Introduction

As identified in the Governance/Management Interface topic, the monitoring and evaluation of organisational activity by a board is a vital role in respect to a board’s stewardship. The monitoring and evaluating should be against pre-established criteria, and should tie in with the entity’s strategic plan and other key documents including any enabling legislation. In Crown-connected organisations the monitoring priorities and focus should reflect any Statement of Intent and/or Memorandum of Understanding.

Criteria

Monitoring by a board is an activity that can cause suspicion amongst management who may see it as an opportunity to unreasonably interfere in operational activities. Board members may see the same function as simply carrying out their role. Therefore, having clear pre-established criteria is very important to ensure that the monitoring is organised, informed, relevant and fair. The CEO is key to management’s reporting as was stated in the CEO/Board relationship.

"Ensuring there is in place appropriate and robust reporting and information systems so that the CEO knows what the board requires and the board has confidence in what is being reported'"

The Crown dimension

An entity’s Statement of Intent and Memorandum of Understanding will contain some key accountabilities to Ministers and other stakeholders. Board members will want to ensure that these are reported on and that the information is in a form that board members can monitor. Most entities also have their own enabling legislation (e.g. Broadcasting Act) which also sets out requirements that boards need to monitor. Many Crown boards operate in sensitive areas with the possibility of regular headlines, parliamentary questions/debates and select committee appearances a part of their life. Crown-connected boards, therefore, will want to ensure the Crown perspective is appropriately covered in their monitoring role.

Some monitoring approaches and tools

Outcomes: Boards tend to receive a mass of data that is very output-related. For ‘best practice’ the information should be outcome rather than output related. Boards usually need much less paper but far more of a tie-in to the strategic and operational outcomes of the entity.

Dashboard:  A simple method whereby some key reporting items are reported on at previously agreed intervals and show progress in the form of Red, Amber or Green Lights so a board can, at a glance, be aware of progress (or the lack of it) on an issue.

SOI/MOU Links:  The Statement of Intent and the Memorandum of Understanding for an entity will detail a series of outcomes and activities that are in the public domain, are often expected by Ministers and can be subject to any review undertaken by a parliamentary select committee or other review.

No Surprises: Nearly all entities in the MCH family of boards will have a written “no surprises’’ undertaking with their Ministers. Management need to be aware of this and ensure their boards are informed of issues arising at the appropriate time.

Review of monitoring priorities

A board’s strategic plans, operating environment and personnel will change from time to time. It is useful to have a regular review of the key priorities for reporting and monitoring. After a review the key areas of board involvement can be placed In the Annual Work Plan (see the topic ‘Developing the Board Work Plan’). The important area of financial monitoring and reporting is the subject of the next topic.

Board’s Monitoring Role - Appendix

Web links

• The monitoring role is well discussed from a Māori organisation perspective at:
  http://tinyurl.com/yuwhkl
• The monitoring and related roles and functions of the Board of Auckland Airport are contained in the company’s Board Charter.
• Enhancing the Board’s Monitoring Role without micro managing’ is discussed in an informative discussion piece from the Canadian Association:
  www.axi.ca/TCA/Mar2004/featurearticle.shtml
• "The success of the Board depends on how effectively and continuously it monitors the company's progress against stated goals’’ states Shri Balasubramanian, the Chair of the Company Law Board of India, in a useful traverse of the monitoring responsibilities of corporate boards.