interviews

Building better boards - the role of non-executive directors in ensuring clinical quality and patient safety

Among the many failings at Mid-Staffs identified in the Francis report was the ineffectiveness of the trust’s non-executive directors on the board in getting to the bottom of what was going on, asking searching questions, demanding information or challenging the executives. Board governance expert Roger Barker, head of corporate governance at the Institute of Directors, told NHE how the best boards do their jobs, and how this could help avoid another Mid-Staffs.

Part of what’s come out of the Francis review is a question about the effectiveness of the board of directors at Mid-Staffs, and the overall governance structure. That report has been very insightful, in terms of drawing out some of the characteristics you might have wanted in the directors of that trust.

As a non-executive director, it’s often helpful if you do have some direct expertise, or professional knowledge, of the activity of an NHS trust – but that won’t be the case for every director. There should be a balance: some people with direct medical/health expertise, balanced by people with experience in other areas.

Asking the right questions

You do need a particular type of personality – someone who is going to be very challenging and ask a lot of questions about what the executive team is doing, and wants to gain evidence to get to the reality of what’s going on.

What the Francis report seems to suggest is that the board were aware, to some extent, that there were problems at the trust.

But they more or less just accepted the word of the executive in terms of what was being done to address the issues, and didn’t really pursue their own investigations to get to the bottom of what may have been happening.

What Francis says in the report is that there was perhaps an excessively rigid demarcation between what were operational details and the non-executive role.

They shouldn’t cross over the line of getting involved in operational areas, but if you make that demarcation too rigid, you don’t ultimately fi nd out what is really going on, on the ground.

Francis says that was a shortcoming of that board. A non-executive isn’t there to run the organisation and does have to respect the leadership role of the executive – but ultimately they do need to fi nd ways of truly understanding what is going on in the organisation, if they’re going to properly oversee it.

Having the right priorities

Determining what’s important, and prioritising that, is key. Another issue which came up in the Francis report is that there seemed to be an excessive focus at board level on processes rather than reality.

There was a very strong focus on achieving foundation trust status, which they were encouraged to do by Monitor and others, but perhaps the board was focusing a bit too much on ticking boxes and jumping through the hoops in terms of putting in place certain processes, rather than engaging with the reality of what was actually happening in the hospital and with the patients, which is ultimately what counts.

Only when one has a handle on that should one be thinking about these other issues, which are less important.

The role of training and development

My view is that there does need to be a signifi cant amount of training and induction processes for non-executive directors.

We’re still in fairly early days in terms of having board structures within the NHS, and a lot of people who have come onto NHS boards in non-executive roles haven’t really had direct experience of that before, certainly in the health sector – though they may have had board experience in other sectors. The foundation trust structure and governance structure is a relatively new and unusual one, compared to other organisations, in having a separate board of governors, and a board of directors. This isn’t necessarily a familiar world for a lot of people.

So there really is a need for people to have a degree of training in terms of understanding their specific role as a director – ‘what are the sort of things I should get involved in’, ‘what sort of questions should I ask’? If, as a director, a senior clinician tells me something isn’t my concern, or that I shouldn’t be getting immersed in it, am I confident that I know that’s correct? Or should I be saying ‘no, there are things I need to assure myself about – you’re not right to be pushing me away here’.

Unless you’ve had some degree of formal training, or professional development, you could quite easily be pushed off the track along which you should really be going.

There is a fair amount of training going on of that nature. We see some of it here at the Institute of Directors – we do have tailored director-training courses for NHS board members, and they are well attended, and we have contact with particular trusts around the country. But whether the people we’re seeing are representative of the NHS as a whole, or just in the vanguard of best practice, that’s another question.

‘Cosy’ relationships with management

These skills are common to any non-executive, particularly of a listed company. Those characteristics of challenge, critically testing what the executive is putting forward – their activities, performance, strategic proposals or on the risks facing the organisation – those are common activities of non-executive directors in any company.

If you look at what happened during the financial crisis in the banking sector, one of the criticisms made by the Walker review and other reviews of what went wrong was that the nonexecutive directors weren’t being challenging enough of the executives.

There are all sorts of reasons why that process of challenge might not take place: it could be a lack of expertise, or they could have an excessively ‘cosy’ relationship with the management, or they may simply not have enough information flowing upwards to them. They may be very dependent on the management for the information they receive.

That was absolutely an issue in Francis too. The information they were getting was coming through management in a way which reflected management’s perspectives. People like whistleblowers within the organisation didn’t have an established chain of communication to members of the board. That caused a problem. The board didn’t have independent sources of information.

Demanding the right information

The key thing is that non-executives have to actively define the information they want. They shouldn’t just be passively receiving what management are providing them with and just responding to that: if you’re controlling the information that goes to the board, you’re controlling the agenda.

In any organisation there is likely to be control or audit type functions, such as an internal audit department. It’s very important for the board to establish direct lines of communication with those departments, so that they have eyes on the ground who can actually report back to them what’s happening.

The board should be quite clear with management that this is not interfering with their operational running of the organisation – it is part of good governance. Management shouldn’t feel defensive about the board having these sorts of links with key people in the organisation.

What often happens in private companies is that key position holders, such as the head of internal audit, will have a joint report into the CEO and the chairman of the board. There’s a danger with that sort of function that if you’re only reporting into the chief executive, you may see that person as your boss and the person you’re accountable to, and the board as being on the ‘other side’ of the accountability divide.

You really don’t want that: you want that function holder to feel a sense of accountability to the board as well. Often you’ll have a governance arrangement whereby that person can’t be either hired or fired without the agreement of the board.

Transparency

Transparency around meetings and minutes is quite a tricky issue. People have different views about it.

There is a need for some meetings and deliberations to be privately held. It affects behaviour if meetings are open; it will inhibit certain people, and simply lead to other meetings happening on an informal basis behind closed doors, which are not minuted and for which there is no accountability whatsoever.

People ultimately have to have those sorts of conversations. I do think there’s a need for a degree of privacy there, but it’s about finding a balance. There is a need for transparency, and also for the board of governors at an NHS trust to function properly and be well-informed, and to properly hold the board of directors to account.

There is a need for information to be made available to the general public as well: disclosure in annual reports, and general progress reviews of what’s happening. The board of governors has a particular role there to have an engagement role with the general public, but they in turn have to really understand what the board of directors is doing.

Dr Roger Barker, head of corporate governance at the Institute of Directors since 2008, was speaking to Adam Hewitt.

He is also senior advisor to the board of ecoDa (the European Confederation of Directors’ Associations), and chairman of the ecoDa Education Committee. He sits on the advisory board of the Institute of Chartered Accountants in England and Wales (ICAEW) and is a visiting lecturer at the Said Business School (University of Oxford), ESSEC (Paris), UCL (London) and the Ministry of Defence, and is a former adviser to the EU Economic and Social Committee in Brussels.

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