GovernWith Blog

Our Governance Evaluator Crowd Governance Data is a wonderful resource for evaluating, trending, and benchmarking data that delivers powerful insights into governance. 

What we are seeing is that ongoing evaluation produces consistently improving results, more specifically that year three is where the magic happens. Three being the magic number is of no surprise when you consider that in science one must do three experiments to validate results and prove they are replicable for them to be considered true and accurate. 

This month we’re excited to share with you our Governance Evaluator Crowd Governance Data to support our claim that three is the magic number in evaluation. 

Change in overall average answers to evaluation, over 5 years. 

Figure. 1 - Change in overall average answers to evaluation, over 5 years. 

This chart shows the change in average answers to the Governance Evaluator Board governance evaluations across five years, totalling over 480 individual Board governance evaluations by over 5,000 directors, councillors and executives. 

As shown above, those first few years really are about fixing surface level issues that are illustrated by the initial evaluation data. The turning point in the data is the third year, that is the year where the average answers start to increase. This is suggesting to us that those surface level issues are now resolved and the real work is beginning for deeper level improvement, resulting in average increases in years four and five. Boards often describe themselves as being more discerning and knowing what they don’t know at this point in their journey. 

Change in average answers to evaluation over evaluation years, over 5 years. 

Figure. 2 – Change in average answers to evaluation over evaluation years, over 5 years. 

This graph shows the change in average answers to the Governance Evaluator Board governance evaluations core governance modules across five years, totalling over 480 individual Board governance evaluations by over 5,000 directors, councillors and executives. 

In the above diagram, we have left out the sector specific modules to focus on the corporate governance areas that effect all boards from any sector. It is clear from our data the real magic appears to be delivered when boards have been engaged in evaluating, trending, and benchmarking their governance data for three years or more. 

We would describe the three-year journey of governance evaluation and resulting capability building as the following: 

Year 1: Often the lowest results, the evaluation creates a great starting point to identify what boards do not know. Interestingly we had always believed that the first year was one of the higher-ranking years as the directors didn’t know what they didn’t know and thought that they were doing quite well. This again highlights the power of consistently analysed data proving that an initial insight, based on anecdotal and individual evidence, was not necessarily correct for all Boards. 

Year 2: A higher result from the Board’s first evaluation as they have become more aware, knowing what they don’t know and have addressed the immediate opportunities that were identified. They describe this as a period of raised anxiety and have a real focus on their governance risk priorities, and the support and resources required. 

Year 3: More realistic results which are reflective of the true ‘state of affairs” as the board appears more discerning and developing a stronger focus on what’s required. The results show a plateau as we see no significant increase in ‘Yes’ answers but instead the results are largely consistent with the previous years. This would suggest that they are in the stage where they know what they don’t know and are now working on improving the deeper level issues. Boards often describe this as a true indication of having a culture of review and development and they understand governance is a journey. 

However, we can still see that even after five years there are still areas that need improvement and development – no one is perfect and we can see there is opportunity to improve, particularly their stakeholder engagement, induction process, succession planning, strategic oversight and insight, and lastly, their risk and tolerance appetite statement. 

Change in average answers to evaluation over evaluation years, over 5 years. 

Figure. 3 - Answer change to evaluation over evaluation years, over 5 years. 

This chart shows the movement in answers provided to the Governance Evaluator Board governance evaluations across five years, totalling over 480 individual Board governance evaluations by over 5,000 directors, councillors, and executives. 

Our graph above breaks down the aggerate answers to the overall evaluation based on our four answers: Yes, Yes but qualified, No and Unsure, across five years. What is interesting to observe over time with these graphs is in year one 40% of the overall answers are made up of Yes, but qualified, No’s and Unsure’ s. However, by the fifth year that is reduced to less than 20%. Evaluation highlights areas that need addressing and that consistent evaluation leads to meaningful and long-lasting positive change, with directors feeling assured that they can answer a full yes in areas that were previously an issue. 

What is making an even bigger impact on this three-year journey of awareness is the inclusion of the Individual Director Development and Skills Matrix evaluation. This is enabling boards to have an even broader view of their strengths and weaknesses at an individual and group level. Our data shows that evaluating the individual’s development and skills, as well as the whole board, provides an added dimension in identifying areas for concern and required education, which when acted on, contributes to the overall improvement of the board. 

Change in overall average answers to evaluation: 

Comparing Boards who complete the Skills Matrix and those who don’t 

Figure. 4 - Change in overall average answers to evaluation, comparing Board who complete the Skills Matrix and those who don’t 

This chart shows the change in average answers to the Governance Evaluator Board governance evaluations across five years comparing the boards answers based on whether they completed the Individual Director Development and Skills Matrix or not. Our results total over 480 individual Board governance evaluations by over 5,000 directors, councillors, and executives. 

