Towards a framework for enhancing the performance of NHS boards: a synthesis of the evidence about board governance, board effectiveness and board development

Article history

The research reported in this issue of the journal was funded by the HS&DR programme or one of its proceeding programmes as project number 10/1012/03. The contractual start date was in July 2011. The final report began editorial review in July 2012 and was accepted for publication in December 2012. The authors have been wholly responsible for all data collection, analysis and interpretation, and for writing up their work. The HS&DR editors and production house have tried to ensure the accuracy of the authors' report and would like to thank the reviewers for their constructive comments on the final report document. However, they do not accept liability for damages or losses arising from material published in this report.

Copyright statement

© Queen's Printer and Controller of HMSO 2013. This work was produced by Chambers et al. under the terms of a commissioning contract issued by the Secretary of State for Health. This issue may be freely reproduced for the purposes of private research and study and extracts (or indeed, the full report) may be included in professional journals provided that suitable acknowledgement is made and the reproduction is not associated with any form of advertising. Applications for commercial reproduction should be addressed to: NIHR Journals Library, National Institute for Health Research, Evaluation, Trials and Studies Coordinating Centre, Alpha House, University of Southampton Science Park, Southampton SO16 7NS, UK.

Introduction

How boards set direction, exercise control and shape culture in their organisations is once more in the spotlight with the high-profile failure of Barclays Bank PLC to rein in their traders and their senior staff, and the hugely missed opportunity of G4S to employ sufficient security staff to support the Olympics. 1 In the NHS, the Kane Gorny case at St George's Hospital in Tooting2 illustrates that despite the architecture of governance, including extensive board oversight and a full panoply of clinical risk management arrangements, organisations, including illustrious teaching and research institutions such as St George's Hospital, that have been established to care for patients can still do them harm. Desperate for water, Kane Gorny rang 999 from his hospital bed. The ward staff mistook his medical condition for an attention-seeking mental health problem, with fatal consequences.

Interest in how boards can control and influence organisations as complex as those that make up the NHS is likely to continue, and indeed increase, particularly in the light of recent failings in patient safety, the events at Mid Staffordshire NHS Foundation Trust and the forthcoming findings from the Francis Inquiry and the Quality, Innovation, Productivity and Performance (QIPP) agenda, and as the scale of efficiencies required begins to bite. There is a need to reduce the variation in organisational performance across the NHS (e.g. as measured by the quality and safety of care provided and efficiency and productivity), for which boards hold ultimate responsibility. By exploring how effective boards can add value it is hoped that this research will both benefit patients and improve service efficiency. In the wake of the publication of the first Francis report3 into the failings at Mid Staffordshire NHS Foundation Trust, the chief executive of the NHS has emphasised the role of boards as guardians of patient safety. The NHS Confederation, which represents the NHS board member community, has expressed the need for more detailed analysis of the complex issues around the cultures and characteristics of boards. 4

There are some clues from a selective literature review about what boards in the wider UK public sector might do well to pay attention to. 5 There is, for example, evidence that smaller boards with well-functioning subcommittees are associated with better performance. Board focus on the three areas of strategy, use of resources and talent management appears to be important. Board dynamics is emerging as a significant element, with a triadic proposition of working relationships that combine the three elements of (1) high trust between board colleagues, (2) high challenge by non-executives to executive proposals and (3) high levels of engagement in and out of board meetings. 5 The energy and expertise of non-executive directors are argued to be important in partnering with managers to shape strategy and in tracking performance. 5 These programme or middle-range theories around the structure, focus and dynamics of boards are examined in more detail within the review reported here.

As the latest wide-ranging structural reforms in the NHS bed down, we envisage that the findings of this evidence synthesis will also be highly relevant for clinical commissioning consortia as they begin to enact their own governance arrangements. The study uses and builds on a developing body of knowledge in relation to health-care governance, organisational culture and performance, which have been the subject of other funded National Institute for Health Research (NIHR) studies (e.g. Sheaff et al. ,6 Davies et al. ,7 and Mannion and House8).

The approach that we have taken is a theory-based realist review emanating from our judgement that the effectiveness of boards is likely to be highly context dependent. We start from an exploration of theories and frameworks about boards in general, including underlying assumptions about their purpose, composition, role and behaviours. We then examine the literature relating to non-profit, state and health-care boards to ascertain sectoral or domain-specific distinguishing contextual features. We proceed to analyse the available guidance for boards to determine the experiences of boards, the dominant discourse and the gaps as a result of certain ideas and theories being foregrounded. We examine and assess the empirical evidence for the effect of boards on organisational performance and end with a mapping and assessment of board development approaches. Our conclusions offer the beginnings of an explanatory framework for use by NHS boards and identify areas for further research.

The four objectives of this literature synthesis are:

• objective 1: to explore the main strands of the literature (e.g. in corporate governance, behavioural economics, organisational studies, organisational strategy, organisational psychology, public management, health-care management) about boards and to identify the main theoretical and conceptual frameworks that relate to the structure, purpose, functions, behaviours and effectiveness of boards

• objective 2: to understand to what extent the experiences of NHS boards match these theories and to provide an explanatory framework for understanding the characteristics of effective boards in the NHS

• objective 3: to assess the empirical evidence relating to how NHS boards can contribute to organisational performance

• objective 4: to map and evaluate different approaches to board development including diagnostic tools, models of assessment and facilitation, and to identify how these approaches relate to theories about board effectiveness and their impact on organisational performance.

