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The 3-P Approach to Public Sector Governance – Principles, Process and Performance

Brian Shane and Patricia Lafferty

In a previous article – Issues Interfering with Effective Governance in the Canadian Public Sector (Shane & Lafferty, 2008a), we addressed a number of systemic issues that severely limit the effectiveness of Canadian federal public sector governance. We noted that existing governance practices are characterized by inconsistent, idiosyncratic, personalized approaches to public sector decision making, relying often solely on the human dynamics within senior level committees. In other words there was no set of governance best practices upon which to lay a foundation of effective decision making.

As a result, the generally poor quality of federal public sector departmental governance practices has resulted in many instances of:

  • Duplication of effort and overlap of initiatives across the organization in developing solutions that are needed by all core business lines. As a result scarce department resources are used ineffectively.
  • Lack of transparent and streamlined decision making where governance is visible, understood, accepted and supported throughout the department.
  • Poor quality and/or timeliness of services to internal and external government clients.
  • Lack of an appropriate process for discussing and resolving issues related to specific initiatives both at headquarters and in the regions.
  • Inability to identify business opportunities, their benefits, risks and impacts on the organization.
  • Lack of a structure and process for creating and / or supporting the implementation and updating of the departmental multi-year Business Plan.
  • Cumbersome and untimely processes of defining requirements, obtaining approvals and developing / implementing effective solutions for initiatives and projects.
  • Poorly managed change process associated with the implementation of new initiatives causing major disruptions to departmental operations.
  • Lack of established standards, policies and guidelines for program branches that conform to those of the department.

In this article, we present a 3-P Approach to Canadian Public Sector Governance. It provides the means to evolve into a more effective governance regime. In fact, we believe that the 3-P Governance Regime will eliminate most of the endemic issues outlined above. The best practices that need to be established are:

  • Principles – the norms by which all stakeholders interact in making governance decisions.
  • Governance Structure – the roles and responsibilities of senior management committees and key organizations within departments in making effective decisions.
  • Governance Process – the formal decision making process by which new departmental strategic initiatives are started, analyzed and either approved or rejected, and the ongoing assessment of performance against approved plans.
  • Inclusion Criteria – the formal criteria to determine which strategic initiatives should be applied to the governance process.
  • Exclusion Criteria – the formal criteria to determine which strategic initiatives should be excluded from the governance process.
  • Evaluation Criteria – the formal criteria used to evaluate strategic departmental initiatives to impartially determine how well the proposed initiative supports its strategic direction.

Each of these 3-P Governance Regime elements will be described in terms of:

  • Definition / Components;
  • Performance Criteria; and
  • Importance.

Figure 1 provides a graphical illustration of the 3-P Governance Regime.

Figure 1_3-P

Governance Principles

Governance Principles establish the framework and the doctrine that govern behaviour in the exercise of making decisions. They define the values and the expected behaviours of those who will participate in the decision making process. Governance principles ensure that the governance process is both accountable and transparent and based on stated organizational values. Without formally stated governance principles there will be a tendency towards competitiveness among participants, a lack of a concerted effort to reach consensus and compromise, and a general disinterest in advancing the vision and mission of the department as a whole.

Effective governance should demonstrate the following stated performance criteria. It must be:

  • Applicable – The committee structure and process must be usable, reasonable and rational. This means that the process itself ensures that the ‘right’ decisions are made in a timely fashion.
  • Transparent – Key departmental decisions are made in committee and the process for arriving at the decision is the result of frank, open and earnest discussion. There are well established interdependent criteria used for decision making. No ‘backroom deals’ are apparent.
  • Visible – All departmental staff is aware of the governance process, its purpose and mandate. Staff understands how they can link into the governance process and comprehend the impact of decisions from both a business line and a department wide perspective.
  • Accountable – Decisions and associated rationale are enthusiastically communicated, are understood and then actively supported by the organization. Management and staff are aligned to deliver and progress is measurable. Each member of the governance structure understands the boundaries of its decision making authority and applies stated and explicit criteria to reach a decision.
  • Responsive – Decisions are made with the appropriate sense of urgency and support the vision and goals of the organization. Committee schedules are sacrosanct, being rescheduled only under the most critical of situations.
  • Corporate in Nature – The focus of the committee is not seen as being a resource for individuals, particular programs or special interests. Rather, it is promoted and leveraged as a portfolio and a corporate resource to support many and various programs from a common architecture.
  • Horizontal – Governance transverses the whole of the branch or department. Decisions made are demonstrative of the six (6) principles previously stated. No one area has greater influence than any other by virtue of its internal agenda or because of its external commitments.
  • Balanced – The departmental or branch governance structure must respect the various distinct business priorities of each business line, and balance these so as to obtain the greatest return on investment.