At three years we see a clear separation in the results in boards who do and do not undertake the individual Director Development and Skills Matrix evaluation, with those who do having better overall results after 5 years. 

To talk about starting your evaluation journey and to see the impact of consistent evaluation on your Board contact our governance expert, Fi Mercer. 

Are you proactive when it comes to dealing with your governance issues and concerns? 

Join Fi Mercer, Dr Tegan Smith (CEO, OPAL Rheumatology), Adrian Wagner (IT Operations Manager, Governance Evaluator) & Ashley Blackburn (Data Analyst, Governance Evaluator) as they discuss why is data the crucial “other piece” for peace of mind, achieving the balance between intuitive and factual decision making and getting the right data. 

How to use evaluation to assure Board excellence 

Join Fi Mercer & Brendan Moore (General Manager, Member Services, Leading Age Services Australia) as they discuss how to use evaluation to assure Board excellence. 

No longer a question of whether to evaluate, but how will you evaluate – Fi & Brendan explore the many elements required for a strong and engaging governance evaluation process for your whole Board and individual Directors. 

Join Fi Mercer & Jo-Anne Moorfoot (Executive Director, Australian Centre for Healthcare Governance) as they discuss how to using induction to drive a culture of contribution. 

An effective induction program sets directors up for success – Fi & Jo-Anne explore the many elements required to support new directors to feel engaged and confident to contribute faster to minimise your governance risks. 

Driving a culture of contribution in Local Government 

Join Fi Mercer & Lisa Mahood (Director, Reltuc Consulting) as they discuss how to using induction to drive a culture of contribution in Local Government. 

An effective induction program sets directors up for success – Fi & Lisa explore the many elements required to support new councillors to feel engaged and confident to contribute faster to minimise your governance risks. 

The Governance Evaluator 2019 Benchmark Report analysed evaluations from 92 boards comprising of 777 members across a range of sectors, with Risk Management and Compliance being identified as one of the top five risks for boards. 

Boards noted their areas for capability building related to the following: 

• understanding what the organisation’s top risks were and noted the need for being assured about these risks through insightful data-driven, trended and benchmarked reports 
• the setting of a clear risk appetite statement relating to their strategy 
• desire by all directors to know how to lead a culture of continuous review and development 

Directors stated that more training about Risk Management and gaining sector-specific knowledge and discussing the relevant associated risks were of high importance to them. 

There has never been a more important time to focus on having the right systems, processes and behaviours in place for assuring boards and directors of their governance risks. The revised ASX Corporate Governance Principles and Recommendations state that boards are to monitor the adequacy of their organisation’s risk management strategy, for both financial and non–financial risks. 

This includes ensuring risk strategies deal adequately with contemporary, emerging or unforeseen risks such as conduct risk, digital disruption, cybersecurity, privacy and data breaches, sustainability and climate change. 

One of the key roles of the board is to monitor the adequacy of the entity's risk management framework and satisfy itself that the entity is operating with due regard to the risk appetite set by the board. This is to instil and continually reinforce a culture across the organisation of acting lawfully, ethically and responsibly. 

Following are some effective strategies that Governance Evaluator has observed boards using to maintain their assurance for their governance risks: 

Leading a culture of continuous review and development from the top 

Following the recent Royal Commissions and Prudential enquiries, ASX revised their Corporate Governance Principles Guidelines and have increased focus on the following aimed at supporting a strong culture and governance: 

• annual whole board and individual director governance capability assessments 
• implementation and ongoing review of resulting board action plans and individual director development requirements 

Governance Evaluator has seen high growth in board and director evaluation and development programs and through this role modelling they are strengthening their culture for quality improvement across the organisation. This has been even more successful in the board’s that then utilised both group and individual director development action plans.  

Directors skills and capabilities for their governance risk oversight role: 

1. Understanding directors skills and experience before building governance risk oversight capabilities 

Over 50% of Governance Evaluator clients who undertake annual Board Evaluation also commenced a Director Development and Skills Matrix review culminating in Individual Director Induction and Development Plans. This resulted in:  

• assisting directors to understand their attributes and gaps, therefore focusing on developing skills for having a high-level knowledge of the nuances and risks relating to the organisation they govern 
• organisations developing relevant education plans 
• quarterly development plan reporting in board papers generating important discussion and accountability 

2. Becoming an expert on the organisation’s top risks, not just a subject expert 

It is not possible as a director to simply become a subject expert in order to have the right capabilities for oversight of sector and organisation specific risks. Rather, Governance Evaluator clients who have developed these capabilities specifically in the organisation’s top risks have:  

• included education about the organisation’s top risks as part of their director induction 
• invited their executives/managers to explain to them what are the top issues that keep them awake at night and what have they done to address such risks 

Directors receiving the right information to be assured of their Governance Risks 