Approach

The study is an evidence synthesis of a diffuse literature relating to boards and organisational performance with particular reference to health-care boards and with special emphasis on the NHS. A literature review on board effectiveness commissioned for the NHS Institute for Innovation and Improvement9 concluded that:

there is no agreement among researchers on the best framework for identifying, measuring and discussing characteristics of effective boards . . . There has been a lack of clear definition of concepts and a reliance on incomplete research models. This means that there is little convergence on terminology, definitions and findings.

p. 5

The terrain is characterised by some complexity in terms of the multiple locations of the evidence across different disciplinary traditions, by weakness and ambiguity in terms of association and causation (and direction of causation) and by the influence of contextual factors on board characteristics, performance and effectiveness. Given this complexity, a conventional systematic review, with its emphasis on a hierarchy of evidence and randomised controlled trials as the research design of choice to address questions of effectiveness, would not be appropriate. Indeed, a traditional systematic literature review would almost certainly be unable to take account of the multiple and interconnected variables that influence boards and their performance.

A realist angle on the other hand emphasises the contingent nature of the evidence and addresses questions about what works in which settings, for whom, in what circumstances, how and why. 10 It is suited to the investigation of complexity for evaluations of either complex interventions or complex causal pathways. 11 Given that boardroom practices have been described as a ‘black box’,9 this seems a sensible approach to take: the study aims to open that ‘black box’. A realist synthesis also emphasises an iterative approach between programme theory and predicted theory and we therefore chose this for our overarching research design. Jagosh et al. 12 offer useful definitions of terms used in realist reviews and a summarised version is provided in Box 1.

Realist synthesis belongs to the family of theory-driven inquiry. This is an approach rather than a strict technical procedure. 14 It starts with knowledge and theory and ends with more refined knowledge and theory, along the way ‘stalking and sifting’ ideas and empirical evidence. It continuously searches for and refines explanations of programme effectiveness. 10,14 It draws from Campbell and Russo's15 notion of organised distrust and ambition to secure methodological advances and trustworthy reporting (p. 143). In our case, the synthesis addresses, in particular, questions about how boards operate, in what circumstances and why, the influence that boards may have on organisational performance and the appropriateness and relevance of tools and techniques for board development. The focus is therefore very much on mechanisms rather than on boards per se. Realist review learns from, rather than controls for, real-world phenomena, thereby providing an acknowledgement, for our study, that no two boards are the same in human composition, context or stage of development.

The limitation of realist synthesis is that it is a method which is still in development with a relatively small number of studies under its belt and there can be shortcomings in investigations of context–mechanism–outcome configurations, some confusion between context and mechanism and a lack of a proper explanatory focus. 11,14,16 Standards for realist and meta-narrative evidence syntheses (Realist and Meta-review Evidence Synthesis: Evolving Standards; RAMESES) are under development and are not due to be published until 2014. 17 However, from the reviews and literature published to date, it is an approach that appears to address the limitations of more traditional systematic review methods when dealing with complex social interventions across different circumstances, with varying underlying beliefs and assumptions. 18 Its focus is on offering explanations rather than judgements and developing principles and guidance rather than making rules. For the purposes of this review, we believe that this is a more appropriate course of action to take – it will offer insights for practitioners to take note of and make use of and will offer a valuable addition to the armamentarium currently available to members of NHS boards.

In considering alternative approaches we are mindful of an analysis of alternative approaches to systematic review (Table 1) which underlines that only realist synthesis meets the criteria for focusing on mechanisms rather than whole programmes. In our case, this allowed us to look at discrete aspects of boards (composition, methods of working, governance arrangements and so on) rather than having to consider ‘the board’ as the overall unit of analysis.

One of the principles of realist synthesis is the importance of sense-making. The meta-narrative mapping approach to synthesising evidence is attractive because it acknowledges different disciplinary traditions and changes to dominant narratives over time. 20 It explores paradigmatic assumptions and the story of how empirical studies build on one another. This approach was deployed to illuminate changing paradigms across different disciplines in understanding about the diffusion of innovations. 20 Board governance is also a good example of where the dominant narrative has changed, with a shift away from the discourse of agency theory within the political science discipline to a more hybridised one in which, inter alia, board dynamics within the organisational behaviour discipline is now playing a significant contribution. We therefore adopted a meta-narrative mapping approach within a realist framework to identify and explain the rise and fall of dominant theories about the composition, role and functioning of boards.

The caveat here is the challenge of the very diverse nature of the sources of evidence on which the review is based and the relative infancy of the realist synthesis method; hence, detailed guidance around the processes of data extraction and appraisal is limited. Given the diversity of literature on boards and governance, we have purposely drawn on evidence from a broad range of peer-reviewed journals, books and reports. We are not claiming to be exhaustive in the search strategy employed; rather, we have focused on literature that helps to shed light on the theoretical propositions that drive the review and the relevance and rigour of the literature are judged in relation to the particular proposition under consideration, regardless of its source.