Best Practices

The 3-P Governance approach (at the branch and departmental level) requires establishing a stated and communicated set of governance principles that outline the criteria by which all stakeholders interact cooperatively in making crucial governance decisions. This will ensure that behaviours among participants are guided by strong synergistic ethical values.

Governance Structure / Roles and Responsibilities

To operate smoothly and successfully, most government departments are heavily reliant upon their committees to make effective decisions. Best practices with respect to the performance of the committee include ensuring that:

  • The purpose of the committee is to make decisions and provide recommendations, not to exchange information;
  • Each committee has a clear mandate that is complementary to the mandates of other committees and has clearly defined roles and responsibilities for its members. No committee stands as an island unto itself;
  • Each committee has clear criteria for membership and the actual members are qualified to carry out their responsibilities effectively. Committee members have the following qualifications:
    • They are appropriate to the mandate of the committee on which they serve;
    • They are fully aware of their responsibilities and prepared to carry them out to the best of their abilities;
    • They have the authority to make decisions on behalf of the organization they represent;
    • They have / make the time available to fulfill their responsibilities; and
    • Their participation is sacrosanct to the committee but on those very rare occasions when they cannot be present, they provide alternative representatives with similar authority.
  • All appropriate stakeholders are represented on the committee ;
  • Meeting schedules allow initiatives to proceed through the governance process without impediment or delay. Meetings are scheduled so that departmental initiatives can proceed from one committee to another in a rapid and orderly progression;
  • Roles and responsibilities are formally identified and accepted by all committee members including those related to:
    • Preparation for and raising items at the meetings;
    • Attendance and participation in meetings; and,
    • Reporting back to the organization represented in terms of the content, timing and follow-up required.
  • Meetings procedures include:
    • To the extent possible, efforts are made to restrict the agenda to items requiring a decision. Agenda items that are used to provide information [i.e., presentations and status reports] should be avoided where possible, except for those that are crucial for decision making;
    • A quorum to ensure key members are present to make decisions;
    • Attendance by only those empowered to make decisions; and,
    • Communication of the results to those stakeholders affected, and to the department as a whole.

Best Practices

The 3-P Governance approach to Committee Structure requires that the following best practices be adopted:

  • Each Committee TOR should follow a common template and contain at a minimum: the purpose, linkages, principles, objectives [stated in measurable terms], responsibilities of the Chair, a list of membership, and a description of roles, responsibilities, accountabilities and authorities. All TORs should be approved by the committee they represent and the committee to which they report.
  • The governance structure should be documented in terms of how the individual committees work together and be communicated to all key stakeholders in the department.
  • Each committee should be assessed formally on a regular basis [at a minimum, annually] in terms of its role, responsibilities, authorities, and accountabilities of committee members.
  • The Chair should be appraised annually.
  • Every committee should produce a Record of Decision (RD) and its distribution list be made known. All RDs should follow a common template and be published within 48 hours of the committee meeting. All action items should be recorded with responsibility assigned and an end date identified.
  • Meeting schedules should be published and reflect a frequency that enable nimble decision making.

Governance Process

Department wide management decisions should be made within the context of the department’s multi-year [generally, three year] Business Plan. This context ensures that all initiatives support the departmental mandate, vision, mission, organization, values, strategic outcomes, and departmental priorities.

The governance process must be defined, documented, be repeatable and be used to ensure that the appropriate initiatives are managed from a department wide perspective (Shane & Lafferty, 2008b). Successful governance ensures all initiatives are aligned and contribute to the vision and mission of the organization.

Effective governance also exhibits the following performance characteristics:

  • Consistency of the decision making process;
  • Application of accountability;
  • Strategic use of senior management committees;
  • Delegation of authority;
  • A limited set of decision making options;
  • Time efficient decisions;
  • Transparency;
  • Identification of cost savings; and,
  • Identification of opportunities.

In short, an effective department wide Governance Process outlines what information, in what format, and within what time frame must be submitted at each step in the decision making process. The process must be independent of personality and personal interests.

Best Practices

Governance at the departmental level requires the following best practices be adopted.