1. Building the capabilities of Board Sub Committees: 

As over 60% of directors reported not feeling assured for their governance risks it is also important to discuss how organisations have improved their risk reporting to the boards. Focus on building the capabilities of Board Sub Committees for providing governance risk assurance has been successfully achieved through the following:  

• ensuring the structure, number and Terms of Reference of the committees reflect what’s required to support risk management and achievement of the organisation’s strategy 
• ensuring the right directors are on the relevant committees based on their skills with the executives and other experts on the committees 
• Sub Committees are reviewed annually and not afraid to discontinue if not required or serving purpose, and their structure is reviewed tri-annually in line with strategy 
• organisational accreditation and legislative requirements, for example responding to Standard 8 in Single Aged Care Quality Framework, are addressed by committee/s 
• all other organisational risks are divided across the committees 
• Terms of Reference containing:  
  1. Clear purpose 
  2. Skills for leadership and membership 
  3. Identified risks to monitor 
  4. Reporting to the board via dashboards and recommendations 

2. Reducing the volume and increasing sophistication of board papers and agendas through investing in governance risk reporting dashboard

Boards have significantly improved their Board Agendas and Papers through reducing the volume of their reports and increasing the sophistication of their papers. A key element of this has been:  

• creating risk reporting dashboards that come from the Board Sub Committees in relation to the risks they are tasked to have oversight for. This is more helpful for directors being assured than receiving just the minutes from the Board Sub Committees 
• ensuring that reports are insightful, data-driven, trended, benchmarked and contain relevant commentary. 
• ensuring the dashboards and reports are high level, reflecting the top risks and allow the directors to drill down into the detail if they wish or there is a red flag 

If you would like to talk to an expert for building your governance risk capabilities please book in for a free consultation with our governance expert, Fi Mercer.

The Governance Evaluator 2019 Benchmark Report has identified for the second year in a row Stakeholder Engagement as the number one risk for boards.  

An analysis completed by Governance Evaluator looked at boards who have improved their performance year-on-year in this area and identified some of the key actions these boards had taken for addressing their gaps.  Following is a summary of some of the actions taken that have resulted in these boards having greater confidence in their stakeholder engagement capabilities.  

Assessment 

Following their board governance evaluation in 2018 and the identification of stakeholder engagement as a potential gap for their board, boards went on to dig deeper into their capabilities in this area, through:  

• Assessment of individual directors’ skills and experience for stakeholder engagement 
• Identification of individual directors’ connections and relationships with potential key stakeholders 
• Assessment of who were their key stakeholders and identification of any special requirements. 

Planning 

Based on the outcomes of the assessment, these boards went on to create targeted Key Stakeholder Engagement Plans which addressed:  

• Prioritised levels of importance of each stakeholder in relation to the organisation’s strategy with specific strategies for approaches and responsible persons, inclusive of directors and executives.  It is important at this stage for the board not to abdicate responsibility for stakeholder engagement to executives, rather identify those stakeholders that are best managed by each level of the organisation, including the board. 
• Clear reporting structures and KPIs for measuring stakeholder engagement effectiveness that went beyond number of visits. 

Training 

Some boards felt that going back to basics was necessary to ensure a clear understanding of the importance of stakeholder engagement to the organisation.  

• Board members, CEOs and Executive teams received training on best-practice approaches to stakeholder engagement. 
• Other boards provided key message training to its members so that they could build their confidence to talk about why their organisation exists and have a greater understanding of the communities they serve and its current priorities. 

Strategic planning influenced by stakeholders 

Stakeholders and communities served by an organisation should factor in the organisations strategic planning process.  

• We saw some boards introduce presentations from stakeholder representatives at their strategic planning days, whilst others invited key stakeholders to participate fully in the planning sessions. 
• Other boards communicated the organisations strategy to stakeholders and invited feedback. 

Ongoing engagement, communication and feedback  

We saw a range of initiatives from our boards throughout 2019 to build their capabilities for engaging, communicating and receiving feedback from their stakeholders.  

• Establishment of Consumer/Client Advisory Committees or a review of the Terms of References of present ones. 
• Establishment of a Stakeholder Advisory Committee to meet on a quarterly basis. This is different to a Consumer/Client Advisory Committee and enables the board to have face to face engagement with stakeholders on specific topics relating to mutual interest and at a strategic level. It is also used to test ideas, discuss advocacy and policy priorities and actions, along with joint collaborations such as funding proposals and key messages. 
• Introduction of a key stakeholder mapping exercise with the Board, executive team and senior staff members to better understand their personal networks and relationships to their Stakeholder Engagement/ Communications Plan.  It’s important to identify existing relationships so that there can be clear communication and to manage key person risk if that person leaves or discontinues being involved. A “buddy” approach is a good way to enable more than one person to be introduced and lessen the dependency. 
• Implementation of a Customer Relationship Management system (CRM) or database of contact details. Many people hold the contact details in their phone or email and it is not centralised and accessible to all.  One social enterprise, identified their stakeholders, segmented them into different categories and then added their details to a CRM. They are now communicating with people to ask them to “Opt In” to subscribe to their general newsletter and have the ability to tailor the communication methods and messages according to the audience/segment. 
• Utilisation of video to communicate messages with subtitles, not just relying on written words. This approach acknowledges the different ways in which people consume information, rather than a one size fits all. 
• Quarterly “Letter from the Chair” to key stakeholders. 
• Extending invitations to key stakeholders to their events and/or board meetings. 
• Addition of stakeholder events to existing events or following a board meeting in different parts of their regions or campuses to ensure all stakeholders are being reached. 