A key test for NIHR-funded studies is that the research questions and subsequent research findings are relevant and usable for the target audience who are responsible for the organisation and delivery of health care. Realist review stresses the importance of intensely practical theorising with programme practitioners to guide the inquiry of what works in what circumstances, how and why, eliciting, articulating and formalising hypotheses as to why outcomes are so varied (pp. 180–1). 14

Accordingly, in line with realist review principles, we tested, honed and refined the research questions with a joint expert advisory and stakeholder group of 23 people, made up of seven researchers active in the relevant discipline areas together with 16 representatives of the target audience of NHS board members and managers, including four board chairpersons, four non-executive directors/governors, two NHS chief executive officers (CEOs) and six corporate governance experts from the legal profession and from management consultancy. We convened this group once on a face-to-face basis in Manchester and ran a facilitated workshop early on in the study to elicit programme theories about board structures, processes, dynamics, development and impact on organisational performance and to guide the development of the research questions. The outcome of the workshop was a list of testable propositions and questions of interest to this stakeholder group, which are outlined in the following section. The provisional findings of the study were shared with the same expert advisory group and a number of comments were received. This embeds the ‘linkage’ between practitioners and researcher communities, which is advocated as a key characteristic of realist synthesis and helps to move findings from research into practice. 12,21

Focus of the review

There are four main steps in a realist review,10 which we have broadly followed. These include, first, clarifying the scope; second, searching for evidence; third, extracting the data and appraising the evidence; and, fourth, synthesising the evidence and drawing conclusions. Chapters 2 and 3 are concerned with theory comparison and reality testing and complete the scoping by articulating the main theories to be explored, Chapters 4–6 focus on the appraisal and use of the evidence and Chapter 7 draws conclusions from a synthesis of the material.

Drawing from the realist approach to clarifying the scope of the study, our research questions at the start, which came from the main objectives described above, were amplified by the stakeholder group and a number of underlying testable propositions were also developed. These are outlined in full in the following sections.

Research methodology

A literature synthesis using a realist approach is neither a systematic review nor a meta-analysis. The PRISMA (Preferred Reporting Items for Systematic Reviews and Meta-Analyses; www.prisma-statement.org) 2009 checklist, nevertheless, contains important steps regarding the structure and content of a review that we have followed where relevant. In particular, we have taken note of the need for a clear rationale, objectives, study selection and data collection processes, data extraction reporting, synthesis of results, summary of the evidence, limitations and conclusions.

The detailed plan of investigation is summarised in Table 2 with more detail about the search strategy provided in Table 3 as this lies at the heart of the study. It is important to note that the four objectives with their associated research questions are closely inter-related. For example, in attempting to arrive at an understanding about different approaches to board development (the final objective), the material is correlated with findings from the literature on theories about boards, their application in NHS contexts and evidence about how boards affect organisational performance. Equally, although Table 2 suggests a sequential set of phases, in realist review there is an iteration between the phases so, for example, theories about boards and explanations about the characteristics of effective boards in NHS contexts are shaped and reshaped throughout the course of the study.

Data extraction and inclusion/exclusion processes are less linear than in traditional systematic reviews and decisions do call for pre-existing knowledge of the subject area and the exercise of judgement on what to include/exclude from the review, drawing on advice from the research team and stakeholder group as required. Examples of data extraction forms used are provided in Appendix 1.

Literature search

A search was conducted from 1968–2011 across relevant library and external sources as outlined in the following sections.

Studies excluded from the review

The following study topics were excluded from review as these were deemed not to be related to our research questions, nor were they topics of interest to the advisory group members or relevant to our testable propositions:

• small firms

• founder director firms

• CEO pay

• corporate social responsibility

• specific industry sectors, for example sports, banking, technology-intensive firms, in which findings pertain only to that sector

• in-country articles in which findings relate only to that country

• anecdotes of single company experiences.

Studies included in the review

In total, 618 general articles, 209 health-care-related articles, 252 textbooks and 54 reports were identified as a result of the initial search. After screening and tagging for links to the four research questions, 22 textbooks, 21 reports and the following numbers of articles were reviewed to assess their relevance for full examination:

• 374 (general) + 50 (health-care related) for research question 1 on general theories and frameworks for boards

• 28 (general) + 29 (health-care related) for research question 2 on experiences of health-care boards

• 70 (general) + 20 (health-care related) for research question 3 on the impact of boards on organisational performance

• 47 (general) + 9 (health-care related) for research question 4 on approaches to board development.

After eliminating duplicated references and application of criteria for exclusion, and the inclusion of additional material from hand searching, snowballing and updating, 670 articles and other texts were selected for full review.

Disciplinary sources of ideas about boards

What are the main disciplinary sources of ideas about boards and what are the principal theories, conceptual frameworks and main paradigms? Interest in board governance is growing. In our trawl of 618 general (as distinct from health-care-specific) articles from 1968 to 2011 we found a significant and steady recent increase in relevant material (Figure 1).

FIGURE 1.

Publication timeline. a, Search undertaken in August 2011.

Table 4 shows the top 20 journals in terms of numbers of articles and, as discerned from terms used in the titles and abstracts, these articles largely relate to ‘corporate governance’ and ‘management’, although economic, legal, strategic, behavioural and organisational frames are also significant (Table 5 shows the main disciplinary themes). A number of key texts are characterised by interdisciplinary synthesis, for example legal (Berle22) and economic (Means22).

Huse23 distinguishes between general theories (contingency and evolutionary), the role of boards (e.g. agency, stewardship and so on) and process theories (e.g. norms, decision-making culture and interactions). Selim et al. 9 refer to the interaction of structures, processes and behaviours in affecting board effectiveness. We have adapted these, which we would identify as middle-range theories, by starting with theories about the role of boards, proceeding to process theories, which we have termed board practices, and concluding with a conjunction of the two.

