Food for Thought

• Published date: 01 November 2016
• DOI: http://doi.org/10.1002/bl.30061
• Date: 01 November 2016

4 BOARD LEADERSHIP

“There is nothing quite so

useless as doing with great

efciency something that

should not be done at all.”

Peter Drucker in “What Executives

Should Remember,” Harvard

Business Review, Vol. 84, No. 2,

February 2006

Distinguishing Governance

by Caroline Oliver, Chair of the UK Policy Governance Association (UKPGA)

Synopsis of a contribution to the Shaking the Foundations of Governance—

Ownership Discussion Forum, hosted by UKPGA and The CRSA Forum,

supported by Mazars LLP, held on November 1, 2016, London, UK.

Here, Caroline Oliver makes the case for distinguishing governance as a unique

discipline and suggests that governance is best understood as “ownership

one step down, not management one step up.” She starts from the meaning

of accountability and the location of the board in the accountability chain. She

reviews the board’s position from an ethical and practical perspective. Finally,

she questions whether the future of governance lies in taking a more systematic

approach than we typically do today.

We can’t hold anyone to account

for anything unless we can

secure their agreement as to what

they are to be accountable for. I sug-

gest that accountability in governance

is largely missing because, so far, we

have failed to agree what it is for and

who is to do it. My main evidence for

this assertion is twofold. First, many

people talk about governance as if

it is everyone’s job, which, in terms

of accountability, is another way of

saying that it is no one’s job. Sec-

ond, when it comes to deciding who

to hold to account when things go

wrong, we seem to have no road map

to help us make consistent and clear

determinations.

I am proposing that responsibility

and accountability can be thought of

as different things. There may be lots

of people who have different respon-

sibilities in an organization and, in the

end, you could say that all of those

responsibilities are to do with gover-

nance because governance is about

the “proper” (and we need to come

back to the meaning of that word!)

running of everything. But does this

perspective help us with establishing

accountability for governance? Not

at all.

It is, of course, fair enough to say

that everyone in an organization is

involved in that organization’s gover-

nance. However, it is not fair to say

that everyone in an organization is

accountable for governance. Workers

on the front line can be made respon-

sible and accountable for doing their

part within the governance system, but

they cannot be made accountable for

the overall development and operation

of the governance system itself.

In other words, you cannot be held

accountable for something you have

no authority over. And the fact is that

front-line workers have no author-

ity over the overall development and

operation of their organization’s gov-

ernance system.

It is true that whatever authority

you have, you can delegate to oth-

ers. Indeed, no organization could run

without such delegation. However, if

you delegate your authority, whatever

happens as a result is still happening

with your authority, and so you remain

accountable for it. So, of course, boards

and executives have to delegate to get

things done, but they remain account-

able, and it is critical that we are clear

what their respective accountabilities

are if organizations are to be account-

able. The current mish-mash in which

we don’t know who to hold account-

able for what is not serving us.

Today, I want to suggest that we

need to build the Foundations of

Governance on far firmer ground

and that finding that ground requires

developing a clear defining of the

role of the board as the accountable

body for the overall development

and operation of their organization’s

governance system. I suggest that the

board’s accountability for governance

is unique—and that uniqueness lies in

the fact that governance is ownership

one step down, not management one

step up.

What does this mean?

It means that the subject of today’s

discussion forum is crucial. For it

means that the board’s unique role

starts from its definition of, and con-

nection to, its owners. No single

employee, shareholder, executive,

customer, stakeholder, and no groups

thereof are ultimately accountable

to organizational owners for the

overall development and operation

of their organization’s governance

system—only the board is. So who

those owners are, what their purpose

is, and what their best interests are

in the accomplishment of their pur-

FOOD FOR THOUGHT

If you delegate your

authority, whatever

happens as a result is

still happening with your

authority, and so you

remain accountable for it.