Transcript The board realizes that it alone bears ultimate authority

DR. Y.P.BHATIA
MANAGING DIRECTOR
ASTRON HOSPITAL AND HEALTH CARE CONSULTANTS
NEW DELHI
Governance
• Governance is about processes, not about ends.
It is about the process by which power and authority is
exercised in a society by which government, the
private sector and citizens’ groups articulate their
interests, mediate their differences, and exercise their
legal rights and obligations.
(Fukuda-Parr and Ponzio, 2002)
• Governance is a process for reconciling the ambitions
of the individual or group with the need to preserve
and develop a ‘common weal’ which binds through
shared interests. (Davies, 1999)
Corporate Governance
• Corporate governance is a system by which
business corporations are directed and
controlled. (OECD, 2004)
• A view emerged that traditional governance
was not capable of coping with a rapidly
changing work environment which produced
new challenges and threats to accountability
in the early 1990s.
Corporate Governance (cont’d)
• Corporate governance promotes corporate
fairness, transparency and accountability.
• Corporate governance does not guarantee success
and sustainability of organisations, however, it does
provide a better approach for organisations to
demonstrate transparent and accountable
governance. (OECD, 2004)
• Corporate governance in the private sector is
different from that in the public sector.
Assumptions
• Most Boards truly want to make a
difference and add value
• The vast majority of board members are
talented and committed individuals who
devote incredible time and energy to
governing
• Yet performance of typical healthcare
organization board is far from optimal
Why so
• Governance is unfocussed, idiosyncratic,
not grounded on a coherent, precise
explicit TECHNOLOGY and associated set
of principles that promote best practices
and continuous improvement
Technologies in Healthcare
Organizations
• Management Technology : Well advanced,
a lot done Management Development
Practices all over the globe particularly
after World War II
• Clinical Technology : Refined and
elaborated by huge investments in Basic
and Applied Research
• Governance Technology : ????
Facts on Governance
• Governance really matters
– Yes it does : For Better or Worse
• Governance is becoming more difficult
– Due to nature and pace of change, increasing
size and complexity and greater demand for
accountability
• Governance can dramatically improve
organizational performance
Essentials for Improving
Governance Quality
• Board Members must be dissatisfied with
status quo
• Board must have a clear image of what its
governance can and should be like at its
very best
• Significant time and energy should be
devoted to board development initiatives
• Continual follow-through and follow-up
must keep the board on track
Governing vs. Managing
– Board’s job is Governing, NOT
Managing
– More the Board manages, the less it
will Govern
– Management Function should be
responsibility of Executives
PRINCIPLE 1
The board realizes that it alone bears
ultimate authority and accountability for the
organization. It appreciates the importance of
governance and undertakes its work with a
sense of seriousness and purpose.
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Board has no capacity for doing the real work of the
organization i.e. Patient Care
Board cannot and should not attempt to manage the
hospital
Yet Board is ultimately responsible for both these
activities
THE BUCK STOPS AT THE BOARD
PRINCIPLE 2
• The board understands the factors
that most affect governance quality
and employs a coherent set of
principles to govern.
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Optimal Board Performance and contributions
are based on principles that specify best
practices regarding governance obligations,
functions, structure, composition and
infrastructure.
IDIOSYNCRATIC GOVERNANCE MAY BE
OCCASIONALLY FINE BUT CAN BE DISASTROUS
PRINCIPLE 3
The over arching obligation of a board is ensuring
that the organization’s resources and capacities are
deployed in ways that benefit stakeholders. The
board is their agent; representing, protecting, and
advancing their interests and acting on their behalf.
– The role of the Board has to be clearly understood. The typical
response ‘we are here to look out for the organization, to ensure that it
survives and thrives’ is off the mark and not real intent, which is to
protect the interest of stake holders by representing, advancing,
deciding and acting on their behalf
PRINCIPLE 4
• The board identifies the organization’s key
stakeholders.