Principal corporate governance theories

Figure 2 outlines the numbers of articles relating to the main theories about boards and, therefore, shows the relative dominance of the main theories over time. In addition, the texts in Table 6 were selected as landmark texts because of frequency of citations, influence on corporate governance theory and theory development and relevance for the research questions in this study.

FIGURE 2.

Timeline for the main board theories (from 618 general references about boards). a, Search undertaken in August 2011.

Agency theory

Stewardship theory

Stewardship theory was developed as a challenge to beliefs that managers are always self-interested rational maximisers, first by Donaldson54 with later development by Davis et al. 26 and Cornforth31 (Box 4 provides a summary of the implications of stewardship theory for an understanding of board governance). According to stewardship theory, the goals of board directors and of their managers are aligned, with the latter being intrinsically motivated to act in the best interests of the organisation and to focus on intangible rewards such as opportunities for personal growth and achievement. The theory relates to a very different human relations perspective from the one that underpins agency theory, one in which, in general, people are motivated to do good and to act unselfishly, as long as a number of organisational and cultural preconditions are satisfied. 26 In this model, managers and owners share a common agenda and work ‘side by side’; the emphasis is on the board's role in developing strategy rather than on monitoring performance and a preponderance of internal (or executive) directors with high levels of access to information is favoured. 31 Implicit in stewardship theory is the understanding that the owners (principals) are prepared to take risks on how managers will run their business and provide a return on their investment, indicating a level of trust that is absent in agency theory.

The theory was explicated in a large empirical study covering 658 corporate directors in four countries. Anderson et al. 55 found that boards of directors were evolving into an active partnership with management, positioning themselves as a strategic asset to the organisation. This partnership role is more in keeping with a model of stewardship rather than an agency model of the board as monitor. Importantly, this co-operative role requires that the board develop closer ties with management. The board's shift to sit closer to management might otherwise have created an oversight vacuum but for the move toward activism by institutional investors. In the view of the authors, this evolution of the board to strategic partner of management, combined with increased investor monitoring, offers the potential to produce a more effective governance regime.

Davis et al. ,26 although proponents of stewardship theory, argue that, given the mixed empirical evidence, neither agency theory nor stewardship theory represents a ‘golden bullet’ for corporate governance. Other critiques of stewardship theory also indicate that there is, at best, mixed evidence to support this theory56 and that its application can lay organisations open to risks of governance failure, strategic drift or inertia. In addition, there is a danger of ‘groupthink’57 or ‘upper echelons’-dominated thinking,58 in which there is not enough independent challenge on the board. A study of 768 US company directors showed that non-executive directors experienced acute role conflict in having to serve the interests of shareholders while at the same time maintaining camaraderie on the board. 59 The same directors reported that non-executive directors who were members of a remuneration committee felt compelled to appease the CEO.

Resource dependency theory

Resource dependency theory derives from economics and sociology disciplines concerned with the distribution of power in the firm and was developed particularly by Zahra and Pearce60 and Pfeffer and Salancik24 (Box 5 provides a summary of the implications of resource dependency theory for an understanding of board governance). According to resource-based theory, the organisation is an amalgam of tangible and intangible assets and capabilities. 61 Strategic resources in particular are those that are valuable, rare, inimitable and non-substitutable. 62 In this context, the board can be seen as a strategic resource. Given that all organisations depend on others to survive and thrive, resource dependency theory24 suggests that managing external relationships to leverage influence and resources is the prime purpose of the board, and hence board members are selected for their background, contacts and skills in ‘boundary-spanning’. 63 Mintzberg64 called the board the mediator between internal and external coalitions, facing in to management and out to shareholders. The use of the board as a co-optative mechanism (also known as co-optation theory) reflects the potential of the board in fostering long-term relationships with key external constituencies, thereby co-opting important elements of the organisation's external environment. This is also evidenced by multiple board membership known as board interlocks. 65 The theory focuses on how uncertainty caused by external environmental factors and dependence on outside organisations can be minimised. Four benefits that board directors can bring include advice, access to information, preferential access to resources and legitimacy. 24

Allied to resource dependency, and drawing from Marxist sociology, is class hegemony theory, according to which the members of boards and governing bodies, even in a culturally diverse society, seek to perpetuate a ruling elite. Here, a small group of people head or direct all of the large companies and organisations through the exercise of political, social and economic power66 and imposition of a ruling-class world view. 67,68 The justification of the approach is that the world view taken is beneficial to all and not just to the ruling class. In relation to board governance, this amounts to an inner circle who constitute a distinct recursive semi-autonomous powerful network deeply embedded in community and society. 30

A recent review of resource dependency theory37 confirmed theoretical support and the existence of empirical evidence for this lens for understanding boards and emphasised its contingent and dynamic nature and its particular utility early in the life cycle of organisations and in times of stress or decline. The theory can be criticised for an overfocus on an external locus of control construct. 69 It underplays views of the board role in determining its own future through strategising, and in exercising oversight of internal management actions and performance.

