Governance for growth
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Presented at NCVO's Trustee Conference on Monday 11 November 2014. The presentation was by Nigel Kippax, NCVO. These slides startsfrom the premise that governance is about compliance and performance; contending that good governance and leadership around risk requires responsible trade-offs. To learn more about governance: http://www.ncvo.org.uk/practical-support/governance To find out about NCVO's Trustee Conference: http://www.ncvo.org.uk/training-and-events/trustee-conference
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Governance for growth
- 1. AM6: Governance for Growth #TRUSTEECONF2014 Nigel Kippax, NCVO Alistair Lomax, NCVO
- 2. Introductions Nigel Kippax – Head of Consulting and Training; NCVO Alistair Lomax – Senior Consultant; NCVO Thank you
- 4. Introduction • What did Stephen mean by ‘ Governance for Growth’? • In what way is your organisation growing? • How is the organisation changing to get ready for growth? • What sort of governance is needed for growth? [Discuss]
- 5. Charity Commission Charities & Risk Management
- 6. 2. Avoid 3. Mitigate Risk strategies 1. Transfer 4. Accept (Insurance) What’s the underlying assumption?
- 7. Risk = Bad
- 8. Risk Orientation Example Gains Losses High Probability (Certainty Effect) RISK AVERSE. 95% chance to win. Fear of disappointment. RISK SEEKING. 95% chance to lose. Hope to avoid loss. Low Probability (Possibility Effect) RISK SEEKING 5% chance to win. Hope of large gain RISK AVERSE. 5% chance to lose. Fear of large loss. Is risk a rational concept?
- 9. Flooded by Risk Aversion?
- 10. Risk paradox
- 11. Three modes of governance Fiduciary Stewardship, compliance, mission, accountability, sustainability Strategic Sets strategy, priorities, resources, general course Generative (governance for growth) Trustees work with Exec to frame problems, make sense of ambiguity, shape strategic planning and decision making Ref: Lesirge: Chait, Ryan,Taylor, Governance as Leadership: Reframing the Work of Nonprofit Boards (John Wiley & Sons, 2004).
- 12. Risk – Group work What risky issues is your Board facing? How would you gauge your Board’s appetite for risk?
- 13. The role of the Board
- 14. Sir Terrance Conran interview Control & Innovation What could be the benefits of Risk?
- 15. Sir Clive Woodward interview Performance & Fear
- 16. The role of the Board Board Compliance Performance Limit risk Control Protect Manage risk Innovate Change &
- 17. A Question of Legacy What will you leave behind? Hand Back “Better” Hand Back “Safely”
- 18. Behaviours Collective decision making Reducing risk Compliance Performance Sub committees Risk register Role descriptions Financial authority levels Review & learn Innovate Managing risks Performance data Analysis Trustee reviews Systems & Structures ‘Good’ governance requires action in all four segments
- 19. Introducing a third dimension …. time
- 20. Context: The “S” curve Impact; £ Organisations follow a similar curve as they evolve/grow Time
- 21. Context: The “S” curve Maturity - Plateau Growth – High Performance Time Initiation – Period of high risk Impact; £
- 22. Case study
- 23. Case study You’ve been asked to advise the board: • What governance issues are there? • What might happen if these governance issues are not resolved? • What should the board do to break through? • If the board succeeds what could the organisation look like?
- 24. Actions to consider • Fresh mind sets – challenging assumptions • Fresh insight – review of the board • Fresh ways of working – process changes • Fresh faces – recruitment of trustees Ref: “Board & Risk” Nigel Kippax; October 2014
- 25. Summary
- 26. 2. Avoid 3. 5. Embrace Mitigate The 5th risk strategy 1. Transfer 4. Accept (Insurance?)