– Every conceivable stakeholder can not be specified; just the most
important ones
– The initial process need not be perfect; Expand and refine as required
– Keep the list short; may be half a dozen
– Be specific and formulate a brief rationale why each has been designated
a stake holder
– Identify stakeholder groups by the differing interests they have
– Recognize that it is a hard intellectual work, fraught with tough choices,
traps and blind alleys
– The stake holders though fairly stable can and do change, so review your
list periodically
PRINCIPLE 5
• The board understands
interests and expectations.
stakeholder
– Specificity is the key to understanding stakeholders interests and
expectations, generalities are of little value
– Extent and nature of dependence of stakeholders on the organization
– Dependence of the organization on stakeholder for its success and
existence
– What does stakeholder expect the organization to accomplish on its
behalf
– How does each stakeholder define organizational success
– How well does the organization presently meet the expectations and fulfill
the needs of each stakeholder- What more needs to be done
PREPARE A DOSSIER ON EACH KEY STAKEHOLDER, DESCRIBING THEIR
ACTIVITIES, INTERESTS AND EXPECTATIONS
PRINCIPLE 6
• The board decides and acts on behalf of
stakeholders, it discharges its legal
fiduciary duty of loyalty.
– Board members breach their duty of loyalty if :
• A material conflict of interest influences their decisions
• They seize an opportunity for themselves or other parties that legitimately
belongs to the organization
• They vote to distribute the organization’s assets in a way that subverts its
purpose, impairs advancing stakeholders interests or results in private
benefit
DEFINE POLICY ON CONFLICT OF INTEREST TO BE
ACKNOWLEDGED AND SIGNED BY ALL BOARD MEMBERS,
REMIND BEFORE VOTING ON VITAL ISSUES
PRINCIPLE 7
• The board discharges its legal fiduciary
duty of care.
– The law requires boards to take due care in discharging their
responsibilities as per the provisions of the local and global legal
structure applicable from time to time.
– The issues become more important on big issues
– Therefore board should
• Have Legal counsel review the legal fiduciary duty of care
• Make sure that analysis undertaken by staff and consultants is thorough and
accurate
• Make available background material timely for all to review and comment
• Allow enough time at board meeting for discussion on sensitive and
important matters
PRINCIPLE 8
The board understands the functions it
must perform to meet its obligations.
Responsibilities
•Formulating the organization’s ENDS
•Ensuring high level of EXECUTIVE
PERFORMANCE
•Ensuring HIGH QUALITY CARE
•Ensuring organization’s FINANCIAL
HEALTH
•Ensuring the Boards own
EFFECTIVENESS, EFFICIENCY AND
CREATIVITY
Roles
•Policy Formation
•Decision Making
•Oversight
PRINCIPLE 9
• The board understands the importance of
and fulfills its responsibility for determining
the organization’s ends.
– Organizations are means of accomplishing ends. Board is responsible to
decide on which ends to pursue and which not
– For this the board must
• Formulate the Organizations VISION
• Specify it’s key GOALS
• Ensure that MANAGEMENT STRATEGIES will lead to accomplishing key goals and
fulfilling the vision
PRINCIPLE 10
• The board formulates the organization’s
vision.
– Vision is a description of what the organization should become
at its very best
– Board should define an empowering and useful vision, which
should be :
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Specific, Precise and Detailed
Self actualizing
Future Oriented
Encompassing Core Purposes and Core Values
PRINCIPLE 11
• The board specifies key organizational
goals.
– Goals are Specific Accomplishables, the most important
things the organization should do to fulfill its vision
– Board should set up Key Organizational Goals which
should be
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Few in number
Realistically Achievable
Quantifiable
Time Specific
Consistent
Brief, Crisply worded and unequivocal
Reviewed and if necessary, modified periodically
PRINCIPLE 12
• The board does not become involved in
developing organizational strategies; this
task is delegated to management.
