29 November 2015

Some thoughts on corporate governance

I have been thinking a lot lately about corporate governance in the heritage sector, and particularly how relationships between non-executive directors (the Board) and the executive (CEO and others) are managed.

This stems from my current roles on both sides of that particular fence - firstly in my day job as the executive Director (ie. CEO) of the Clwyd-Powys Archaeological Trust (CPAT), and secondly as a non-executive director (ie. Board member) of both the Black Country Living Museum (BCLM) and the Chartered Institute for Archaeologists (CIfA).

The trick is to strike the balance between having the support and advice of the Board, without micro-management. The Board also need to have a long-term strategic vision, and each member of the Board needs to have as wide a perspective as possible on the issues facing the organisation.

There are two things which need to be in place to make it work well: people and protocols.

Firstly, it is important to have a range of people on the Board whose experience is not entirely from within the sector within which the organisation operates. It is clear from recent events that the Boards of some charities have not worked as they should have done, and I suspect that in the cultural heritage sector we could do with improving the ways in which business is done.

Past and current experience is that archaeological organisations in particular tend to draw from a very narrow pool of people. The same can also be true in the museum sector, and perhaps elsewhere. This may not matter so much in the context of a learned society - where in fact focussed expertise from the discipline or sub-discipline is arguably more important - but even there the value of an outside perspective is perhaps under-rated.

Recent recruitment to the BCLM Board, for example, has been through an open and transparent process. Gaps in the skill set of the Board have been identified and a selection panel manages the recruitment of new members. This has resulted in a transformation of the Board in recent years - former members had been very long-serving, and some posts were 'institutional' ones. Some of these worked very well, but others were occupied by disinterested individuals who weren't willing or able to contribute to the strategic development of the organisation. Now we have a diverse board of people with a general heritage background, people from other independent museums, people from the broader arts and cultural sector, and people from business and industry in the region. We are still bedding down as a 'team' but every meeting is extremely interesting and I think we all feel that - whatever our background - we are making a valued contribution to the governance of this very successful educational charity and visitor attraction.

Secondly, protocols are important. Lines need to be drawn so that the CEO feels supported and respected, and not undermined by the Board in day-to-day decision-making.

Here the example of the CIfA Board is worth noting. At a recent special Board meeting we received governance training from Andy Friedman of the Professional Associations Research Network. This was extremely valuable, and we followed this with a session which roughed out a 'responsibilities protocol'. We all broadly agreed where most of the lines should be drawn. Things like the long-term strategic plan and the financial plan should be designed by the executive but approved (and monitored) by the Board, whereas the Board itself should be responsible for setting pay and health and safety.

The CIfA Board (like my own Board at CPAT) is at the moment drawn entirely from within the profession, but I think we have recognised the need to at least consider widening the membership.

I think that there is a great deal that the cultural heritage sector, and particularly those organisations who are charities, could learn a lot from the experience of our counterparts in the for-profit world. Sure, there have been some high-profile failures (notably in banking and finance) but - in the Anglo-Saxon world at least - corporate governance in the private sector seems to be robust and efficient.

At the moment I have to admit that the governance of CPAT falls short of best practice, but valuable lessons on how it can be improved are being learned.

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