Measurements/outcomes 

We’ve seen boards introduce new metrics for measuring the effectiveness of their stakeholder engagement efforts. This includes metrics that go beyond the number of visits or meetings, including measuring the health of the relationships with stakeholders through:  

• Independent review 
• Interviews 
• Feedback 

This has given boards and executive teams insight into how stakeholders view the organisation, including the communication they receive and their trust in the organisation.  It also gives the board some early warning signs of relationships that might not be as good as originally believed.  

If you or your organisation are taking action to build your stakeholder engagement capabilities, we’d love to hear what you’re doing, contact us today and chat with one of or experts. 

Governance Evaluator and The Australian Centre for Healthcare Governance (ACHG) are excited to announce a new initiative for building strong governance in the health sector. 

Our newly formed partnership combines the proven approach of Governance Evaluator’s online suite of board evaluation solutions with the health sector and extensive governance consulting expertise of JoAnne Moorfoot Director of ACHG and her Team to provide VHA members with a comprehensive approach to board and director review and ongoing governance support services  The partnership builds capacity for both Governance Evaluator and ACHG to ensure all VHA members have access to a consistent and proven range of solutions for improving their governance performance and ultimately driving quality outcomes for their consumers. 

Governance Evaluator is the most straightforward and intelligent way to improve your board’s performance. The easy-to-use online system enables you to manage your governance program at your own pace whilst using a proven, systematic approach to improving governance performance.  A suite of complementary, health sector-specific solutions, enable you to design a governance program to meet your specific needs. 

Using Governance Evaluator for your annual governance and director development program ensures you build your capabilities using sector relevant evaluations, consistent trending of results and dynamic action plans which are responsive to your needs at any point in time.  Our community enables you to benchmark your performance against your peers and other governing bodies with like responsibilities. 

The ACHG approach and experience is unique, combining their working and ‘systems’ knowledge of governance and strategy in the Victorian health system to apply a practical methodology to work with organisations to diagnose systems issues, and facilitate problem solutions to develop governance system improvements. 

Together Governance Evaluator and the ACHG expertly support boards and directors on their journey of continuous improvement; building a shared, consistent understanding of good governance and empowering leaders to improve organisational efficiency, productivity, service quality and culture. 

ACHG not only provides expertise convening to support boards through their governance and director development programs, but, following on from the board evaluation ACHG can provide additional support to boards. They can provide ongoing development to build and enhance the skills of the board across a broad range of areas including Corporate and Clinical Governance, Legislative Compliance, Integrity Governance Training, Occupational Health and Safety, Strategic effectiveness for boards and Roles and Responsibility of Chairs. 

If you would like to learn more about this exciting new initiative, please contact Governance Evaluator  or the ACHG achg@healthcaregovernance.org.au

Why are sub-committees so important? 

For many boards, sub-committees are where the bulk of the board’s work actually takes place. Sub-committees enable a board to ‘divide and conquer’ by distributing the detailed planning and oversight of each of the board’s many responsibilities across smaller groups of appropriately skilled members. While the collective responsibility for decision-making remains with the full board, sub-committees inform the board through reporting and making recommendations in line with their remit. 

The number and type of sub-committees depend on the tasks required, and their tenure may be short or long-term. Sub-committees must utilise the specific expertise of members as well as others, including staff and/or external parties. Chairing sub-committees provides valuable experience for members, which can be useful in succession planning for future board leadership roles. 

Effective sub-committees provide significant benefits to boards and the organisations they govern through enabling the board to make informed decisions and meet their many and varied governance and regulatory responsibilities. They play a key role in supporting directors to be assured in their strategic and oversight roles for risk and compliance by providing analytical information that improves and optimises future governance decisions and performance. 

They also benefit members by providing them with the opportunity to utilise and extend their knowledge and understanding of specific aspects of governance as well as the organisation they are governing. Governance experts even advise that an accurate correlation for strong board culture and performance is the effectiveness of a board’s sub-committees. 

Are sub-committees supporting boards in achieving their goals? 