– Strategies are plans for allocating the organization’s
resources to accomplish goals and basically a
Management Responsibility
• Management should develop Core Organization Strategies
• Core Strategies and accompanying rationale should be reviewed
by the Board for ensuring alignment with key goals and vision
BOARD FOCUSSING ON VISION AND GOALS AND MANAGEMENT
DEVELOPING STRATEGY TOWARDS ACHIEVING THEM, EFFECTIVELY
SUBDIVIDES AND COORDINATES GOVERNANCE AND MANAGEMENT
RESPONSIBILITIES, ELIMINATES DUPLICATION OF EFFORT AND
MINIMIZES CONFLICT
PRINCIPLE 13
• The board understands the importance of
and fulfills its responsibility for ensuring
high levels of executive performance.
– Board’s job is Governing, NOT Managing
– More the Board manages, the less it will Govern; eventual losers
being Organization and stakeholders
– Yet the Board is responsible and accountable for ensuring that
the Organization is well managed
– To accomplish that the Board has to explicitly decide on policies
for CEO
PRINCIPLE 14
The CEO is the board’s only direct report.
PRINCIPLE 15
When a vacancy occurs, the board selects
the CEO.
PRINCIPLE 16
The board has a CEO succession plan.
PRINCIPLE 17
The board specifies its key expectations of
the CEO.
PRINCIPLE 18
Employing explicit criteria, the board assesses
the CEO’s performance and contributions
annually.
PRINCIPLE 19
The board adjusts the CEO’s compensation
annually.
PRINCIPLE 20
Should the need arise, the board is willing
and able to terminate the CEO’s employment
with the organization.
PRINCIPLE 21
• The board understands that it is ultimately
responsible for ensuring the quality of patient
care provided in and by the organization.
– Though Quality is usually a management function, legislative mandates,
court decisions and accreditation standards hold HCO Boards responsible
for it
– To fulfill this responsibility the Board must
• Have a precise and shared working definition of Quality
• Credential members of the Medical Staff
• Ensure that Quality Monitoring and Management Systems are in place and
functioning effectively
• Employ scientific quantitative indicators and standards to assess the quality of
care and ensure corrective actions in case of non compliances
• Ensure that a plan is in place for Continuous Quality Improvement
YOUR BOARD MUST BE ABLE TO ANSWER: WHAT IS QUALITY? DOES
YOUR ORGANIZATIPON PROVIDE IT? HOW DO YOU KNOW ?
PRINCIPLE 22
• The board has developed a precise and
explicit working definition of quality.
– Quality is an illusive concept, difficult to pin down, meaning different
things to different people. There fore the Board must define a measurable
quality management system for Continuous Improvement keeping in view
the following:
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Identify key stake holders and customers
Understanding what they want and expect from the organization
Prioritizing and balancing these expectations
Shaping them in to your board’s working definition of Quality
Periodically redefining Quality as needs and expectations change
PRINCIPLE 23
• Based on recommendations of the medical staff
and after a careful, thorough, and independent
review, the board credentials physicians.
– The Board decides the eligibility of clinicians to practice in their
organization and also scope of competent practice
– For this very important function
• The Board must make Final Appointment, Reappointment, and Privilege
Delineation decisions. All steps prior to the board’s action are supportive
and advisory, designed to gather and analyze data and make
recommendations
• Board credentialing decisions must be made on case-by- case basis after a
thorough careful and independent review. The detailed review can be
conducted by specially appointed credentialing committee, but the final
action must be taken by the board as a whole
Board is accountable for ensuring the effectiveness and fairness of the
entire credentialing process
PRINCIPLE 24
• The board makes sure that necessary quality
and utilization management systems are in
place and functioning effectively.
