tumultuous times.
17

18. Key drivers of effective governance
18

19. How well does board perform key governance roles?
Ensuring economic viability of the organisation
43%
Discharging legal and regulatory duties
43%
Agreeing mission, objectives and strategies
13%
7%
25%
49%
28%
47%
8%
Bringing novel or creative ideas to the organisation
24%
46%
18%
Resolving the interests of different stakeholders
16%
52%
24%
Understanding & reflecting views of all stakeholders
12%
51%
19%
Establishing appetite for and management of risk
13%
47%
31%
Managing the processes of governance
10%
46%
36%
Providing insight, wisdom and judgement
9%
51%
39%
Appointing and supporting the chief executive
7%
46%
36%
Upholding the values of the organisation
Tracking organisation performance against plans
48%
35%
44%
36%
32%
0%
20%
Extremely
48%
40%
Very
60%
Quite
9%
12%
80%
100%
Not very
Base: All respondents (228)
19

20. Top 20 drivers of governance performance
An effective board:
1. Works well as a team
11. Has strong chair /CE relationships
2. Ensures meetings deliver excellent
governance
3. Has the required skills and experience
12. Holds at least one away day per year
4. Focuses on strategy
13. Spends time discussing performance of
governance
14. Has high quality of board papers
5. Operates with openness and trust
15. Achieves high attendance levels
6. Has great diversity
16. Holds formal reviews of governance
7. Praises management
9. Uses committees effectively
17. Requires Chair and CE to plan agendas
together
18. Reviews performance of members before
re-election
19. Has chair / CE who speak 1:1 frequently
10. Gives thorough induction
20. Reviews individuals’ performance
8. Provides robust challenge
21

21. How prevalent are the top 20 drivers?
Strength
of driver
% of organisations with
good performance on
each key driver
Has strong chair and chief executive relationship
11
89%
Has high quality board papers
14
82%
Has the required skills and experience
3
80%
Operates with openness and trust
5
80%
Uses committees effectively
9
79%
Holds at least one Away day per year
12
79%
Spends time discussing performance of governance
13
75%
Achieves high attendance levels
15
74%
Ensures meetings deliver excellent governance
2
74%
Gives thorough induction
10
70%
An effective board:
22

22. How prevalent are the top 20 drivers?
Strength
of driver
% of organisations with
good performance on
each key driver
Provides robust challenge
8
69%
Requires Chair and CE to plan agendas together
17
68%
Has great diversity
6
64%
Has chair and chief executive speak 1:1 frequently
19
64%
Works well as a team
1
63%
Praises management
7
63%
Focuses on strategy
4
61%
Reviews performance before re-election
18
54%
Holds formal reviews of governance
16
51%
Reviews individuals’ performance
20
50%
An effective board:
23

23. How many key drivers do organisations have in place?
Strength of governance:
15%
Medium
43% of orgs.
Stronger
33% of orgs.
10%
5%
Average
% of organisations
Weaker
23% orgs.
0%
1
Base: All (228)
2
3
4
5
6
7 8 9 10 11 12 13 14 15 16 17 18 19 20
Number of Key Drivers in place
24

24. Top innovations introduced by charities in last 2 years
The top innovations introduced by charities in the last two years
were, in rank order:





Changes to the committee structure
Undertaking a formal governance review
Changes to the board composition
Carrying out board appraisal or board effectiveness review
Reporting innovations (e.g. reporting framework, KPIs, clearer
or more concise board papers)
 Doing a skills audit or enhancing skill sets
 Use of an external consultant or facilitator.
25

25. Future improvements
The top actions that participants would like to take in future were,
in rank order:
 Carrying out a board appraisal or board effectiveness review
 Greater strategic focus
 Broadening the skill sets of board members or conducting a
skills audit
 Creating boards with greater diversity and more balanced
membership
26

26. Hierarchy of governance improvement
Increasingly
gain from
making
improvements
Increasingly
demanding
to implement
change
Behaviours
Meetings
Processes
Structures
27

27. Conclusions
28

28. Conclusions
1. The four most important drivers of effective governance are:
 team working
 great meetings
 people with the required skills and experience
 a sharp focus on strategy
2. Overall picture is that many of the top 500 charities report high
standards of governance
3. Charities have to pinpoint those drivers that are most securely
in place and those that require attention
4. Working on the top 20 drivers will deliver the greatest
improvements
29

29. Conclusions
5. Improving structures and processes may be prerequisites for
strengthening governance. Making significant
improvements, requires work on behaviours
6. Greater diversity also contributes strongly to better delivery of
governance roles
(although may make team working more of a challenge)
7. Among the UK‟s largest charities the top 20 drivers with the
greatest potential for improvement include:




Regular reviews of governance and individual performance
Greater focus on strategy
Praising management
Working as a team
30

30. Obtaining the full report
“Delivering Effective Governance
Insights from the boards of larger charities”
Mike Hudson
Jacinta Ashworth
Available from Directory of Social Change
www.dsc.org.uk/guc
31

31. Chair‟s role is critical ………but even a
good chair can‟t do it alone

32. Personal effectiveness
“Personal effectiveness means making use of
all the personal resources at your disposal talents, skills, energy and time to enable you
to achieve both work and life goals.
How you manage yourself impacts directly on
your personal effectiveness. Being selfaware, making the most of your
strengths, learning new skills and techniques
and developing behavioural flexibility are all
key to improving your personal performance.”

33. Questions for discussion
1. What can an individual trustee do to improve
board performance?
2. Given that team working is key to improving
governance, how do you engender trust and
team working in a board/how do you make a
group of talented individuals greater than the
sum of their parts?
3. Any questions you would like to pose for us…

34. Higgs report
Advice for non-executive directors
• Question intelligently
• Debate constructively
• Challenge rigorously
• Decide dispassionately

35. Additional resources
Good Governance: A Code for the VCS http://www.ncvo-vol.org.uk/codeofgovernance
The Good Trustee Guide, NCVO, 2010 http://www.ncvo-vol.org.uk/productsservices/publications/good-trustee-guide
NCVO‟s Annual Trustee Conference - http://www.ncvovol.org.uk/trusteeconference2013
NCVO‟s Events and Training calendar http://www.ncvo-vol.org.uk/training-events