Governance Evaluator analysed board evaluation responses from over 90 boards comprising almost 1000 members across multiple industries in 2018 and 2019. The key finding was that the satisfaction of board members with their sub-committees in supporting the board to govern effectively varies greatly between industries. 

In the health sector, the structure and function of sub-committees are heavily mandated by government agencies. As a result, the responsibility and reporting requirements of sub-committees are relatively well understood and adhered to. This maturity is reflected in the strong majority of health board members who reported being satisfied that the work of the committees supports the board’s governance role in both 2018 (79%) and 2019 (85%), as well as reporting a low level of uncertainty in regard to this topic (4% in 2018, 2% in 2019). Having said that, health sector sub-committees, in particular quality and clinical governance committees, have shifted their focus to having the right risk systems operationally reporting to the sub-committee. They are also focused on having the right skills on their committee, specifically a chairperson with strong leadership qualities and directors with a strong health sector background. Finally, building capabilities for reporting industry indicators, trends, benchmarks and commentary. 

The aged care sector is at a very different stage in its governance and regulatory maturity regarding sub-committees. In 2018, 80% of aged care board members were satisfied that the work of the committees supports the board’s governance. However, in 2019 this figure dropped significantly to 50%. Interestingly, the level of uncertainty among board members about the effectiveness of sub-committees was relatively high in 2018 (9%) and even higher in 2019 (15%). It is likely that this lower satisfaction and higher uncertainty relates to the new Aged Care Standards and Royal Commission raising awareness of governance issues and best practice across the sector, which has led to a more critical reflection of sub-committee performance. 

The community, non-profit & associations sector also experienced a decline in reported satisfaction that the work of the committees supports the board’s governance between 2018 (70% satisfied) and 2019 (66% satisfied), and an unchanged yet relatively high level of uncertainty about sub-committee performance (9% in 2018, 7% in 2019). Like aged care, this sector is comprised of organisations that do not have mandated sub-committee regulations, therefore the effectiveness of their sub-committees is more dependent on the individual preferences and actions of the board rather than a proven standard of best practice that must be achieved. 

Across all sectors however, there were consistent reasons given by those board members who reported a lack of effectiveness in supporting the board. These include: 

• Insufficient or unclear sub-committee terms of reference which are required to inform members of the purpose of the committee or its function, the skills required of the chair and directors, external members and internal organisational members, reporting structure to the board, tenure and annual review. This led to uncertainty regarding the scope and governance responsibilities of sub-committees. 
• Too many (or too few) sub-committees on the board. Some boards were ‘gathering’ committees not realising that they could be discontinued after a set amount of time if they had completed their specific role. Other boards had too many operational type committees, blurring the lines between governance and management, with many boards reporting they did not have the right sub-committees to support them to achieve their strategy. 
• Members being placed on too many sub-committees or being placed on sub-committees for which they do not have suitable expertise. 
• Inadequate or unsophisticated reporting by sub-committees to the board, in particular in relation to understanding the top risks to report and how to provide trended and industry benchmarked data with commentary to support the board’s ability to decision make and deliver their oversight roles. 

How your board can ensure your sub-committees are effective 

Review your sub-committees. The Governance Evaluator Sub-Committees Review involves a review of the overall sub-committee structure in relation to the organisation’s strategy and governance requirements. It looks at each individual sub-committee’s terms of reference with a view of identifying its relevance, role, skills, both for leadership and membership, reporting structure, and effectiveness.  The process includes interviews with the committee members and/or Chairs. 

The findings of the Governance Evaluator Sub-Committees Review would then inform the appropriate next steps for the board, such as: 

• Identifying what you can learn from other industries who have a more mature sub-committee environment. 
• Discussing and agreeing to the right number of sub-committees for the board, and ensure that each sub-committee is composed of the right people who have expertise in the area, particularly the chair of the sub-committee. 
• Set terms of reference for each sub-committee that outline a defined purpose, function, process, timeframe, attendance requirements, reporting obligations as well as a clear product/outcome to be generated by the sub-committee. 
• Calculate and agree to the financial and time resources needed to support the sub-committee 
• Confirm the board’s preferred report format and content from the sub-committee, inclusive of risk reporting and business analysis for decision making. 
• Set measures to determine whether or not the sub-committee is reporting to the board and completing its tasks successfully, and agree to the evaluation/review process for each sub-committee in relation to the annual board review. 

The sub-committees review process and subsequent next steps will support governing bodies to be confident that the sub-committee structure is effective and efficient, that there is transparency of information and accountability of actions to inform good decision making and governance. 

A board that listens and acts will help secure a better ageing future 

Picture yourself in bed, incapacitated and unable to communicate. Your greatest pleasure is a hot cup of coffee, but every day your coffee grows cold while you await the arrival of your carer. A board that hears the voice of the consumer can prevent this from happening. 