– The Board should be able to ensure that QMS answers following key questions
:
• Do the Clinical practices, processes and outcomes meet or exceed current
professional standards
• What initiatives should be undertaken to correct deficiencies and improve Quality
• What were the results of these initiatives
• QMS should have yearly review to include
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Quality and Utilization Goals and Objectives
Alignment of Objectives with organization’s vision
Adequacy of resources for achieving the stated Goals and Objectives
Major activities (Reviews, studies, audits) planned
Are Performance Measurement Indicators adequate, what changes are needed
Integration of QMS with Utilization Systems
PRINCIPLE 25
• Employing specific and quantitative
indicators & standards, the board assesses
the quality of care and, if problems are
detected, demands corrective action.
– The final stage of Quality Improvement involves following steps :
• Develop a panel of Quality Indicators, that are representative,
comprehensive, quantifiable, valid and aligned with the board’s
definition of Quality
• For each indicator, specify a standard; a minimum level that the
indicator must achieve
• Trends in variation between indicators and standards are compared and
analyzed
• If non compliances are detected, the board requires management /
medical staff/ both to analyze and correct them
PRINCIPLE 26
• The board ensures that the organization
has a plan for improving quality.
– Principles of CQI or TQM as already
discussed
PRINCIPLE 27
• The board understands the importance of
and fulfills its responsibility for ensuring the
organization’s financial health.
– Money is both the organization’s source of buoyancy and
propellant. Board has an accountability to ensure that there is
enough of it and allocated in effective and legitimate ways
– For this the Board must:
• Specify key financial objectives
• Ensure that management developed budgets will accomplish
management objectives
• Assess the organization’s financial performance and outcomes
• Ensure that the necessary financial controls are in place and functioning
effectively
PRINCIPLE 28
• The board specifies key financial objectives for
the organization.
– Responsibility for “MONEY” is dealt by Board assisted by Finance
Committee and inputs and counsel from CEO and CFO
– Board must develop comprehensive, precise, explicit, quantifiable
objectives covering all areas of financial performance and outcomes;
especially with linkages to vision and key goals
– Objectives should be developed in four areas :
• Bottom Line :
• Cash
:
• Capital
:
• Performance :
Monthly, Quarterly, Yearly with Operating and Non operating
Margins
Cash Flow available for meeting organizational needs
As per Capital Budget and plan
To measure organizations financial health by an array of ratios
PRINCIPLE 29
• The board ensures that managementdevised Budgets are aligned with financial
objectives and the organization’s key
goals and vision.
– Like formulation of strategy, developing budget is a management
function and the Board should not directly get involved with it
– Management should prepare an annual operating, cash and capital
budget and Board should review and approve it
– However Board should exercise appropriate influence :
• Management should prepare a “Governance Friendly” focused Budget with
direction and inputs from Board’s Finance Committee. It should reflect Board
formulated financial objectives and organization’s key goals and visions
• Management should support the budget with written rationale for proposed
allocation of resources
• The governance focused budget should be closely analyzed by the Finance
Committee before being forwarded to Board for review and approval
PRINCIPLE 30
•
The board develops a panel of financial
indicators, monitors the organization’s
Financial performance, and if problems
are detected, demands corrective action.
•
Board specified financial objectives and budgets provide the basis
for measuring and monitoring the organization’s financial
performance and outcomes. For this three broad types of specific
financial indicators are developed:
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Those specifically keyed to financial objectives
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Variances
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Ratios and Indexes : Liquidity, Activity, Capital Structure,
Profitability ( Before and After Tax, Interest, Depreciation
etc)
PRINCIPLE 31
• The board ensures that necessary financial
controls are in place.
– Very important and crucial Board function as board is accountable for
supplying timely and accurate information regarding transactions, their
authorization
– The Board must :
• Appoint or reappoint the External Auditors and approve the audit’s scope and
approach
• Review the auditor’s opinion and alter systems, procedures and practices if so
recommended
• Require management to devise and execute plans to correct any deficiencies
THE AUDITORS ARE RETAINED BY THE BOARD AND ARE
ACCOUNTABLE TO BOARD AND NOT THE MANAGEMENT
PRINCIPLE 32
• The board is responsible and accountable for itself – its
own effectiveness, efficiency, and creativity.
