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Governance benchmarking review 2014

This report summarises research involving 24 separate national and regional sports and recreation organisations. It repeated similar research undertaken with the same organisations in 2003/04. Its aim was to obtain an up-to-date view of governance systems and practices in the sector and to identify and evaluate changes made since 2004.


Executive summary

This report summarises research undertaken in 2014 on behalf of Sport New Zealand by BoardWorks International. The research involving 24 separate national and regional sports and recreation organisations repeated similar research undertaken with the same organisations in 2003/04. Its aim was to obtain an up-to-date view of governance systems and practices in the sector and to identify and evaluate changes made since 2004. Each organisation was benchmarked against the best practice concepts developed and promulgated by Sport New Zealand since 2004. These expectations are demanding but by no means beyond the reach of organisations such as those participating in this research.

The research identified governance effectiveness improvements across a wide range of performance components. For example, there have been noticeable improvements to constitutions generally and in particular to specifications relating to tenure, board size, selection/election processes and composition. There are generally improved role definitions in place and overall the membership of boards appears to have a broader skill base, than in 2004. Most boards have also improved practices that relate to board efficiency (e.g. an increased focus on agenda planning and other techniques that improve board time use). These improvements are both significant and commendable in the light of the largely volunteer director base on which the governance leadership of the sector depends.

At the same time, however, there remain effectiveness gaps that represent significant opportunities to further strengthen the governance of the sector. If attended to these opportunities have the potential to not only enhance the governance performance of the sector, but to make the jobs of boards and their management teams both more manageable and more satisfying.
Looking to the future, the greatest challenge is to assist boards out of the ‘activity trap’ most have succumbed to. Their preoccupation with operational activity, both in relation to planning and monitoring organisational performance, is such that many boards appear to be little more than spectators to management activity.

In this regard most of the boards appear to operate in a manner that is inconsistent with a basic tenet of governance: that it is ‘ownership one step down, not management one step up’. A board governs; it does not manage. In practice, many of the participating boards appear to act more as a top tier of management than as an independent governing body, detached from day-to-day operational activity, serving the collective interests of the organisation's owners, and determining the outcomes to be achieved in return for access to member, community, taxpayer and commercial partner funds. Boards have a vital 'leadership' role in organisational life and this appears to be widely understood and accepted in principle. In practice, however, there were signs that among the participating organisations many boards are content to follow the lead of their chief executives.

Critically, there is a weakness evident not only in the sport and recreation sector but equally across other not-for-profit and commercial sectors. This is an apparent lack of understanding of the central role in effective governance that is played by the policy-making process. Even though many organisations have adopted comprehensive and coherent governance policy frameworks over the years, very few of their current boards appear to ‘own’ these, understand their purpose as an essential means for 'remote control' or apply them to good effect. Consequently, neither board nor management attention is focused to the extent it should be on the things that matter. The workload of most boards is both heavier and less value-adding than it could be.

This is particularly apparent in the quality of strategic plans. With few exceptions, these have little or no practical use at the board level because they mostly lack an articulation of organisational purpose and intended outcomes (impact). Such a statement is needed – along with other dimensions of governance policy – to create a rationale and risk framework for subsequent management action. A clearly stated outcomes (ends) framework is necessary before, logically, management can design and implement effective management action (means).

Information is the lifeblood of the governance process and yet governance-quality reporting to most of the participating boards seems, at best, hit and miss. The absence of an outcomes orientation in strategic plans and at the board level more generally means that organisational and chief executive performance monitoring is made more difficult. Both boards and management are buried in the preparation and processing of reports on activity, with results or impact related to organisational purpose scarcely referred to, if at all. Much of the material provided to boards by their management teams is random operational detail, perhaps not even useful at the chief executive level. A comprehensive and actively applied governance policy framework would facilitate the kind of criterion-referenced monitoring that would make reporting more efficient and effective.

In conclusion, this review indicates that while the standard of governance of sport and recreation organisations is, in many respects, much improved on that documented in 2004, it is still falling short of what is both desirable and possible in some key areas. Therefore, prevailing governance processes are not making the best use of the valuable time and capabilities of volunteer directors or the staff who support them. Consequently, good, well-motivated people cannot perform to their capacity, nor can their organisation benefit from the potential of focused and proactive governance leadership.



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