Throughout the hearings leading up to the Interim Report of the Royal Commission, we heard frequent accounts of both clinical governance and organisational governance failures. We can expect governance to be featured heavily in the Final Report, due at the end of this year.
It’s in the best interests of organisations to prepare their governance and ensure its integrity, resilience and accountability in the preceding months.
Providers should remain true to the key principles of good governance. These strengthen all aspects of business function from service delivery to internal operations.
These are the ten key principles of good governance:
- Purpose and strategy
The organisational purpose should be clear and outlined in governing documents as well as being clearly understood by the board. The strategy should answer key questions including:
- Why the organisation exists
- What the organisation does
- Who the organisation benefits
- How the organisation will achieve its goals
- What success looks like for the organisation
Alongside strategy, purpose is what the company hopes to achieve. Purpose is the reason for being and all activities should contribute to the purpose in some way.
Strategy and purpose are directly aligned with identity, and both should be thoroughly understood by governing members. Any changes to these must also be in collaboration with these stakeholders.
- Roles and responsibilities
“The roles of the people involved in an organisation and their relationships to one another must be clear and understood.”
As the board has ultimate responsibility for and control over the organisation, it’s vital that the Bboard Directors understand their duties:
- To act in good faith and for a proper purpose
- To act with reasonable care, skill and diligence
- Not to improperly use information or position
- To disclose and manage conflicts of interest
- Board composition
Directors should be appointed based on merit through a transparent process. “There is no one-size-fits-all ideal structure and composition for boards. Instead, the directors must decide what form their board should take and give consideration to how this might change over time.”
Boards should aim to reflect a diverse range of expertise, backgrounds and qualifications.
- Board effectiveness
An effective board engages in careful forward planning, efficient operation of board meetings, regular performance assessments and effective chair arrangements.
- Risk management
The board should understand the organisation’s risk and make decisions based on this understanding. They must also oversee a framework that manages risk on an ongoing basis. “Risk is not something to be avoided, but to be understood and leveraged in pursuit of an organisation’s purpose.”
The board should work closely with staff to ensure resources are available to meet the organisation’s goals and oversee their appropriate use. These resources might be financial, physical, human or intellectual.
- Accountability and transparency
As boards have ultimate authority for the organisation, they have an obligation to report, explain and be answerable for the consequences of decisions it has made.
Boards should have oversight of the two components of accountability: answerability (providing information and justification for actions) and enforcement (accepting the consequences of failing to meet those actions).
- Stakeholder engagement
An awareness of the stakeholder environment should be a priority of the board. “At the heart of stakeholder engagement is the acknowledgement that organisations are impacted by, and have an impact on those with whom they interact.”
The organisation’s stakeholders include members, suppliers, neighbours, staff, clients and their families, volunteers, etc.
- Conduct and compliance
Clear expectations with regard to behaviour should be established and enforced from a governance level. The code of conduct should be made aware to all levels of the organisation and consequences in the instance of failure to comply should be equally transparent.
An organisation’s culture contributes significantly to its ability, or inability, to achieve its purpose. By leading through example, the Board plays an important role in establishing culture. While culture can be difficult to monitor, many companies analyse metrics such as employee engagement, retention and turnover rates as an indicator of staff satisfaction – a key indicator of overall culture.
Now only a matter of months until the Royal Commission’s Final Report is released, organisations need to have effective governance and strong leadership at the heart of their journey.
The 2nd Governance in Aged Care conference, being held in Sydney from 20 – 21 May 2020, has been developed in partnership with COTA Australia and ACSA to support you in effectively leading and governing your Aged Care service into the future. You will gain strategies to embed good governance structures into your own organisation, optimise the relationship between your board and executive functions and drive continuous improvement.