PRINCIPLE 33
• The defining and fundamental function of a board is
governing that organization through fulfilling core
responsibilities (for ends, executive performance, quality,
Finances, and its own effectiveness and efficiency).
Board members may be called on to perform other tasks,
but if they accept to do so, they are performing
discretionary governance activities.
PRINCIPLE 34
• The board executes three roles : policy
formulation, decision making, and oversight.
– The Board members are fulfilling their responsibilities for Ends,
Executive Performance, Quality, Finances, Effectiveness and Efficiency.
– For achieving all this the Board must perform three roles :
• Policy Formulation : Specifying expectations, directives and constraints
• Decision Making : Choosing among alternatives
• Oversight : Monitoring and assessing organizational processes and
outcomes
GOVERNANCE IS A TWO SIDED COIN
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SUBSTANSIVE ASPECT (WHAT) ; FULFILLING RESPONSIBILITY
ACTIVITY ASPECT (HOW) ; PERFORMING ROLES
PRINCIPLE 35
•
The board formulates policies regarding
its responsibilities.
 The Board should formulate most effective policies and prescribe
results, the methodology should be left to management
 The Board’s policies should essentially have the following
criteria :
• They should be formulated with great care as they become
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board’s most important pronouncements
They should be authoritative, expressed powerfully
They must be codified
They should be brief
They should be parsimonious
They must be comprehensive
They should be reviewed periodically
PRINCIPLE 36
• The board makes decisions regarding matters
that require its attention and input.
 The most important thing a board does is TO MAKE DECISIONS
 Board should use options of retaining authority or delegating decisions very
carefully with documented policy
 Following steps can enhance Board’s Decision Making Effectiveness :
• Make as few decisions as possible – Make policies instead
• Do not fall in to the trap of ratifying management decisions – by doing that you shift
the accountability to the Board
• Carefully triage the areas that need Board’s involvement
• Decision proposals brought forward by the management should be reviewed by
relevant committees first
• Codify all decisions
• Conduct an audit on Board’s decisions every year
PRINCIPLE 37
• The board oversees (monitors and assesses) key
organizational processes and outcomes.
 The Board monitors and assesses key organizational processes and
outcomes, answering four questions :
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Is the organization performing so as to protect and advance stakeholders interests
Are the Board’s expectations as conveyed in its policies, being met
Are the Board’s decisions having desired impact
Are the Board’s directives and constraints being respected as management and medical
staff perform delegated tasks
 For this the Board should built in five steps in OVERSIGHT process
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Selecting right indicators
Specifying Standards
Monitoring Results
Assessing what was achieved vis -a -vis what was expected
Taking corrective action
PRINCIPLE 38
•
When it meets, the board spends the
vast majority of its time executing roles;
formulating policy, making decisions,
and overseeing.
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Apportioning the time spent during board meetings is an
indicator of Board’s effectiveness. Most Boards spend
more than 60 % time listening, leaving little time for
Governing
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The suggested optimal mix would be as follows ;
Role Related Activity : 80% (Policy 50%, Oversight 30%, Decisions 20% )
Listening
: 15%
Non Role Related
: 5%
PRINCIPLE 39
• The board acts only collectively, never
individually; and once an action is agreed
to, members support it.
 Governance is a TEAM SPORT
 Members should argue, deliberate, debate and disagree when an
issue is being discussed, but after the vote is taken, members
must lock arms and support the decision even if they were
against it.
WHEN THE BORAD ACTS IT ACTS TOGETHER, INDIVIDUAL
MEMBERS HAVE NO POWER, BOARD AUTHORITY DERIVES
FROM THE GROUP AS A WHOLE
PRINCIPLE 40
• The board has a coherent, precise,
shared, and empowering notion of the type
of work it must do, its responsibilities, and
its roles.
