Radojka Miljevic, Partner at CT, outlines the impact of crises on organisations and identifies a new wave of governance thought.
The global financial crisis of 2008 was a watershed moment for governance. Following on from other corporate scandals, it more firmly focused thinking about how clever people sitting around a table could (and clearly still do) get things so wrong. That moment in time was a catalyst for good governance practice across sectors that are increasingly now taken for granted – the focus on skills, on diversity, on collective responsibility, on Board renewal, on evaluation, and on risk and assurance. Ten years ago I’d never heard the word ‘assurance’, used in this context, but now it has become a regular part of our governance vocabulary.
Crisis bring clarity
What is the wider learning? Perhaps that crises can bring moments of clarity. They give us permission to take more radical steps for change. Whatever the scale of a governance crisis, there always follows a focus on who is making decisions and how, and what information and tools they have to hand. The recent crop of charity sector stories – whether related to fundraising, solvency or safeguarding – is provoking a new wave of debate and re-evaluation, much as 2008 did.
Just as hubris took Icarus flying too close to the sun, so organisations can over-reach themselves.
Many Boards worry about becoming too remote from the life of the organisation and the people who use its services; perversely this worry has become more acute as skills and the quality of debate have improved. Perhaps the impact of austerity on the charity operating environment, with less public investment and organisations taking risks to counteract that, have moved Boards into a more abstract sphere. Their understanding of what happens in respect of service delivery is thus more tenuous. The debate at the services committee of today is more like the Board of 10 years ago.
Losing trust
While we understand why this may have happened, it carries dangers, particularly as public trust erodes in a whole range of different types of organisation. We speak of group think within a Board. But what of sector ‘group think’ ‑ a kind of collective loss of judgement about certain assumptions? There will be some who think that housing associations have lost sight of their charitable origins or of the day to day management of homes. Others that charities have lost sight of leadership and ethics with the recent spate of sexual and safeguarding failures; or that corporations are out of touch with society generally with the eye-watering millions paid out to Chief Executives.
Gear shift
As we look at recently published codes of governance, I see a shift of gear, a closer attention to organisational health and the longer term impact of each organisation on society more generally. Equality and diversity, and fairness more widely, are more prominent as subjects. It feels as though we are moving to a new wave of governance thought, with Boards and leaders better applying their stated of values to how they operate in practice. They will need to know their organisations – not just in terms of ‘wealth’ and what secures their income streams – but in terms of ‘health’, and how a strongly aligned internal culture can foster real success and public trust.
Radjoka Miljevic is a Partner at Campbell Tickell. For more information or to discuss this article, please contact radojka.miljevic@campbelltickell.com
This article also appears in CT Brief 39- Charities edition
