Developing Governance & Leadership Performance in the Public Sector

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Developing Governance Leadership Performance in
the Public Sector

• John Halligan
• Professor of Public Administration
• Deputy Head, Division of Business, Law
  Information Sciences
• University of Canberra
• John.Halligan_at_canberra.edu.au

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Public Sector Governance

• Corporate governance to public sector governance
• Public sector versus private sector
• Governance corporate organisational
• Developing governance
• Advocacy of CG PSG
• Promotion of elements of governance
• Demarcating the field
• DoFAs categorisation of 955 govt bodies
• Basic models corporation, dept of state and
  hybrids

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Values of Good Public Sector Governance

• Accountability
• Transparency
• Integrity
• Stewardship
• Leadership
• ANAO 2003

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CG Principles Elements

• Focus on foundations for management oversight
• Eg formalise management/board functions/roles
• Structure board to add value
• Eg Chair majority of independent directors
• Promoting ethical responsible decision-making
• Eg establish code of conduct
• Safeguarding integrity in financial reporting
• Eg establish audit committee,
• Managing risk
• Enhancing performance culture
• Recognising stakeholder interests
• Sources ASX Corporate Governance Statement 2003
  ANAO 2003

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Contingent on Type of Organisation

• Legislative basis type of board
• Corporate governance roles
• Chair, Board, Minister relationships
• Executive boards
• Advisory (dependent on CEO)
• Mixes of policy, governance etc

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Corporate Boards v PS Executive Boards

• Secretary/CEO/MD has ultimate/shared
  responsibility?
• Board members have consultative/decision-making
  roles?
• Board members have statutory/directors duties
  for which they are personally liable?
• Board members are wholly internal/external?
• Board members are subject to formal/informal
  ministerial direction/influence in terms of
  appointment, decision-making, dismissal?
• Board members have other/ministerial roles?
• Board members have little/much control over their
  Secretary/CEO/MD?
• Board members are/arent answerable directly to
  Secretary/CEO/MD?
• Horrigan 2004

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Key Governance Issues Boards

• Different board concepts in FMA agencies CAC
  bodies
• Board appointments
• Conflicts of roles representational interests
  for board members
• Governance expertise of board appointees
• Interaction between government policy board
  autonomy
• Need for protocols in Minister-Board-Agency
  comunication
• Sources NIG 2003, CGP 2004

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Key Governance Issues

• Whole-of-government issues
• Handling of portfolio agencies under emerging
  regime
• Risk management
• Cross-portfolio cross-governmental policy
  coordination
• Sources NIG 2003, CGP 2004

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Two Phases of Howard Govt

• 1 Private sectorising dominant
• Privatisation, competitive tendering, outsourcing
  etc
• APS arms length dictates of market or private
  sector practice
• Public-private differences minimised rise of
  corporate governance
• 2 Strengthen PS capacity direction
• Role of central agencies, oversight integration
• Public-private differences emphasised
• Reassertion of public sector governance

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Post-Uhrig Environment

• Implications
• Principles for public sector agencies
• Focus on binary approach to structure
• Corporate board Executive management
• Departmentalisation
• Strengths of Uhrig
• Recognises limitation of purchaser/provider
• Need to streamline range of different
  organisational types
• Appropriate use of board concept

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Post-Uhrig Issues

• Limitations of Uhrig
• First principles approach
• Emphasis on private sector expertise
• Narrow approach to governance
• Simplistic dichotomy
• Governance questions for bodies eg ABA, ABC,
  ATSIC etc
• Sources Wettenhall 2004

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Leadership Performance

• Different approaches to leadership
• Focusing on performance?
• Several leaderships
• Corporate governance
• Organisational

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Leaders Performance

• Initial observations
• Recent review of CG
• No rigid adherence to prescriptions
• Adapt to agency and its environment
• Leadership styles
• 1 Compliance
• Legality, directives probity
• 2 Instrumentalist
• Delivering government objectives
• 3 Human relationships
• Softer concepts

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Governance Performance

• Assumptions about relationship between private
  sector board attributes organisational
  performance
• Objective (Hard) measures
• Separation of roles of chair/CEO?
• Independent/non-executive directors?
• Board size

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Governance Performance 2

• Soft (qualitative) factors
• Roles, responsibilities and relationships?
• Board, committee, leadership dynamics
• Board cultures, trust and oversight stance
• Information communication flows
• (Edwards 2004)

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Building Effective Boards NDPB

• Enhancing effectiveness of independent boards of
  executive non-departmental bodies
• Model
• 3 crucial elements of high performing boards
• Structure functions
• Actions behaviours
• Performance evaluation
• Framework
• 8 essential components of high performing boards
• Each has key elements of good practice
  indicators of strong performance
• Barker 2004 (HM Treasury)

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Elements of High Performing Boards

• Structure functions
• Executive function purpose
• Board function position
• Fit for purpose skills, knowledge etc
• Actions behaviours
• Effective board leadership decision making
• Boards relationships
• Performance evaluation
• Board member performance
• Source Barker 2004 (HM Treasury)

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Corporate Governance ARC Project Overview

• Univ. Canberras Australian Research Council
  Linkage Grant
• Corporate Governance in the public sector - the
  tensions, gaps potential
• Examines structures processes of public
  administration of
• Agencies under Commonwealth Authorities
  Companies (CAC) Act 1997
• Departments/agencies under Financial Management
  Accountability (FMA) Act 1997
• Principal Investigators at University of
  Canberra
• Professors Meredith Edwards, John Halligan, Bryan
  Horrigan Mr Geoff Nicoll
• Project Output
• Issue papers
• Conference Workshop
• Academic books Handbook

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Corporate Governance ARC Project
Our Industry Partners ________________________
Sponsorship monies have also been provided to the
Project from the Australian Public Service
Commission
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Specific Questions

• Public-Private Comparisons of governance
• Similarities differences of public private
  organisations
• How far can you go in adopting private sector
  governance within the APS?
• Public Sector Governance
• Different types of governance arrangements within
  public sector
• Is there a separate public sector model?
• Selected Issues
• What determines the success of Boards in the APS?
  
• How are the interests of stakeholders represented
  in the different forms of public sector
  governance?
• How are corporate governance elements like
  accountability, conformance performance
  manifested?
• Are there principles of design practice in
  public sector corporate governance that can guide
  future decisions in this area?

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Conclusion Issues Directions

• Implementing Uhrig?
• New governance environment balance?
• Challenges of horizontal governance
  participatory governance?
• Connecting governance to performance?

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Corporate Gov Developments in Public Sector
Major Documents

• Conflicts and Tensions in Commonwealth Public
  Sector Boards (NIG, 2003)
• Current Issues in Public Sector Governance
  (NCCLPR NIG, 2003)
• Public Sector Governance Volumes 1 2 Better
  Practice Guides (ANAO, 2003)
• Review of Corporate Governance of Statutory
  Authorities and Office Holders (Uhrig Report),
  2003 (released 2004)
• Public Sector Governance Australia (CCH, 2004)
• List of Australian Government Bodies 2002-2003
  (DoFA 2004)
• Building Effective Boards Enhancing the
  Effectiveness of Independent Boards in Executive
  Non-Departmental Public Bodies (UK Treasury,
  2004)
• ARC-funded public sector corporate governance
  research project (http//www.blis.canberra.edu.au/
  corpgov2Daps/whatsnew/default.htm)