 The Boards description of it’s functions should be
codified in the form of a charter, giving explicit details
of all its roles and responsibilities in a manner so that
all board members and functionaries can well
understand it including all its implications
PRINCIPLE 41
•
The board recognizes the importance
of governance structure. This structure
is consciously designed on the basis of
explicit principles, criteria, and choices.
 Structure of the Board matters. A poorly designed structure will
impair the board and an appropriate one will facilitate effective
and efficient performance of governance work
 Design Criteria for structuring the board could be ;
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Intentionally
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Functionality
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Adaptability
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Individuality
PRINCIPLE 42
• Governance structure is streamlined.
– Parsimony should drive the design process where “Less is More
and simplicity is better”
– A large, overweight and cumbersome structure diffuses and
squanders boards efforts and consumes inordinately large
amount of valuable executive time
– Every board and committee meeting should be staffed, prepared
for, attended, documented and followed up
– The number of governance layers, committees should be no
larger and no more complex than is necessary for performance of
organization’s governance work
PRINCIPLE 43
• In a multi corporate organizational form, the
parent or system board makes an explicit choice
regarding whether to employ a centralized or
decentralized
governance
structure
after
carefully weighing the benefits and costs of each
alternative.
 The Board should make a comprehensive study of
the pros and cons of both the models and adopt the
one most suitable for the governance in its individual
scenario. In healthcare, however, a centralized
structure is recommended unless the HCO is
functioning from multiple locations
PRINCIPLE 44
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In organizations employing a decentralized
governance structure, the parent board has
systems in place to monitor subsidiary
organization and board performance.
 In decentralized structure, the parent board still bears ultimate
responsibility, authority and accountability for subsidiaries and
their governance, therefore the board should :
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Develop and periodically monitor a set of strategic, operational and
financial indicators and standards that reflect subsidiary
organization’s performance and outcomes
Indicators may be customized as per the activity, purpose,
characteristics, challenges and constraints of each subsidiary
Annually the parent board should get from each subsidiary board a
report detailing its key challenges, SWOT and specific initiatives to
improve governance performance and contributions
PRINCIPLE 45
• Unless there are compelling reasons to do
otherwise, a board should have between
nine and nineteen members.
– Optimize the size of the Board – too large or too small boards
have inherent difficulties. Any variations should have carefully
thought out explicit and persuasive rationale for doing so.
– Odd number helps to avoid the possibility of TIE VOTES on
controversial issues
PRINCIPLE 46
• In decentralized structures, the authority,
responsibilities, and roles of parent and
subsidiary boards are explicitly and
precisely specified.
 HCO’s with decentralized structure need to map the partitioning
of responsibilities and roles explicitly and precisely to avoid
rework, time and cost wastage and conflict over authority and
function
 Specific Roles should be defined if these would be :
– Retained by the parent Board
– Shared by the parent and subsidiary boards
– Delegated with or without constraints
PRINCIPLE 47
•
If advisory bodies are employed, their
functions
are
clearly
specified
and
differentiated from those of governing
boards.
 The Advisory Boards, if appointed, are misnomers as they do not
bear legal fiduciary responsibility and hence do not govern
 To avoid any conflict situations, where advisory boards may
not project as Real Boards, the board should
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Define purpose and functioning of the committee very carefully
The inputs from advisory boards as a Sounding Board and
reserving the rights to accept or reject the advice
Make them serve as a link to stakeholders and community
Serving as an organizational advocate in the community
PRINCIPLE 48
• The board specifies the functions of its
committees.
– The committees play an important role in the
governance function
– Committees tap best of expertise and can have
invited individual experts who are not the board
members
– Committees have no authority and should never
formulate policies or make decisions
– They support and facilitate the board by undertaking
analysis and framing recommendations
PRINCIPLE 49
• The number and types of committees are
specifically designed to aid the board in fulfilling
its responsibilities.