Identifying the problem 

Governance Evaluator’s 2018 Governance Capability Benchmark Report assessed governance capabilities across over 70 boards in the aged care, health, community and government sectors, with the Governance of Clinical Care module evaluating boards in relation to the new Aged Care Quality Standards. 

It is no surprise that genuinely partnering with consumers, in particular hearing the voice of the consumer at the boardroom table, emerged as the key governance issue among aged care and health boards. The results show that only 39 per cent of aged care boards understand how to successfully hear the voice of the consumer at the boardroom table. 

Working towards the solution: today 

Aged care boards have a crucial role in achieving a person-centred aged care industry, for it is at board level that the consumer becomes genuinely embedded within the care framework. 

In order to understand what dignity and choice really means to their consumers, boards must take steps to identify who their consumer is, what they want, and what obstacles they need to overcome to get what they want. 

Leading aged care organisations are currently implementing solutions at board level that enable the consumer experience to be respected and reflected in service delivery, for example: 

• Boards are ‘getting up and going out’; conducting ‘walkarounds’ of their facilities to get a better understanding of the issues. 
• Boards are immersing themselves in the communities they serve, and are embracing the diversity within. 
• Boards are extending methodologies for collecting consumer feedback to a series of larger focus groups consisting of people with ‘lived experience’, being consumers, their children, families and carers for a deeper understanding of their issues. They are also using their definitions of choice, vulnerability, respect, dignity, happiness and dignified dying to inform their policies procedures and behaviours. 

An important component of this is gaining an understanding of the way their consumers lived and the things they loved before they entered their aged care service, and working to respect their individuality in care planning. This is how the board can be assured that the organisation understands the importance of a simple hot cup of coffee. 

Working towards the solution: tomorrow 

The capacity of behavioural data and artificial intelligence in providing a voice for the age services consumer is expanding at an astounding rate in Australia and internationally. 

No longer the stuff of science fiction novels, artificial intelligence applications collect data to model predictable behaviours in an individual consumer as well as larger populations so that deviations from an expected behaviour can trigger appropriate responses. 

Examples of these include devices that check inconsistencies in biometric data and smart sensors that detect and report on falls, through to human pose detection applications and companion robots that identify and keep track of important objects around the residence and help the consumer remember important tasks and events. 

For an aged care service board, the collection and utilisation of this type of data, which can speak on behalf of the consumer if the consumer is unable to speak for themselves, provides assurance that their organisation is providing safe and quality care as well as providing true choice and dignity to the consumer.  This information can also be used to assure boards that their consumer needs are being heard and attended to in a proactive caring way. 

Next steps are for boards to develop more sophisticated skills around data analysis and how it can support their important oversight roles for consumers’ choices being respected, services having a culture of safety and quality, and their aged care businesses prospering. 

Originally published in LASA Fusion Magazine Spring 2019. 

A key factor for building high functioning boards that have the ability to lead successful organisations is for the board to have the right systems, processes and supports in place to empower a group of experts to become an expert group. 

An effective induction is an essential process that enables directors to be ‘on boarded’ in a timelier fashion, allowing them to contribute their expertise better at the board room table, to feel more confident about their knowledge of the organisation and its risks, and ultimately to improve their ability to govern. 

However, our research shows that boards across multiple industries consistently identify effective director induction as a critical gap in their governance processes. While effective induction is actually quite a straightforward process to achieve, many boards are missing the mark, with the result being directors who lack the understanding, expertise, engagement  and confidence required to properly govern the organisation. 

What does an effective director induction process look like? 

An effective induction process provides new directors with information about their role so that they quickly become useful, integrated and satisfied members of the board, and are able to contribute effectively. 

It is important that the induction process is relevant to each director’s skillset, and is an engaging process. This is a shared responsibility for imparting and gaining knowledge about governance requirements as well as the organisation and its top risks. 

A quality induction process should include a well thought out combination of: 

1. Knowledge about the director’s skills and experience, with corresponding supports & information: mentoring/buddying, board online systems and supports tailored for their gaps. 
2. Information about the organisation and director roles, including strategy, services provided, top risks and tolerances, directors’ roles and responsibilities, board processes, governance policies and procedures, board resources and training, as well as tours of the organisation and social events. 
3. Information about the industry/sector, including key information about the sector and its unique requirements, frameworks, legislations and legal structure 

When should the director induction process begin? 

Induction should commence in the recruitment stage, before election or appointment, to ensure that directors with the necessary strengths are appointed. The Governance Evaluator Director Development & Skills Matrix is invaluable at this stage in identifying the current skills, experience or cultural gaps on the board that will inform the recruitment process as well as explain the board’s priority areas to potential new directors. 

