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The Basic Issues on Governance

Excerpt from the Sage Group Report: New Governance - Some Considerations


Governance is important. Without proper direction and accountability, organizations can easily lose their way and perform poorly in meeting stated objectives. In a highly diverse and complicated sector such as children, families and adults with disabilities, good governance is essential. There are a large number of stakeholders and service providers involved, more than one level of government, and most importantly children, families and individuals with developmental disabilities in need of service.

In a modern system of corporate governance, governors carry fiduciary responsibility for the operation. There are not advocates or stakeholders but trustees. They have authority given to them and exercise that authority consistent with the mandate received. Governors focus on the vision to be realized, the principles to be followed in reaching that vision, the outcomes to be achieved and the basis to measure and hold people accountable in the process. Strong fiscal management, adherence to the rule of law, transparency of decision-making and action, and clarity of role are cornerstones of good governance.

In providing quality services to children, families and adults with developmental disabilities, an area that involves considerable complexity and resources, all of the expertise mentioned above is essential.

Something needs to be said about stakeholders and the role they may or may not play as governors. As a general rule, if a stakeholder has significant conflict of interest with the role of governor, the stakeholder is not a good candidate for governor. It must be remembered that governors carry fiduciary responsibility for the operation. They are not in a position of authority in order to advocate their position or interest or that of others. If a conflict of interest does arise, governors are expected to disclose the conflict and either deal with it or remove themselves from decision-making.

It is also important to ensure that the governors have an understanding of those being served. For example, if many of the children in care are Aboriginal, there should be a strong aboriginal presence in governance. This is just common sense and fully consistent with corporate governance practice. Governors need to know how to direct and oversee an operation or business and this includes, in the case of a service operation, a good understanding of the people being served. That said, governors should not be service providers to avoid conflict or interest.

Considerable work has been done on the readiness criteria to be used to determine if a change in governance will be successful. The operational readiness work was done by KPMG Consulting in August 2002 and is contained in Appendix 1. The main criteria to be met are in the following areas:

  • The governance framework including leadership and a service plan;
  • Financial management and administration;
  • Human resources and labour relations;
  • Information management;
  • Performance management and quality assurance;
  • Contract management;
  • Stakeholder relations and public relations; and
  • Risk management.

In addition to the operational readiness criteria outlined above, there are four other criteria that must be met, as follows:

  • Service transformation must be successfully underway;
  • Budget stability for services to children and families must be achieved;
  • An actual service delivery plan must be developed and approved and this plan must demonstrate that on day one of new governance, service will be delivered well; and
  • A high level of trust must be established among the parties involved in new governance.

The four readiness criteria mentioned above, plus operational readiness criteria, should ultimately be used by a small panel of experts, reporting to government, to assess the overall state of readiness of the proposed Authorities.

 

Read the entire report.


   Last updated December 9, 2003

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