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Board should resolve two basic questions regarding
committees
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Which Committees should it have
What should these committees do
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There is a need to review committee structuring from year to year, therefore
ZERO BASED DESIGN is helpful, where at the end of the year all committees
are automatically dissolved and new committees reconstituted as per the
current and future needs
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Committee Design should be based upon the principles of Authority,
Minimalism and Functionality
PRINCIPLE 50
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The objectives, functions, and tasks of
committees are specified by the board.
 The Board should formulate the charter for each committee so
as to frame, direct and regulate the work of each committee
 Committee functioning should be specified and fine tuned by
requiring each committee to draw an annual work plan, that is
approved by the Board
 Work Plan should explicitly describe the key priorities, tasks,
deliverables and dead lines
 This should become the basis for determining the performance
measurement criteria for the committee
PRINCIPLE 51
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Governance structure is thoroughly
assessed, and modified if necessary, on a
regular basis.
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Regular evaluation is essential for ensuring that governance
structure is appropriate, effective and efficient
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The evaluation should address the following :
• What aspects of governance structure are working well and which should be
working better
• What aspects of structure are in place and have not been eliminated or
modified just because “We have always done it that ways”
• What structural alterations (Layers of governance, board size, committees
etc) are needed to govern more efficiently and effectively
PRINCIPLE 52
• The board consciously and proactively designs
and manages its composition.
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No other single factor so directly affects the board as its composition
The quality of the board and its ability to govern depends upon the
characteristics, knowledge, skills, experience, perspectives and values
of its members
Therefore to design and mange its composition, the board must :
• Identify, screen and select new members, well aligned to the organization and
the board needs
• Orient new members
• Specify member expectations
• Develop Board members
• Periodically assess the performance and contributions of individual members
• Ensure an appropriate balance between the inside or ex-officio members and
outside members
PRINCIPLE 53
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Members are recruited and selected on the
basis of explicit criteria as part of a board
profiling process.
 Many Boards deal with composition issues idiosyncratically and
opportunistically
 Great Board casting begins with carefully crafted well defined
criteria based system that is used to identify, screen and select
new members. The criteria need to be directed by the individual
needs of the organization, some of these could be :
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Basic Qualifications
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Demographic Characteristics
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General Competencies
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Special Competencies
PRINCIPLE 54
• New board members participate in a carefully
crafted and executed orientation process.
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In a criteria based selection process, new members arrive the board
room as Right Stuff, however, the board needs to groom them
properly
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An effective orientation process should be in place :
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Some senior member should be assigned the responsibility of orientation
It should be designed to accomplish specific objectives
It ia a process and not one time exercise
Multiple approaches should be employed
All key subject issues are covered
Monitoring and periodical assessment should be incorporated
NEW BOARD MEMBERS ARE PRECIOUS ASSETS, THEY MUST
START OFF ON THE RIGHT FOOT AND NURTURED TO ACHIEVE
THEIR FULL POTENTIAL
PRINCIPLE 55
• The board specifies its expectations of
members.
– A new board member has to know that what is expected of him
– The Board should create a set of expectations based upon the
following criteria
• Citizenship
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Attendance on Board and Committee meetings
Attendance in annual board retreat
Fulfillment of fiduciary duties
Confidentiality
Avoidance of Conflict of Interest etc
• Performance
– Punctuality
– Participation
– Contribution etc
PRINCIPLE 56
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The board has fixed term lengths and
limits the number of terms members
can serve.
PRINCIPLE 57
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The board periodically assesses the
performance and contributions of every
member; the results are employed to
coach and develop members and make
reappointment decisions.
PRINCIPLE 58
• Board composition is nonrepresentational.
– Though the boards represent the stake holders , they do so by
balancing and aligning the needs, interests and expectations of
all the groups of stake holders
– The Board members can not be and should not be serving as
representatives of a particular interest group or narrow interest
– The boards should have diversity and not tied down by too much
of this and that
PRINCIPLE 59
•
The CEO is a voting ex officio member of
the board.