Stakeholder theory

Stakeholder theory comes from nineteenth-century developments of alternative forms of organisation and control in the shape of mutuals and co-operatives (for a review with specific interest for the health-care sector see Gregory70). Recent thinking on stakeholder theory has been developed in particular by Blair71 and Clarke36 (Box 6 provides a summary of the implications of stakeholder theory for an understanding of board governance). There is a view that an exclusive focus on shareholder interests has not held the key to good corporate performance and effective accountability. In an age of vocal consumer groups, employee activism, media monitoring and now social networking, the assumption that only shareholders are capable of effective monitoring looks increasingly flawed. 36

According to stakeholder theory,72 board members work to understand and represent the different interests of individuals and groups who have a ‘stake’ in the organisation. Stakeholders are all those whose participation is critical to the survival of the organisation. 73 These include managers, employees, customers, suppliers (contractual stakeholders) and the community, that is, consumers, regulators, government, pressure groups, media and local communities. 73 The argument runs that the inclusion of a range of different stakeholders drives an inclusive approach that represents a wide spectrum of societal opinions, balances competing priorities and avoids dominance by one group with particular interests. Among the myriad of stakeholders, stakeholder theory also argues that boards have to identify the critical stakeholders (e.g. key staff groups) whose commitment is essential for long-term value creation. According to stakeholder agency theory, managers are seen as the agents for all of the stakeholders, not just the owners. 74

The genesis of stakeholder theory can be traced back to the co-operative movements of the nineteenth century. Although Berle and Means' classic text22 is cited as the leading proponent of agency theory, their conclusions actually herald the notion of corporate social responsibility, and the importance of a community theory for how corporations should be managed, and they begin to address the broader question of what corporations (and therefore boards that manage them) are for:

This third alternative offers a wholly new concept of corporate activity. Neither the claims of ownership nor those of control can stand against the paramount interests of the community. . .it seems almost essential if the corporate system is to survive. . .that the ‘control’ of the great corporations should develop into a purely neutral technocracy, balancing a variety of claims by various groups in the community and assigning to each a portion of the income stream on the basis of public policy rather than private cupidity.

pp. 312–13

Penrose75 developed the intellectual foundation of stakeholder theory in her proposition that the company can be seen as a bundle of human assets and relationships. Blair71 argues that, if organisations are viewed as institutional arrangements for managing relationships between all of the parties that contribute to the wealth of the enterprise, not just the shareholders, management has to take into account the effect of corporate decisions on all stakeholders. Thus, the control rights should be allocated according to all of the stakeholders who provide the sources of firm value creation and who bear risk. In some interpretations of stakeholder theory,71 a hierarchical distinction is made between ‘taking into account’ the views of stakeholders and ‘being responsible to’ the shareholders.

Blair further argues that there developed an accommodation of the classic property conception of the corporation with a newer social entity conception, backed by developments in US law that protected companies which engaged in socially responsible behaviour that might not directly, in the short term, maximise profits for shareholders but that benefited shareholders in the long run, on the premise that the well-being of communities in which companies operate was considered good for business.

In practice, given that knowledge is these days the pre-eminent resource and that knowledge is generated by individuals, elements of the stakeholder approach are increasingly utilised. Only by creating great relationships with employees, customers, suppliers, investors and the community will organisations learn and change fast enough. 36 This argument is backed by Kaufman and Englander76 in their advocacy of the ‘team production’ model of corporate governance, which draws from a stakeholder view for board membership to include representation from those who add value, assume risk and possess strategic information.

Stakeholder theory has been challenged by some, for example Von Hayek,77 who argues that allowing management to use company resources for ends other than a direct increase in shareholder value confers on them ‘undesirable and socially dangerous powers’ (p. 100). Other arguments against the stakeholder view include diversity of and lack of clarity about stakeholder expectations, complexity of trade-offs if stakeholder interests are to be taken account of and the need for a simple focus of the bottom line for managers. 78

Despite the fact that stakeholder governance models are deeply embedded in some countries in Europe, notably Germany, and in Japan, and that claims for these countries' industrial and social success are often based on this model, the empirical evidence for stakeholder theory is weak. In a study of 250 firms and more than 3000 directors, Hillman et al. 79 found no association between the presence of stakeholder directors on the board and organisational performance. The theory can be criticised for encouraging risk-averse, inoffensive but bland and lowest common denominator decision-making. It can lead to large and unwieldy boards with people recruited for whom they represent rather than for their board-level skills. 80

Theories about the exercise of board power

Berle and Means,22 in relation to agency theory, delineate between the three main aspects of enterprise: (1) having power with ownership and taking action, (2) the diverse situations of owners without appreciable power and (3) having power without appreciable ownership (p. 112). Power can be defined as the ability to influence others and, in relation to boards, Huse et al. 50 argue that the literature on power can usefully be divided into four main groups. These are direct power, indirect power, conscience-controlling power and institutional power. Power differentials between members of the board affect both processes and outcomes (Box 7 provides a summary of the implications of board power theory for an understanding of board governance). Mace81 found that the gap between expectations of boards and actual practices could at least in part be explained by power relations.

Models of board behaviour and exercise of power can be related to the main theories about boards: for example, agency theory is connected to a ‘challenge and compliance’ set of behaviours, whereas stewardship theory relates to a high-trust partnership style of working, and in a stakeholder model board members tend to be most vocal when articulating the interests of ‘their’ constituency. 80 Power boards are those to which influential boundary spanners have been recruited, in a model closely related to a resource dependency view of the board. 30

In an amplification of their view that one size does not fit all, Davis et al. 26 propose that participative, empowered, involvement-oriented management culture with lower power distance is more likely to produce principal–steward relationships, and that a control-oriented management, with individualist culture and transactional leadership characteristics and high power distance, will, conversely, produce principal–agent relationships. The authors further indicate that both the principal and the agent (manager) are psychologically predisposed to one or other relationship but do have a choice. They conclude that, if there is an agreed mutual stewardship relationship, the potential performance of the firm is maximised and, if there is an agreed mutual agency relationship, risks and costs are minimised.

