UK: Striking The Balance

Last Updated: 18 October 2019
Article by ICSA  

The recommendations from the latest UK Corporate Governance Code and FRC Guidance pose some interesting challenges for governance within the developing NHS landscape

Students undertaking The Chartered Governance Institute's Health Service Governance module find themselves having to sit with one foot firmly in the world of corporate governance and the other firmly in the world of health service governance. This unique combination helps to support those qualifying as governance practitioners to be able to understand the role of governance from a wider perspective. Despite the fact that the UK Corporate Governance Code and its associated guidance is not directly applicable in the health service sector, it is, nevertheless, interesting to see how corporate governance codes can illustrate aspects of best practice and lead to some interesting challenges or areas of development for governance within the NHS.

A current example of this is the emphasis in the latest UK Corporate Governance Code (July 2018) on the increasingly important role of the board in assessing and monitoring culture. The associated guidance of the FRC Code on Board Effectiveness went even further by saying "Boards need to think deeply about the way in which they carry out their role. The behaviours that they display, individually as directors and collectively as the board, set the tone from the top".

If this is taken as the current zeitgeist of our times as we reflect back on the failures of corporate governance which were highlighted by the banking crisis, then it is interesting to see how this might be reflected in the actions and behaviours of those charged with governance within the NHS; from the board of NHS England/NHS Improvement through to the programme board of a workstream within a local Sustainability and Transformation Partnership (STP) or Integrated Care Systems (ICS).

Culture and Transformation

NHS Improvement (Valued care in mental health: a national improvement model, Oct 2018) defines culture as: "the rich pattern of social behaviour present in an organisation over time, including all spoken and unspoken rules, symbols, routines and stories. Culture binds together an organisation's different parts, giving identity to the whole".

The challenge for the NHS is how to bind all parts of it together to focus on the safety, recovery and wellbeing of those who use the NHS and those who work there.

The UK Code is written with companies and their boards in clear view. For the NHS, things are not so clear – yes, there are boards of directors within NHS trusts and governing bodies within clinical commissioning groups but there are also STP's and ICS's developing for which governance arrangements are less clear.

Indeed, the King's Fund (Delivering sustainability and transformation plans – Feb 2017) made the observation that: "STPs are a conscious 'workaround' by national bodies of the complex and fragmented organisational arrangements that are the legacy of the Health and Social Care Act 2012. They rely on the willingness of NHS leaders at a local level to collaborate with their peers in the best interests of the populations they serve. STPs have no basis in statute, and their proposals need to be endorsed and supported by the boards of the NHS organisations involved as they move from planning to implementation".

Further 'workarounds' have been created to allow transformation work on other new models of care to develop as well; committees-in common, programme boards to name but just two. All of these 'workarounds' pose interesting challenges for those charged with governance and their responsibility to lead on culture. The challenge to work collaboratively across boundaries (both geographical and service delivery) is crucial for transformation and yet boards and governing bodies often find themselves having to deal with opposing priorities to those they need to collaborate with. The Kings Fund (Talking leadership: breakthrough conversations - Aug 2019) helpfully outlined the skills required for systems leadership as: "building trusting relationships, getting to a mutual understanding, building rapport, open and inclusive communications, regular personal contact, surfacing and resolving conflict".

It will be interesting to see what support is put into place to upskill those charged with governing to develop and mature these skills. One way to raise the profile and credibility of the commitment to upskill in these areas would be for it to form part of the NHS Well Led framework: development reviews of leadership and governance, which is the current measure by which NHS Boards are assessed for their leadership and governance skills. Another option is for the NHS Improvement's board development programme 'Leadership for improvement' to include culture and leadership in its programme.

Best Practice

In all of the current discussions about change and transformation, it is recognised that until there is legislative change the 'sovereignty, accountability and legal duties of the boards of NHS organisations' remain. And so, the focus for NHS organisations is often on which organisation is in control and who has the power to make the decisions. This focus on control and power can undermine the leadership that boards and governing bodies need to demonstrate in order to navigate the uncharted governance territories imposed by the new models of care.

What does the best practice from corporate governance challenge us to consider? Well, the FRC Guide suggests a series of questions that corporate boards may like to consider and a number of them might make for interesting discussions for NHS boards and governing bodies when considering the development of governance arrangements for the new models of care that may be developing as a consequence of their STP or ICS. The questions have been adapted slightly to fit the context.

  • what does the workforce say about 'the tone from the top' and the 'tone from the middle' of the decision-makers within the STP/ICS?
  • what evidence do we have that the chair of the STP/ICS is willing to listen, take criticism and let others make decisions?
  • what do examples of communications from leadership and middle management tell us about the commitment of the STP/ICS leadership to the values of openness and accountability?
  • how are key promotions or appointments within the STP/ICS decided?

The UK Code also followed through on its commitment to the board's leadership on culture by recommending that engagement with the workforce would mean, one or a combination of the following methods:

  • a board director should be appointed from the workforce
  • the board should establish a formal workforce advisory panel
  • the board should appoint a designated non-executive director.

Again it will be interesting to see how this best practice might be adopted within NHS organisations or the resulting 'workarounds' within STPs and ICSs. Interestingly, the emphasis on culture was most recently picked up in the Interim NHS People Plan which named two of its five main aims as 'Making the NHS the best place to work' and 'Improving our leadership culture'. If we consider these aims together with the UK Code and the FRC guidance, then we can begin to see the interesting overlap that could be at play. A key resource within the sustainability and transformation jigsaw is its workforce, both in its capacity and capability. How are the STPs and ICSs ensuring that workforce engagement is at the heart of their leadership on culture?

Best practice in governance, whether in the health service or the corporate world, still rests heavily on
the pillars of transparency and accountability, fairness and responsibility. The recommendations of the UK Code and FRC Guidance create some interesting challenges for governance within the newly developing NHS landscape and the health service governance module is aimed at equipping its students to meet these challenges. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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