The induction program itself should comprise a stepped process that includes actions before, during and after the first board meeting. New directors should start by completing the Director Development & Skills Matrix and their results should inform key elements of their induction plan prior to commencement on the board.  For example, a director may be starting on the board of a healthcare organisation, but their Development & Skills Matrix results show that while they have high finance and legal skills and experience, they have low clinical governance and data analysis skills. This will therefore inform the most suitable director to be their mentor, as well as the educational resources on which they should focus. 

Their individual induction action plan would therefore include standard organisation and sector components but also include individually tailored content to help them address their specific development needs to more quickly onboard and contribute. In addition, the process enables new directors to become more aware of their strengths, so they feel more confident to contribute in that area at the board room table. 

How long should director induction take? 

Being realistic about the time it takes to become familiar with an organisation is important. An effective induction process may take up to 6 months for the initial actions and is important to be ongoing. It should also include regular check ins between the chair, mentor and the new director to ensure they feel welcome, comfortable and confident to contribute.  Good practice is to have director induction and check in as a board meeting agenda item. 

What steps contribute to an effective induction process? 

As outlined in figure 1, an effective induction process consists of often concurrent steps that seek to optimise: 

• The culture of the board – promoting a welcoming, collegiate culture that values and appreciates the new director. Achieving this culture will result in directors who are engaged, passionate and have a long tenure. 
• The contribution of the director – educating and empowering the new director in relation to the organisation, broader sector and their governance requirements, but also in relation to their own skills and areas for development. Achieving this will result in directors who quickly make a meaningful contribution to the board and continue to improve throughout their tenure. 
• Continuous improvement – ongoing evaluation and improvement of the induction process to ensure that future new directors, and the organisation, will benefit. 

Fig 1: An effective director induction process. Steps are often concurrent. Read on for more details about each step. 

Getting started for your board 

As you can see, an effective director induction process is based on understanding the new director’s skills and experience, and working within a health board culture with a commitment to contribution and continuous improvement. The benefits of achieving this from the outset are significant, in terms of director satisfaction, tenure and contribution right from their first board meeting, as well as the effective governance of the organisation. 

The Governance Evaluator Director Development Program is the perfect place to begin, as it supports boards to achieve the key characteristics of effective governance, ensuring a consistent and high functioning level of the right skills, experience, and behaviours across all directors. 

Our expert conveners support boards to optimise their induction process, and guide directors to build and maintain their Individual Director Development Plans. 

Steps to an effective director induction process in further detail 

Culture 

• Welcome*: As soon as possible after the board has confirmed/been notified of the appointment of a new director, the chair sends a welcome and congratulations letter, inclusive of requirements for commencing the induction process prior to participating in the first board meeting. 
• Appointment*: The new director signs all relevant contracts, statements and disclosures. 
• Introductions*: The chair introduces the new director to existing directors (and senior staff, if appropriate) as soon as possible after their appointment and seeks to involve the director socially in board activities. 

Contribution 

• Development & Skills Matrix*: The new director completes a Director Development & Skills Matrix to identify areas of high strength/expertise and areas where development may be required. 
• Individual Director Development Plan*: The chair assists the new director in building a tailored development plan to guide their education, training and development priorities throughout their tenure on the board. 
• Chair briefing*: The chair takes the new director through the minutes of recent meetings, and briefs them on the issues the board is dealing with at the moment, or will be looking at in the future. The chair also draws the new director’s attention to the roles and responsibilities of the board in general, and the roles and responsibilities they will be expected to undertake as an individual, and discusses any concerns they may have. 
• Mentoring*: Based on the results of the Development & Skills Matrix, the chair nominates a more senior member of the board with differing skills and experience to the new director to act as mentor to the new director. The mentor supports the new director in a variety of mutually agreed and scheduled ways, such as taking the new director through board papers, sitting next to the new director in board meetings and regularly checking in by phone or face to face, accompanying the new director on a walk around the organisation. The chair is kept informed throughout the mentoring process. 
• Background reading*: The new director is provided with a copy of the organisation’s relevant governance manuals by the chair and/or board support person, which will serve as an initial introduction to the group as well as an ongoing reference. It should include:  
  • relevant organisational documents such as the mission statement, organisational purpose & strategic plan, constitution/rules 
  • financial information, including current year-to-date budget, financial position and funding model and the most recent annual report 
  • services provided by the organisation, their top risks and assurances, and the risk reporting strategy to the board 
  • introduction to the organisation’s operational and committee structure 
  • information about the organisation’s social media, newsletter and other communication methods for the new director to subscribe to and/or follow 
  • information about IT systems and networks used by the board for intra-board communication, with necessary logins 
  • basic biographical and contact information about board members, and staff (if appropriate) 
  • basic meeting schedule and board annual calendar 
  • roles and responsibilities of the board and its directors 
• Organisation tour: The chair invites the new director to take a tour of the organisation’s facilities and introduce them to staff, volunteers, members and the beneficiaries of the organisation. The chair and/or board support person also shows the new director where the board meets, and all other general housekeeping requirements, to ensure the new director feels comfortable. 

