Governance reviews: what, why, how?
What is a governance review?
A governance review can cover a number of different areas. It might look at the effectiveness of the board’s work, such as: meeting structure; documentation of key decisions; approach to recruitment of trustees or trustee induction and training; the constitution or size of the board, including skill requirements, election methods, diversity, sub-committee structures and terms of reference; or a very focused review of one of these areas.
The format of a governance review may also vary. For instance, the review may be part of a board meeting or away day, but more expansive reviews should be more formal and undertaken by a relevant professional. The board will need to decide which is more appropriate at any given time, considering the time and resources available.
Why complete a governance review?
A governance review is an opportunity to reflect on an organisation’s governance arrangements. As we reflect on what was one of the most extraordinary years in recent history, it is important to recognise not only the tough challenges faced worldwide by individuals and organisations, but also the mass scale versatility and impressive achievement demonstrated in response.
A few key reflections for membership organisations regarding governance arrangements: have they kept pace with the versatility and rapid change within the organisation? Are your current structures still fit for purpose? Do they allow the proactive decision making that the changing environment requires?
Other reasons to consider a review might be to update the governance arrangements to account for changes in the organisation’s size or as a useful means of ensuring the trustees/council keep up with latest best practice or changes in the law – if your organisation is a charity, then the latest guidance issued by the Charity Commission will be a good place to start.
Generally, it is good practice for boards/councils to carry out some form of governance review annually and in more detail with external assistance every three to five years, which ensures that all risk areas are regularly addressed.
How are governance reviews conducted?
One of the most important things to establish is what you are trying to achieve from the review. Ensure you have an appropriate scope and that the key stakeholders understand the process.
The review, whether conducted by an internal party or third-party consultant, often begins with a survey of council/board members and is, in some circumstances, extended to the membership to understand any particular concerns.
The next step is to analyse the current governance structure and arrangements in the context of your strategic objectives and current situation. This may include benchmarking the size, composition, roles and responsibilities of the council/board, induction methods and eligibility criteria against similar organisations, or best practice. Other areas to review include codes of conduct, terms of reference, or board policies.
It is also important as a membership organisation to consider your members. Should the review include a formal consultation with members – for example, by holding interviews, focus group meetings, or through a questionnaire.
In addition, if the board is organising a large governance review, it could be sensible to establish a working group, consisting of a mix of council members and staff, and may also involve an outside advisor to provide expert input and assistance.
Another consideration is to use an existing set of good governance principles, such as the Charity Governance Code (the Code) to give the board a comparison or benchmark to work from, even if your organisation is not a charity. For example, a board discussion at an away day could be organised around the seven principles in the Code.
A good governance review should assist your organisation in achieving effective decision-making, ensuring that decisions are made and implemented appropriately, and most importantly, that you are effectively representing your members.
Following the review, the board must develop an action plan to implement any changes, and if they do not intend to action a recommendation, they must clearly document why they made that decision. A working group to plan and communicate with key stakeholders on the implementation of the recommendations may be necessary.
When was your last review? Is your governance fit for purpose?
We have spoken to many membership organisations that believe their boards have stepped up, having better attendance and more engagement with meetings being held remotely. In spite of this progress, regulators are still introducing new challenges. The Charity Commission’s investigation into the Royal National Institute of Blind People caused pause for thought for charities and non-charities alike. The findings clearly considered that the Code was not in fact gentle guidance, but regulation which should be followed by all large charitable organisations. Have you benchmarked yourself against the Code? With so many changes within the sector and individual strategies, perhaps 2021 is the year for a more robust governance review.
Any review is only as good as the actions taken to deal with the findings, ensuring that all stakeholders, including your membership, share the journey.
For further information on haysmacintyre services for professional institutes and membership bodies, please contact Kathryn Burton.