In his influential piece on the exercise of power by independent directors of the board, Mace82 argues that, at least at the time of writing, there is a substantial gap between the myths of business literature and the realities of business practice. Directors do give advice, set discipline and provide decision-making in times of crisis but are less likely to exercise influence over strategy or to ask discerning questions or in reality take charge of the CEO selection process. This all suits CEOs who, according to the managerial hegemony frame, do not want the directors too involved in the company. In a more nuanced contribution, Lorsch and MacIver83 chart the rise and fall and rise again of the potential power vested in the independent director. This has to do with the increase in the proportion of outside directors, and the multiple sources of power, which include legal authority, stakeholder expectations and personal confidence as well as the power of unity of purpose amongst board members. Kosnik84 argues for merging agency and managerial hegemony theories to clarify the contingencies that might affect board performance in corporate governance. The argument runs that one is not more valid than the other but that the switching rules need to be identified.

Related to this are theories about the sources and use of board power, including the power of the chief executive,85 the exercise of managerial hegemony,35 the discretionary effort and skill exercised by non-executive board members86 and the increased role of the board in periods of crisis or transition,83 which can be followed by ‘coasting’ according to the stress/inertia theory. 87 Critiques of models of board power argue that there is a sometimes mistaken assumption that board members are able to exercise influence over senior management, and that it is through this influence on management that they are able to bring about change and influence organisational performance. 5

Three main rules governing the proper exercise of power by management have been developed and tested legally: a decent amount of attention to business, loyalty to the interests of the business and reasonable business competence (p. 197). 22 Managerial power theory argues that board structures set the conditions for board control. Boards dominated by managers are seen as weaker monitors and compromised, as the CEO can exercise inappropriate influence over his or her own, and fellow executives', compensation and career advancement. 88 Further, managerial power theory proposes that a CEO who is also a board chairperson (chairperson–CEO duality) has the power to influence board decisions in general and to create the conditions for board ‘capture’. 89–92

Power circulation theory explains political dynamics amongst elites93 and was extended to the corporate governance context by Ocasio,94 Shen and Cannella95 and Combs et al. 96 The theory suggests that top management in organisations is inherently political, characterised by shifting coalitions and continual power struggles. 94 Power circulation challenges the notion that CEOs can perpetuate their power. 94,97 Instead, it suggests that managerial power ebbs and flows because of political obstacles and triumphs arising from the shifting allegiances of colleagues and rivals. Combs et al. 96 argue that a board with a majority of outside directors is only important to control a powerful CEO and that a weaker CEO can be adequately controlled by the other executives.

Finally, in relation to Huse et al.'s allusion to conscience-controlling power,50 corporations may transgress because, although they have power, they lack the conscience to do good, as they have ‘no soul to be damned and no body to be kicked’ (Edward 1st Baron Thurlow, English Lord Chancellor 1778–92, quoted in Coffee,98 p. 386). This begins to indicate the requirement for an agency theory in reverse – the need to consider who controls or regulates the decisions and actions of the board, and a revisiting of Berle and Means' question22 about whether the political or the economic organisation of society should dominate (p. liv).

Developing a realist interpretation framework of board theories, contextual assumptions, mechanisms and intended outcomes

The terrain is characterised by some complexity in terms of the multiple locations of the evidence across different disciplinary traditions. Drawing together these theories is a daunting task. Within a realist frame, the focus is on offering explanations rather than judgements, and developing principles and guidance rather than making rules. 16 In line with a realist view, it seems to us that underpinning the main theories about the role of boards is a series of contextual assumptions, mechanisms and intended outcomes. These are summarised in Table 7.

The theories suggest that boards face choices. If the main intended outcome is for the minimisation of risk (e.g. patient safety), it follows that the main mechanism should be monitoring, predicated on agency theory. This may come at the expense of innovation, however, which is predicated on stewardship theory, with a mechanism of collaborative working on the board. When there is an issue around power (e.g. in health care, the power of the professions, or the power of the regulator), the mechanism of power differentials may need to be deployed to ensure equilibrium. In the context of long-term service commitment in a health-care system, a multi-stakeholder approach involving collective effort may be indicated, with an outcome of long-term added value.

Board practices

What do boards actually do, what should they do and how does this relate to theories about boards? There have been calls for frameworks that combine the insights of different theories. 31,99 One useful model has been proposed by Garratt,33 drawing on an earlier model by Tricker. 99 Garratt suggests that there are two main dimensions of the board's role, what he calls ‘conformance’ and ‘performance’. Conformance involves two main functions: external accountability, including compliance with legal and regulatory requirements and accountability to shareholders or other stakeholders, and supervision of management through oversight, monitoring performance and making sure that there are adequate internal controls. This conformance dimension matches quite closely with the agency theory perspective on governance. In contrast, the performance dimension is about driving the organisation forward to better achieve its mission and goals. This again consists of two main functions, policy formulation and strategic thinking, to take the organisation forward. The performance dimension is in keeping with stewardship theory of corporate governance. This framework (depicted in Table 8) suggests that boards need to be concerned with both the conformance and the performance dimensions of corporate governance.

Carver100 proposes a ‘policy governance’ model. He claims this to be a universally applicable theory of governance that, with the board as servant-leader, and a strict separation of governance from management, is a conceptually coherent paradigm of principles and concepts encompassing ends, executive limitations, governance processes and board–ownership and board–staff linkages. The model can be criticised for similar reasons as the weaknesses exposed in agency theory, which it draws from: the distance between the board and the management of the organisation can mean that essential monitoring does not take place, and it might not be fit for purpose during turbulent times in the life cycle of the organisation.