Continuous Improvement 

• Induction review: The chair and/or board support person surveys the new director regarding the induction process to identify any potential areas for improvement 
• Regular Check-ins: The chair and/or mentor meets with the new director each month for the first 6 months of their tenure to monitor their Individual Director Development Plan, address any issues and ensure they feel engaged and confident to contribute. 

*These steps should take place prior to attending the first board meeting. 

Make a booking below to chat with our a governance expert and see how we can help you. 

The imperative is clear – the question is no longer WILL your board evaluate, but HOW will you evaluate. 

Recent Royal Commissions in banking, education and other institutions have led ASX to revise their Corporate Governance Principles to recommend board and director evaluation and development take place annually across all sectors to support good governance. 

But which evaluation method is best suited to your needs? 

A quick google search will return a multitude of methods by which an organisation may evaluate its board and director performance. Governance Evaluator takes a look at the pros and cons of the most popular evaluation options to help you make an informed decision for your organisation. 

1. Free surveys & tools 

Many organisations with very early governance maturity, or with very limited resources, may choose to ‘dip their toe’ into evaluation via an internally sourced and managed survey. Resource hubs such as VCOSS and  ourcommunity.com.au offer free of charge quizzes and fact sheets that give boards a good initial overview of their level of functioning. 

Pros: Suits the smallest budget. Provides a general overview of collective governance performance. Fact sheets may provide information about areas for development. Tackles the initial issue of ‘not knowing what you don’t know’. 

Cons: Content of questions and resources generic and basic, not tailored for specific industries or addressing specific issues. Can be cumbersome to complete and report upon. Lacks an external perspective. Can be time consuming to compile responses and turn into useful data for decisions about future actions. Provides no ongoing trending or benchmarking. 

2. Internal forums 

Similarly, boards at an early level of governance maturity may decide to hold a board discussion where a group consensus is sought in relation to the board’s performance on key governance requirements. At this or a subsequent session, the board would agree on actions to address issues raised. 

Pros: Can be completed in a short period of time. Does not require additional investment other than time. Helps the board go from not knowing what they don’t know, to identifying as a team what the issues are; ie ‘knowing what they don’t know’. 

Cons: Discussion & actions can be skewed by more influential participants. Lacks an external perspective. Focuses on collective board performance and does not address individual director skills and experience. 

3. External consultants 

Some more mature boards may engage an external consultant to manage the evaluation and development process from end to end, or facilitate specific milestones throughout the process. Consultants may be governance experts or industry experts, but ideally would be both. Consultants provide a guiding hand for boards who know they need to evaluate, but are limited by experience or time to manage the process themselves. Peak bodies are a good source for recommending consultants who have experience in the industry. Governance Evaluator is proud to offer independent consultants as a supplement to our board and director evaluation processes. 

Pros: An external perspective of governance performance against relevant legislation and frameworks. Adds rigour and reduces subjectivity of the process. Expert guidance to enable the board to move beyond evaluation and into targeted capability building & development. Can assist the board to go from ‘not knowing what they don’t know’, to ‘knowing what they don’t know’, to developing strategies to address the identified issues. 

Cons: Can be expensive. Can be labour intensive. In some instances, the board may be left to write an action plan themselves, or are left with a generic action plan that is relegated to the bottom drawer until next year. 

4. Self-assessment 

Self-assessment is recognised by Aon, ASX, DHHS and AICD as well as peak bodies in health & age services (LASA, VHA, ACHG, AHHA), community (ACNC) and education (NESA) as a sound method for understanding and improving a board’s performance, as well as the skills and experience of individual directors. 

Some online tools available offer flexibility and ease of data collation and analysis. In addition, some tools can tailor their content to the specific requirements of board’s sector, and provide data and insights for boards to trend and benchmark their performance historically, as well as against others in their sector and across industries. 

Care must be taken to ensure that the self-assessment tool avoids the influence of subjectivity. This can be achieved through careful questionnaire design and analysis. To find out more about how leading self-assessment techniques achieve this, click here. 

Outputs of the self-assessment inform actions to build board capabilities where they are needed most. Governance Evaluator is founded on effective online self-assessment of board and individual director performance. 

Pros: Affordable. Can be managed internally if desired. Outputs enable the board to move beyond evaluation and into targeted capability building & development for the collective board as well as individual directors. 

Cons: Requires engagement in the process by board members. Can be subjective, unless it is part of a multi-faceted evaluation & capacity building process. 

As you can see, there are options available to suit all levels of governance maturity and investment capabilities. To discuss the best board evaluation and development program for your board, book in for a 15-minute governance health check below.