PRINCIPLE 60
•
In health care provider organizations,
physicians should hold a significant
number of board seats.
PRINCIPLE 61
•
“Insiders” and ex officio members make
up less than 25 percent of the board’s
membership.
PRINCIPLE 62
•
Periodically, the board considers whether
members should be compensated.
 It is a complex question and the board has to think of following
aspects before initiating it :







What are the objectives of this programme ! What benefit it will
accrue to stake holders and the organization
How should compensation be structured
Should members be encouraged from refusing compensation or
donate back their fees to the organization
Should the Board chair receice compensation in addition to
other board members
Should some members receive a compensation differential
How and how often the compensation should be adjusted
Many other issues that may come from stake holders, employees,
medical staff and the community
PRINCIPLE 63
• The board has its own budget.
 The board should create a self discipline with its own budget
and not depend on the management to bear or apportion its
expenses
 It will also help in determining the cost of governance
 The budget is needed for :
 Staffing
 Services
 Operations
 Education and Development
 Compensation to members if any
PRINCIPLE 64
• The board has adequate staff support.
– This ensures efficiency and confidentiality of Board functioning
– Sharing of the staff with management puts board work on a back
burner and can impact the behavior and reaction of the
management and the staff due to possible conflict of interests
PRINCIPLE 65
•
The board formulates annual governance
objectives.
 Development of Annual Objectives is a great tool for planning,
focusing and organizing boards work
 Board should therefore draft its objectives abd cover
•
•
•
•
Crafting of agendas and managing meetings
Developing Committee work plans
Designing education and development activities
Board assessment etc
PRINCIPLE 66
• Meeting agendas are carefully devised
plans for deploying the board’s attention
and time.
 Legally and functionally board exists only when it meets,
therefore Board meetings are the epicenter of governance
 The agenda planning and management should be therefore
done scientifically, ethically, apportioning appropriate time for
each item
 Background information and resource should be made available
to members well in time so that they can study and analyse
before they come for the meeting
PRINCIPLE 67
• Board meetings are managed and conducted
in a way that promotes high levels of
effectiveness, efficiency, and creativity.
 Board should develop a methodology so that agenda items are
handled in sync as follows :
•
•
•
•
•
•
Full understanding of the matter at hand
Clarification on assumptions
Alternative solutions or choices
Assessment and analysis of alternatives
Resolution of the issue
Follow up action if any
PRINCIPLE 68
•
The chair is carefully selected,
understands his or her role, and is able
to perform it effectively.
 The Board Chair should be able to perform four roles
• Ceremonial and Representational Role
• Leadership Role
• Facilitative Role
• Consultative Role
A GREAT CHAIR DOES NOT GUARANTEE HIGH LEVEL OF
BOARD PERFORMANCE, BUT AQ POOR ONE ALWAYS
SERIOUSLY UNDERMINES IT
PRINCIPLE 69
• The CEO does not serve as the board’s
chair.
– The already fizzy lines between governance and management
gets blurred creating confusion and conflict regarding authorities
and responsibilities
– Dual role concentrates too much of power in the hands of one
person, thus causing Total CEO dominance on the board and the
organization both.
PRINCIPLE 70
• The board is serious about continuous
member development and has a plan for
accomplishing it.
 Board members also need to update and nurture their
knowledge and skills to understand the issues in the concurrent
context therefore Continuous Member Development
Programme should be adopted. This may include :
–
–
–
–
Conduct Board Retreats
Include select articles for information of members periodically
Enter subscription of members to relevant magazines and journals
Encourage them to attend governance related conferences and meets
PRINCIPLE 71
• The board holds periodic retreats
PRINCIPLE 72
• The Board engages in a periodic selfassessment and formulates action plans to
improve its performance and contributions.
Getting
to
Great
• The attitude and will of the Board
to Change is Important Factor
• Principles only help to change