As an alternative, and of particular relevance, but not exclusively, to the non-profit sector, Chait et al. 32 propose a hierarchy consisting of three essential components of governance: fiduciary, strategic and generative. Fiduciary duties, or the monitoring and compliance aspects, relate to the legal responsibilities of trustees and to the agency theory of governance. The strategic component relates to the work of the board in setting direction and is closer to the ‘performance’ aspect of Garratt's33 two main dimensions of board work. Generative governance is also about performance but it encapsulates leadership through governance and thereby aims for organisational renewal as well as tasks relating to strategy. Boards exercising generative governance can help organisations to unlearn organisational practices that have become unhelpful101 by diagnosing new opportunities, new performance measures and new control systems.

Garratt's33 and Chait et al.'s32 approaches emphasise mainly the importance of task and process, with a relative neglect of questions of composition and dynamics. Stiles and Taylor30 start with the premise that there are three main roles for boards (strategic, control and institutional) but then focus in their empirical study on the ‘board at work’, examining the contexts and processes that influence, constrain and enable the degree to which they are able to carry out their functions. Recent literature increasingly distinguishes between board structures and processes. 102 There is an argument that the key to unlocking the ‘black box’ of board theories and effective board practices may lie in pursuing insights into three key elements – the composition of boards, the focus of board effort and board dynamics – and that these insights may point to the emergence of a refined composite theory for boards.

Board dynamics

Although most research has examined board composition and functions, there have been increasing calls for a focus on behavioural perspectives. Finkelstein and Mooney122 argue the need for going beyond the use of the four ‘usual suspects’ (proportion of outside directors, size of boards, CEO–chairperson duality and share ownership by directors), which currently drive most of the research about boards of directors. Figure 3 indicates the principal characteristics of research on boards from 1990 to 2002 and demonstrates the relative dearth of work on the behavioural dimension.

FIGURE 3.

Characteristics of research on boards 1990–2002. 122 Based on Gabrielsson and Huse. 123 Reproduced with permission from M. E. Sharpe, Inc.

Maharaj102 identifies the key components of board process as comprising the depth and breadth of director knowledge, the motivation and engagement of directors and transmission channels for information exchange between the board and the rest of the organisation. This is, arguably, more about dynamics, which is the realisation or enactment of process, than about the process per se.

Huse23 in particular has argued for opening up the ‘black box’ of board working, a term used often by authors9,124–126 indicating the difficulties and challenges of understanding the inner working of boards. He offers a useful contextual framework (Figure 4) that can also be seen as a depiction of the ‘black box’ of boards. On the outside of the box are the internal and external actors, board members themselves and formal and informal structures. Inside the box are organisation behavioural concepts such as trust, emotions, politics and expectations as well as (the process of) internal and external value creation.

FIGURE 4.

Accountability and creating accountability: a framework for exploring behavioural perspectives of corporate governance. 23 Reproduced with permission from Huse M. Accountability and creating accountability: a framework for exploring behavioural perspectives of corporate governance. Br J Manag 2005;16:S65–79.

Finkelstein and Mooney122 argue that board effectiveness depends on the quality of the individuals who become directors and their ability as a group to get the work done and, therefore, attention has to be given to understanding how to develop group and team dynamics. Tsui et al. 127 argue that the negotiation of power sharing, not necessarily equalisation of power, between non-executives and managers offers a way out of unhelpful board dominance by one or other party. Pye and Pettigrew128 suggest that the study of board practices provides grist for the development of an alternative paradigm to the agency theory of boards, which has dominated the discourse on corporate governance. They further suggest that effective boards are more than the sum of their parts and, although this is so far under-researched and poorly theorised, it is the dynamic of board members working together that adds value to the organisation. This dynamic includes non-executive directors who are ‘extraordinary’ in terms of their capacity to articulate clearly, their capability and their conceptual awareness and whose relationships are characterised by respect, trust and integrity. 128

McNulty et al.,129 in their report for the Higgs review of the role of non-executive directors in the UK, characterise the effective non-executive director as ‘independent but involved’, ‘challenging but supportive’ and ‘engaged but non-executive’. These dyadic couplets also provide a means of constructing a creative tension between agency and stewardship theories of boards and relate also to Sundaramurthy and Lewis'130 proposal that boards should practise both control (agency) and collaboration (stewardship) behaviours. Research carried out by Stiles and Taylor30 ranked in descending order the qualities brought by non-executive directors as, first, objectivity (‘outsideness’), second, advice and, third, external/expert/knowledge. This relates to agency, stewardship and resource dependency theories and also maps on to Garratt's33 notions in his two sets of board tasks regarding monitoring compliance and contributing to strategy. Forbes and Milliken125 argue that effective boards combine task effectiveness with group cohesiveness but that this is theorised as curvilinear: both positive interpersonal relations and task-oriented disagreement are high.

In research that examined the effects of the board's working style on board task performance, Gabrielsson and Winlund131 found that, in addition to the significance of formal board structures, the level of board member involvement and the extent of clearly defined working styles was important. 131 This echoes the argument adduced by Pettigrew and McNulty86,132 about the extent to which members have the ‘will and skill’ to exercise board power. Bradshaw et al. 120 and Stiles and Taylor30 note the importance of informal core groups and inner cabinets within the board that act for change.

