IMHO: Applying the Four Pillars in a public sector setting

OPINION: One of the positive things to come out of being sacked from Te Whatu Ora has been an active debate about some important governance issues. The issue I address here is how the Institute’s “Four Pillars” are best considered in the public sector setting.

These “pillars” are derived from much research and discussion and while I may personally lack some enthusiasm for the formal structure and be lax in application on occasion I respect them and the process. They provide an organised structure for thinking about what is best to do on such boards so I address them in turn.

Determining purpose

In public sector boards there is limited ability to determine purpose and strategy as such. That has typically and properly been set by legislation, policy statement, letter of intent etc. These are public and politically accountable documents. This does not absolve the board from responsibility and they must consider this at all times. In many ways they become the guardian of this purpose and strategy. They must apply, promote and defend this purpose and strategy against sometimes reluctant management teams internally; against vested interest groups externally; and even against informal political pressure. In doing this you may risk your job, but it is the cornerstone of your role.

Your primary duty is to this purpose. If there is a shift it must be formally and publicly advised, not “nudged” or informally hinted at. And if you cannot support that new stance then you should leave. Otherwise you must stick to the defined purpose.

Effective governance culture

The board has the critical responsibility for establishing and maintaining an effective governance culture, especially in new structures. Often such a culture will not be present and many internally (executives and even fellow board members with limited normal governance experience) and externally (e.g. in ministries or ministerial offices) will not have any familiarity with how this works. The board must be vigilant on this and defend best practice against sloppy decision making. This may make the board unpopular but no-one else will take the responsibility. That is why corporate structures such as Crown entities, have been created.

Holding to account

This is hard because in a new entity management will not be used to normal levels of corporate accountability. From my experience they will reject, avoid and resist this. Only the board can ensure that proper targets and accountability are set and enforced. This is harder in a sector which does not much like such things and in which normal incentive structures are discouraged. But the board has to do its best to explain and implement process which at least matches best private sector practice. Otherwise the corporate structure is pointless.

Holding to account is not simply to be applied at executive to board level but throughout the organisation and should include accountability of teams to each other – not simply a hierarchy of control.

Effective compliance

Many of the rules of compliance are different for public sector boards. There are likely to be a plethora of rules and monitoring. Far too many and far too inconsistent to be rational but that is beyond your control. So the board has to be rigorous, not only about ensuring compliance but, equally important, about doing so efficiently and in such a way that the organisation and its practical activity is not swamped by it.

Do not expect there to be much help in any of these Four Pillars from the rest of the system. From the Ministerial offices, to the Public Service Commission, to your monitoring agency, the effort will be to have you behave as much like a unit within the old public service structure as they can. This is a command and control structure totally at odds with the theory and practice of modern organisations.

So, as a board and a board member, you have the option of sitting there like a dried flower arrangement on the reception desk, or taking some risks and looking to apply the Four Pillars and your knowledge as a professional director of how the best organisations outside public service work. I advise the latter approach. But brace yourself. 

The views expressed in this article do not reflect the position of the IoD unless explicitly stated.

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