- 27. The legacy challenge Further growth/impact Continue on the plateau ? Impact; £ Time
- 28. Board & Risk Article http://www.ncvo.org.uk/consultancy
- 29. Thank you Nigel Kippax – nigel.kippax@ncvo.org.uk Alistair Lomax – alistair.lomax@ncvo.org.uk
- 30. NCVO/BWB Trustee Conference 2014
Editor's Notes
- What did Stephen mean by this title? AL reflects: Stephen was the sort of person who was uniquely positioned to exert a quietly positive influence on the lives of us all. He reformed systems. He advised thousands. He presided over a great firm of people who also did the same. When he died on August 20th, apart fro a sense of shock and loss, I had the impression that all those people who had been helped individually were suddenly connected and united. Perhaps this is just the way that people deal with grief. The collective power of grief. The unifying effect of love, affection, loss and sorrow. But it felt like the illuminations of a great city, switching on one-by-one (as people heard the terrible news), were beginning to shine and dazzle. Governance for Growth = typically Stephen. Positive. Challenging. Affirmative. Empowering. Systemic. Father of CICs: "achieving a marriage of private and business wealth with charitable purposes. "Nearly 10,000 have been registered in Britain – including credit unions, trading arms of charities, employee-owned businesses, co-operatives, development trusts and housing associations – playing a crucial role in facilitating the growth of social enterprise, a sector now contributing an estimated £18.5bn to the British economy. Chair of Trustees Unlimited: practical solution to stagnation of membership; to the need to get ready for ever more challenging times ahead. Enormous legacy. From his obit in the Independent: He was a catalyst for the modernising of the charity sector With his great integrity, wit and charm, Stephen Lloyd was an ideas man who sought solutions to problems when none were thought possible. A specialist in charity law, he plied his trade for nearly 40 years in a wide range of areas, fighting for transparency, truth and justice.
- Handover to Nigel
- Nigel
- Different orientations for risk: what do we do with risk? Avoid, mitigate, manage, reduce, accept, embrace or increase: Notion: that with innovation comes the need to embrace and even increase risk taking. People make decisions based on the potential value of losses and gains rather than the final outcome. Prospect theory is a behavioral economic theory that describes the way people choose between probabilistic alternatives that involve risk. People tend to overreact to small probability events, but under-react to medium and large probabilities too (far off like global warming to frame or understand). Our approach to RISK may depend on the amounts involved and on whether the gamble relates to becoming better off or worse off. People consider not only the value they receive, but also the value received by others – this is where NON PROFIT (inherently altruistic) differs from PROFIT SEEKING (inherently self-seeking). In economics and decision theory, loss aversion refers to people's tendency to strongly prefer avoiding losses to acquiring gains. Some studies suggest that losses are twice as powerful, psychologically, as gains. The result = risk aversion Is your board risk averse?
- Look at Risk Aversion in government decisions in which, Environment Agency, a risk reward ratio of 8:1 must be met for an investment to be made. Hence NO DREDGING. It’s the job of this sector (AND YOURS AS TRUSTEES) to hold a far off vision, to protect the vulnerable, to seek greater outcomes, to see and go further than others. To lead. To inspire. Passion. Vision. Emotion. Outrage. These things have no place in the rational world of business, but they do in OUR WORLD. I’d suggest that we simply MAY NOT UNDERTSTAND risk. That we apply, without any variation, the wrong templates and rules for risk assessment. That risk taking is operational. That our thinking gets smaller all the time. Grand initiatives get smaller. ENVIRONMENT AGENCY: OR the flooding is the effect of a far greater cause. Precisely the sort of risk which can be handled by charities (research, policy, action, campaigning) focusing on climate change. LONG RUN Risks.
- Give an example. Think of some examples. Take examples from the floor.
- Requires 3 modes of governance: 1.Fiduciary: board concerned primarily with the stewardship - mission, accountable for performance, and compliant with relevant laws and regulations 2.Strategic: board develops strategy with management, sets the organisation‟s course, priorities, and resource accordingly 3.Generative: board with executives, frames problems, make sense of ambiguous situations in way that shapes strategic planning and decisions Ref: Chait, Ryan,Taylor, Governance as Leadership: Reframing the Work of Nonprofit Boards (John Wiley & Sons, 2004). Which one described your organisation? Which one works best for growth? What are the challenges about growth? Who are you responsible too as Trustees? The organisation, the beneficiary, yourselves, your donors? All of the above? Need to be generative and strategic and strategic. Must find a way of doing all these things really well.
- Ian
- 30 minutes and then feedback to the group = 45 mins or half the session AL to lead.
- Selling: NCVO Board review/ Trustees Unlimited
- Didn’t get this one?
- Holding slide as people leave