Brundin and Nordqvist133 found that emotions work over the long term and in the moment as power energisers and status energisers in boardroom dynamics and that they are influential in task performance of individual board members. Being aware of the emotions underlying board interactions is thus crucial for being an effective board member. 133

In a study of primary health-care organisations in the UK, Abbott et al. 134 found that, although it was part of their remit, board directors often avoided a challenging style in their relationships with the executive, although the possibility that directors might challenge did affect how business was conducted. One obstacle was relative powerlessness, particularly in the face of overload of technical information. The authors did, however, find that the influence of directors in subcommittees was more extensive than typically found in the private sector, with roles as critical friends rather than as scrutineers. They conclude that these boards are better understood as part of a network in which accountability is embedded, strategy is emergent and the predominant mode is negotiation rather than command and control. This accords with the stewardship and stakeholder models of boards, and complements the evidence that, in times of turnaround, the role of the board committee comes to the fore as potentially a safer place to ask searching pertinent questions that challenge the status quo. 135 It suggests that ‘hands-on’ boards may use their ‘will and skill’ in more subtle ways than merely through formal board meetings.

Trust is an important notion used by Roberts et al. 29 Trust builds on the free flow of information and the subjugation of personal interests30 and can be either competence based or integrity based,136,137 the former more closely allied to agency theory and the latter to stewardship theory. In an integration of the two, ideas such as ‘distanced closeness’ and ‘simultaneous independence and interdependence’ were utilised in these studies by Huse. 137

Four concepts in the behavioural tradition that have been applied in recent board research are bounded rationality, ‘satisficing’ behaviour, organisational routines and bargaining among coalitions of actors. 138 Coombes et al.,139 in a study focused on the non-profit sector, argue that boards can be characterised by underlying behavioural dimensions that go beyond issues of composition and structure. Furthermore, they posit that a board's behavioural orientation represents a key source of value creation. Behavioural orientation represents a fairly stable, collective tendency of the board towards particular behaviours. Examples of behavioural dimensions include the extent to which the board is strategic/operational,140,141 cohesive/fractionalised,142 active/passive34 or progressive/conservative. 143

In relation to an evolutionary framework for boards, Stiles and Taylor30 observed a negotiated order emerging with individual directors establishing roles, rights and obligations through interactions over time, and the need for investment in relationship building, which in turn supports a socialising process of accountability: ‘these interactions are unique to the firm and its board and are difficult to imitate . . . . In terms of research on boards in general, normative theories of board structure may be helpful only up to a point: what really matters is the intangible asset of board cohesion.’

The role of the chairperson also comes to the fore. Kakabadse et al. 144 have argued from surveys and interviews in their study of the characteristics of world-class chairmen/women that there are six essential and distinctive chairperson ‘disciplines’ that do make a difference on a board. These comprise delineation of boundaries with the CEO, sense-making, interrogating the argument, influencing the outcomes, living the values and developing the board. This lends weight to the good corporate governance practice guideline in the UK and Europe (in contrast to the USA) of separating the chairperson and CEO roles.

The emerging evidence concerning the behaviours of effective boards leans towards a comparatively ‘hands-on’ board with able and relatively engaged non-executive directors. The evidence adds up, supporting the tentative triadic proposition of board dynamics that is able to incorporate a way of working that combines high levels of engagement within a board climate of high trust and high challenge. This connects to a composite theoretical model of boards that combines elements of agency, stewardship and resource dependence and thus represents a development of the dual line proposed by Sundaramurthy and Lewis. 130 This proposition also has implications for the workings of non-profit boards aiming for generative governance,32 and calls for the framing of a new set of relationships between the management and the board directors.

Relevance and utility of general corporate governance theories for the public and health-care sectors

With regards to agency theory, there is some ambiguity in identifying the specific proxy in public sector boards for the principals or owners. Cornforth31 argues that trust law for charitable non-profit boards, in countries such as the USA and the UK, reflects an agency model of governance even more closely than company law, particularly with the separation of the board of trustees from management, unlike on commercial unitary boards and some forms of public sector boards including NHS boards (with the exception of the council of governors in the case of NHS foundation trusts). There remain some difficulties with the sufficiency of agency theory on its own as a corporate governance frame in general for the public and non-profit sector. It diminishes the purpose of the board in terms of setting the mission and values for the organisation and, further, it contains the inherent assumption that the board's main role is limited to the detection of neglect or malfeasance on the part of management.

In relation to stewardship theory, for public organisations this theory holds some intuitive appeal, with trustees and managers both sublimating their personal interests in pursuit, implicitly if not explicitly, of their organisation's philanthropic goal. In relation to resource dependency theory, for public sector organisations, productive relationships with policy actors, media and local representatives of various kinds, including politicians, play an important part in securing recognition, approbation and other forms of support and it can therefore be argued that this theory has a high degree of relevance. The relevance of stakeholder theory for public sector organisations, on the other hand, is that it legitimates the board because the stakeholders between them represent society and the range of end users that the organisation is serving. For public sector organisations, predominant models of the exercise of board power offer only partial utility, when the purpose of the organisation is philanthropic rather than to return a profit. Social performance139 as well as financial performance is important. In addition, it is open to question whether or not these boards are able to exert significant influence on management given the constraints on board members' power – the dependence on management, the part-time and often voluntary nature of the role – and not to have unrealistic expectations of boards. 5

None of the theories encapsulates a wholly satisfactory explanation for boards of organisations that exist to ