Accountability in action John Coutts, Governance Advisor, FTN

What we will cover Context: the 2012 Act, the board and the council of governors What accountability is and is not Why accountability is important What is involved in a good accountability relationship Some tips and some things to avoid Conclusions, discussion and questions

The Health and Social Care Act 2012 ‘The general duty of the board of directors, and of each director individually, is to act with a view to promoting the success of the corporation so as to maximise the benefits for the members of the corporation as a whole and for the public.’ ‘The general duties of the council of governors are: to hold the non-executive directors individually and collectively to account for the performance of the board of directors, and to represent the interests of the members of the corporation as a whole and the interests of the public.’

Accountability – what it is To be accountable is to be liable to explain or justify ones actions and decisions. Accountability is the process of explanation and justification. So holding to account is the process of requiring explanation and justification, but it is also about testing, forming a judgment and if necessary taking action. Accountability implies responsibility – It is reasonable only to hold people to account for those things for which the are responsible.

Accountability – what it isn’t It is not synonymous with responsibility It does not imply a management relationship It is not a ‘one off’ annual event It is not the same as appraisal It is not about confrontation, ‘putting someone in their place’ or ‘giving them a hard time’

Why is accountability important? We are working through difficult times: On-going economic uncertainty Fewer resources Loss of faith in institutions and businesses Reflected by adverse press coverage Mid Staffordshire Enquiry

The case for local accountability Boards do not ‘own’ foundation trusts, they direct them on behalf of the ‘owner’ – local communities and the general public. FTs have disparate groups of stakeholders all of whom should have a voice. External regulation tends to be retrospective, encourages compliance rather than high levels of performance and distorts the allocation of resources in a way that might not accord with local priorities. Being answerable for what we do promotes self knowledge, being answerable to lay people promotes self awareness.

Boards can get it wrong Overconfidence, complacency and inertia at board level Strong membership, but board members not applying their skills and knowledge or being prone to ‘group think’ The right processes in place, but not used effectively Management styles not conducive to challenge or scrutiny Focus on one performance factor to exclusion of others Inadequate information to consider the risks associated with its strategy Inadequate controls properly to mitigate risk Insufficient discipline in questioning and challenging Insufficient attention to cumulative risks

Accountability implies a relationship Your accountability relationships will work in two directions: You will be given an account, an explanation, of the trust’s performance, the reasons for it and what is being done to bring about improvement and you will be able to test that out and form a judgment about the acceptability of past performance and of future plans. But you will also need to give account of your collective performance to the membership and be prepared to act on their judgment.

Exercise: Holding the board of directors to account What would the format be? How would you set about the task? What behaviours are important and what commitments would you need to make? What support and advice would you need? What do you need the board to do? What information would you need? What preparation would you need to make? Anything else?

Accountability and governors NEDs giving account to you might include: How the board manages risk How the board gains assurance that the main risks to achieving strategy and performance are controlled. Examples of where the board has intervened to deal with issues of performance. The reliability of past performance as a predictor of future performance. It is the board’s job to convince governors.

Some things you might want to know about The overall picture: what has gone well and what has gone badly – and why. How NEDs have ‘triangulated’ to obtain assurance that the figures can be trusted If the board is satisfied with performance and if not why not. If the chair is satisfied with the level and quality of challenge in the boardroom. How governors can assure themselves that they have the full picture

Making the relationship work Some suggestions: Agree the ground rules Stick to them Don’t try to do the NED’s job Use your experts. Don’t be afraid to question No subject is off limits

To conclude.. Self regulation starts with the board and the buck stops with the board Governors are not a substitute for Monitor, but they can help boards to reflect honestly and to understand how well they are doing This will always be a work in progress – stick with it