Review for improvement

Daniel Taylor says regular external governance reviews are productive, generative and valuable – especially when they’re fully embraced by the organisation being reviewed

There’s a reason independent governance reviews every three years or so is a requirement of almost every governance code. Done well, they provide enormous value to organisations.

How organisations approach governance reviews says a lot about their culture and the mindset of their leaders. And organisational culture also defines the value and effectiveness of reviews. Organisations more open to challenge and scrutiny get far more out of being reviewed, both from the process itself and the work’s output. And these organisations are also more likely to act on the findings and recommendations.

Committing the oldest sins in new ways

"The risk with governance is we commit the oldest sins in the newest kinds of ways."

So said Anita Donely, one of the panellists at a recent GGI event discussing the value of reviews. It's a great quote, not least because of its Shakespearian allusion, because it perfectly encapsulates the importance of regular governance reviews. In a world that is constantly changing, it is essential to ensure that governance structures and processes keep up.

In the day-to-day trenches of delivery and keeping up with regulatory compliance, policy directives and everything else, boards and senior leadership teams often struggle to find heads-up time and can become blind to organisational issues. Without such time, along with objective, independent input, there’s a risk of bad practice and groupthink creeping in. Reviews provide a chance for reflection, revitalisation and the chance to bring in learning from outside.

Tackling scepticism

There is a sceptical view of reviews—and of external consultancy in general—along the lines of paying lots of money to be told what you already know. But there can be enormous value in having objective, independent experts confirm internal beliefs. It’s also true to say that I’ve yet to be involved in a review that doesn’t reveal at least some new insight and generate value.

For organisations with good governance, reviews provide insight into maintaining that baseline and suggesting developmental improvements towards best practice. For organisations with poor governance, they provide a means of revelation and a pathway to correction.

The biggest sceptics are often those who believe their organisation’s governance to be good, if not great. These organisations do exist, of course, but governance has a tropism for disorder; over time, what marks good governance can harden or slide into bad governance if unscrutinised and unchecked.

It takes two to tango

The success of a governance review depends on both the commissioning organisation and the reviewer. The commissioning organisation needs to be open to honest feedback and willing to make changes. The reviewer needs to have the necessary expertise and experience, as well as the ability to build trust and rapport.

Reviews are more of a tango than a foxtrot, a rumba or a waltz. Movement is stealthy, almost cat-like and has an unmistakable staccato feel and major dramatic attitude.

Reviews are a great privilege to conduct. To be trusted, to be invited in and engaged with, openly and with respect. My own experience is that they are always productive, generative and valuable, especially where the process is embraced by the organisation. The very best reviews are a unique sort of collaboration. It takes two to tango and the better an organisation’s mindset towards the purpose and value of a review, the greater their return on investment.

Opening up to challenge

Opening up for external review is a sign of a good, strong culture – one that embraces scrutiny and constructive challenge, and one in which the board can exercise its responsibility for ensuring its own effectiveness and that of the system of governance it presides over.

Not all reviews are created equal. The most valuable reviews are those that are conducted with a genuine desire for improvement, rather than simply to tick a compliance box. These developmental/ enlightened reviews can help organisations to identify and address their real burning issues.

Some of the common issues we are seeing across our work at the moment include board interaction with and governance around EDI, freedom to speak up, digital transformation, and sustainability.

Testing culture in reviews

A significant aspect of board responsibility is in setting and having oversight of the organisation’s culture. Culture and governance are inseparable, and the former has a material impact on the latter by framing the context in which it is conducted. It is what we often refer to as the dynamic side of governance.

This year lots of the common issues we’ve discovered in our reviews have been related to organisational culture and its governance. We robustly test both in all of our work and each of our specialist governance and board maturity matrix tools have dedicated dimensions for culture.

We’re also in the process of producing more specialist tools to specifically look at culture and EDI, in response to and taking learning from our work this year.

The 80:20 rule and good reviewers

The panellists at the GGI event agreed that the most valuable reviews are 20% about checking compliance and 80% focused on the real burning issues. Compliance is important, but it is not enough. Organisations need to go beyond compliance to create a governance framework that supports their strategic goals and promotes a culture of integrity and transparency.

Finally, the panellists discussed some of the key qualities of good reviewers. Good reviewers focus on the greens as much as the reds. This means that they are not just interested in finding problems, they are also interested in identifying strengths to build on as additional opportunities for improvement. Good reviewers are also able to build trust and rapport with the commissioning organisation, and they are able to communicate their findings in a clear and concise manner.

Choose wisely and regularly

If you are thinking about conducting a governance review, I encourage you to keep these insights in mind. By choosing the right reviewer and approaching the process with a genuine desire for improvement, you can get the most out of your review and create a governance framework that will help your organisation to thrive in the years to come.

If it’s been more than three years since your last external review, I’d encourage you to start thinking about commissioning one and to be diligent in the process of setting your specification for the review, with a focus on the developmental aspects rather than seeing the exercise through the narrow prism of regulatory compliance assurance.

And of course, if we can be of help, do get in touch.