  • A formal, defined, straight forward and repeatable decision making process ensures all initiatives are managed from a department wide perspective. For example, at a high level, the governance process should include all decision making steps to:
    • Determine whether an item is for branch or departmental consideration (further in this article);
    • Review a business proposal based upon a standard format;
    • Screen the proposal to determine that it merits departmental consideration;
    • Evaluate the advantages and disadvantages of the proposal submitted;
    • Approve or reject the application in relation to other departmental proposals using a set of standard evaluation criteria; and
    • Assess the advancement of the initiative until implementation is complete.
  • Document, publish and communicate the formal governance process so that it becomes widely known and understood throughout the entire organization.
  • Assess the process annually to ensure that it remains applicable and meaningful. Specifically, assessment should look for the efficiency and transparency of decisions, the value delivered and the adoption of best practices or opportunities for improvement.
  • Improve the efficiency of the governance process by:
    • Employing timing guidelines for committee decisions so that there are no delays in the making of a decision from one committee to the next.
    • Employing a standard set of decision support tools with common formats including:
      • Investment proposals that clearly define the background, goals / objectives, options, cost scenarios, risk and option analysis and recommendations,
      • Strategic Policy Initiatives,
      • Briefing Notes for all other agenda items.
    • Ensuring all supporting documentation is distributed to members 3 days prior to the meeting to ensure effective participation.
  • The secretariat of a committee plays an important role in ensuring the efficacy and efficiency of the committee meetings to be conducted. The best practices within each secretariat should be identified and promulgated.
  • All department wide and branch management decisions should be made based upon the best performance information available. Performance information is needed to reward achievement or deal effectively with the ongoing issues interfering with the achievement of committee approved initiatives.

Governance Inclusion and Exclusion Criteria

Inclusion Criteria exist to assist all stakeholders to determine:

  • Which initiatives should be managed from a branch or business line point of view (vertical decision making); and
  • Which initiatives should be managed from a departmental point of view (horizontal decision making).

These criteria provide a clear understanding of which authorities apply within the vertical structure and which must be subject to a formal and auditable departmental governance process.

Exclusion Criteria determine which initiatives are not subject to either the vertical or horizontal governance processes because they require immediate attention or are within senior management’s level of authority and accountability. Within the governance process mutually supportive inclusion and exclusion criteria keep the process manageable and efficient.

Best Practices

The 3-P Governance Regime (at the departmental level) requires that the following Inclusion / Exclusion Criteria best practices be adopted for both vertical and horizontal decision making within the department:

  • Develop a clear set of Inclusion Criteria for the department that clearly delineates which types of initiative are subject to department wide or horizontal governance and which are the sole purview of the business line / branch level or vertical decision making process.
  • Develop a clear set of Exclusion Criteria for initiatives or situations which are not subject to the formal horizontal Governance Process and should be dealt with expediently at the branch management level.

The very act of trying to determine inclusion and exclusion criteria will be of assistance in determining if the governance principles and process, as defined, are effective and efficient.

Governance Evaluation Factors

Departmental management cannot be all things for all business line needs and interests. Sufficient resources do not exist. Therefore, it becomes increasingly important for management to know when and under what circumstances to say ‘no’ to some requests and proposals, and be confident that saying ’yes’ to others, is the appropriate decision. This means that objective and meaningful criteria need to be developed and communicated so that all departmental branches understand how resources will be committed and to enable timely adjustments to be made as a result of changing circumstances. These criteria provide a transparent and impartial means of deciding upon which initiatives, or Funding Proposals merit being approved in relation to others. They are of increasing importance with the implementation of transforming services for Canadians and in an environment of tightening budgets.

Best Practices

A clear set of Evaluation Criteria provides an impartial, transparent and fair means of deciding upon the value or merit of competing initiatives or investment proposals.

The Evaluation Criteria should provide the means to assess each competing initiative or Funding Proposal in terms of its ability to:

  • Contribute to the departmental Vision and Mission;
  • Support delivery of programs / services;
  • Improve client satisfaction;
  • Improve employee satisfaction; and
  • Enable continuous improvement.

This balanced assessment enables departmental management to be assured that the decisions that are being taken are measurable, defensible and for the greater good. Evaluation criteria enable the governance process to be transparent, visible and accountable.

Figure 2, depicts a sample evaluation criteria in each of the 5 major headings.

Figure 2_3-P

Application

Across many organizations in the public sector, there is a need to enhance the effectiveness and expediency of decision-making through a more effective Governance regime at the branch and departmental levels.

The 3-P Governance Regime has provided a model that addresses many of the systemic governance issues which plague public sector decision making. Utilizing a complete and integrated approach to 3-P governance is recommended. However, the use of the best practices described, in whole or in part, can have a very positive impact on the quality of decisions made, either at the branch or departmental levels.

Effective implementation of 3-P requires a strategy which encompasses changes to organizational culture, business processes, leadership practices and knowledge transfer. This will be the subject of the next article.

References
Shane, B, and Lafferty, P. (2008a). Sources of Ineffective Governance in the Canadian Public Sector. Optimum Online, Journal of Public Sector Management, Vol. 38, Issue 1(March)

Shane, B., and Lafferty, P. (2008b). The Development and Implementation of an IM/IT Governance Framework.Optimum Online, Journal of Public Sector Management, Vol. 30, Issue 3, (April).

Contact Bryan Shane or Patricia Lafferty

FMI Journal – Winter 2011

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