Gareth Jones: Time to think differently about governance?

01 Jun 2017 Voices

Readers of our sister publication Governance & Leadership will have seen the recent debate on the merits of unitary boards, sparked by rights charity the Advocacy Project voting to allow its chief executive to join the board. Meanwhile, senior executives from Oxfam, Marie Curie and RNIB have all previously gone on record as wanting greater freedom to adopt a unitary structure.

The Advocacy Project’s chief executive says it is disempowering for a CEO to do the “heavy-lifting” but be excluded from strategic decision-making. A report which the charity commissioned from the consultancy Campbell Tickell found that the unitary structure is working well in charities that have automatic permission to use it, such as academy schools.

Not everyone agrees with unitary boards. But it is probably fair to say that opposition to them is not as vehement as it is to proposals to make it easier for charities to pay trustees. Unitary structures can ensure that unpaid non-executives retain a majority vote on any decisions, while potentially making it easier to improve diversity.

So on this basis it seems fair to allow charities to adopt the structure if they feel it is right for their circumstances. The current rules allow them to if they can convince the Charity Commission that the benefits outweigh the possible disadvantages, although the Commission is said to be reluctant in practice.

But all that said, it doesn’t feel as if the broader argument for unitary boards has been fully made. While executives’ desire for more control over strategic decision-making is understandable, it is not clear how giving them a seat on the board will necessarily change that. They will still need to convince their fellow board members to back their ideas.

A cultural shift?

The bigger issue here is that the relationship between the board and the executive needs to be collaborative. Tinkering with structures will not bring significant change if trustees are unwilling to delegate responsibility or listen to the views of the executive. The problem is one of culture.

Of course, changing the culture of a sector as broad as the charity sector is difficult. Many different variations of board practice exist in practice. But the first stop for many trustees is the official guidance.

Unfortunately, the guidance we have doesn’t particularly encourage a collaborative approach. The Charity Commission describes charity trustees as the people who have overall responsibility for governing the charity: “They decide its strategy and direct its management,” says It’s your decision: charity trustees and decision making.

Similarly, the draft new Charity Governance Code, which the Commission intends to promote as best practice, provides a fairly dictatorial description of trustees’ strategic responsibility. “The board leads the development of, and agrees, a strategy,” it says. What advice there is on the relationship with the chief executive is fairly top-down in its outlook.

In the wake of recent media scandals, trustees are being expected to take responsibility for any mistakes that their charities make, somehow providing comprehensive oversight from a parttime non-executive role. Meanwhile, executive staff are apparently frustrated with the instruction they are receiving from above.

It is reasonable to resist undermining trustees as the ultimate guiding force of a charity on the basis that their voluntary perspective is important. But a fresh look at the division of responsibility and decisionmaking between board and executive, particularly when it comes to strategy development, could do a lot to help both sides.

 

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