Book Review: Good Governance, Great Strategy
Continued from the home page...
And so they should. Thanks in large part to the leadership of the Ontario Hospital Association and its Governance Centre of Excellence (GCE), hospital trustees across Canada fully understand that a board’s role extends far beyond ensuring that the account books be in shape. One of the most significant contributions of the GCE’s work since its formation in 2004 has been its push for heightened board sensitivity to all dimensions of quality, a theme that jumps out in this crisp, elegantly organized and essential guidebook by Anne Corbett and James M. Mackay, with contributions from Pamela L. Cross.
The 2009 Guide is far more than a mere refresh of the 2005 Guide for hospitals by Ms. Corbett and Mr. Mackay. Just some of its new pearls include clarity surrounding the murkily understood relationships between Local Health Integration Network (LHIN) boards and health service provider boards; an “age and state” framework to convey how a board’s role and operations should evolve over time; and detailed checklists that can serve to assess a board’s effectiveness.
Most books I own concerning law or governance are obsolete upon publication, unread except for the occasional reference. By contrast, my 2005 Guide is red lined, thumbed and creased due to regular use and wear. What struck me most about the 2005 edition continues to impress me in the current guide for the broader not-for-profit sector. Simply, this is the best overview of corporate strategy I have ever read for Canadian hospitals. Prior to joining the non-profit sector, I used the 2005 edition as a crib sheet on a mix of topics including performance indicators, charities law, risk management, communications and strategic planning (what the authors in the current edition call the “enduring fundamentals” of “mission, values, and vision”).
No longer does good governance need to be the poor cousin of strategy. The two should be linked as if they were one, and the guide, while careful to show the divide between the board’s role and that of executive management, makes me ask whether the word governance sidelines its very importance.
Governance is too important to be assigned to lawyers, accountants or to any other professional group as an area of expertise. If good governance is so essential to a public health service provider’s core business – delivering exceptional customer quality – then any value seen in the investment in “Six Sigma” or “Total Quality Management” or “Strategy Mapping” melts away if it lacks a tether to good governance.
After the global recession struck the world in 2008, I hoped that good governance would finally win the respect it has always deserved. From Satyam, the Indian outsourcing giant, to Bear Stearns to Lehman Brothers to AIG, boards of directors in the private sector have failed us, bringing the world economy to heel. As manufacturers and countries fell into bankruptcy, not-for-profits were dealt a wicked blow. This comes with a bitter irony for recession-strapped organizations in Canada’s healthcare sector, many of which led the private sector in their adoption of best practices in governance design.
So how can we advance the governance agenda now? How can we elevate governance to the equal billing it deserves alongside strategy – in boardrooms, and in all professional schools? Part of the answer lies in the business case we make for good governance itself. All too often in healthcare, and in academe, one faces the demand, “Show me the data.” Yet the data suggesting a positive causal link between strong board governance and quality outcomes in the healthcare sector are weak. Maybe the way we measure good governance leaves something to be desired. Perhaps the measures themselves are limited, or, more likely, the ways in which we interpret the measures are flawed.
On this topic of measurement, the 2009 Guide is mercifully economical in its recommendations around the number of things that boards of directors ought to make efforts to track. The authors write: “For purposes of reporting to the board, the measurement system should be kept as simple as possible. The board should monitor as few measures as possible. Conventional wisdom in the private sector suggests keeping six to eight key measures of overall organizational performance.” Thankfully, too, the authors admit to the limitations of measurement. With governance, we are given a good sense of what should matter most to a health service provider board, and the guide breaks these priorities into six areas: managing the board’s own effectiveness; ensuring that goals and strategic directions are on point; overseeing quality and operational performance; monitoring effective management; being stewards of the financial health of the organization; and ensuring stakeholders are properly engaged.
Yet the indicators to assess progress against these priorities are imprecise. “While quantitative measurement of results is necessary and useful,” the authors write, “the board will still need to consider the meaning of variances in measurement indicators.” Too often we attach bizarre magic to the power of measurement in healthcare: “If it matters, measure it!” goes the popular refrain. Measurement without context is muddle-headed. So why, exactly, does measuring board performance matter?
I would suggest that one outcome of interest is trust. Certainly, accountability, the buzzword of 2004, is important; yet trust is more relevant today. Without good governance, there will be no trust. And trust in publicly funded healthcare services is essential to anyone choosing to go to a health service provider. In the era of the “blogstorm” on the World Wide Web – where thousands can rise up, abruptly, to end an organization’s good name – it falls on boards of directors to manage and anticipate risk, including risk to reputation.
It is not insignificant that the Ontario Hospital Association, which published this guide, has earned a deserved halo of trust for its promotion of the governance agenda. All those interested in fortifying their organization’s trust should read and re-read this book. In 10 years, there will be no such thing as “good” or “bad” governance. Given the imperative of transparency, any public board will be forced to follow the guide’s advice or, simply, cease to function.
About the Reviewer
Neil Seeman, JD, MPH, is a writer, and director and primary investigator of the Health Strategy Innovation Cell at Massey College at the University of Toronto, Toronto, Ontario. He is a senior resident in innovation at Massey College, and adjunct professor of health services management at Ryerson University. Prior to launching the Health Strategy Innovation Cell, he was a researcher and consultant at IBM Global Business Services, where he provided strategic and governance advice to hospitals, regions and governments across Canada.
Table of Contents
Framework for Good Governance
The Not-for-Profit Corporation
Legislation Governing Charities
Role of the Board
Functions of the Board
Duties and Obligations of Individual Directors
Board Structure and Processes
Governance Reviews and Best Practices
Introduction to the Guide
The Governance Centre of Excellence (GCE), an initiative of the Ontario Hospital Association (OHA), is committed to leading excellence in healthcare governance. Established in 2004, the GCE provides a broad range of relevant services, education programs, and resources including the Guide to Good Governance (2005). A comprehensive overview of key components to good governance practices, the Guide to Good Governance contains practical templates and tools to support these practices, and has served as the foundation for the GCE’s educational programs for hospital directors.
As with directors of hospital boards, the GCE wishes to offer resources and educational opportunities to directors of not-for-profit and charitable organizations to support them and the important work they do for their organizations and communities. In our effort to promote and foster leading practices in governance throughout the healthcare sector, the GCE is please to provide the Guide to Good Governance: Not-For-Profit and Charitable Organizations (Guide).
The resource material found in the Guide is intended for use by all not-for-profit and charitable organizations. However, we appreciate that materials may need to be adapted to meet the needs of specific institutions. Organizations are therefore encouraged to customize the tools and templates to meet their unique needs. Further, we anticipate that organizations may wish to consult the Guide for different purposes. For example, new board members may utilized the Guide to familiarize themselves with governance practices and processes, while more experienced board and chairs and secretaries may look to the Guide to supplement practices in a particular area. It is not expected that organizations will adopt the Guide in its entirety.
The Guide is not intended as, nor should it be considered, legal advice. Those concerned about the applicability of specific governance practices to their organization are advised to seek legal or professional advice based on their particular circumstances. Although the Guide contains a list of resources and references, it does not provide a synthesis of the literature with respect to governance. For those interested in a review of literature, we would recommend consulting the list of references provided in Appendix II.
As the not-for-profit and charitable sectors continue to improve their governance processes and practices, additional resources will be needed. The GCE looks forward to developing more tools and supports to supplement the contents of the Guide, as well as offering educational programming based on the best practices outlined in the Guide.
Guides can be purchased through the OHA by clicking here: http://www.oha.com/KnowledgeCentre/Store/Guides/Pages/Guides.aspx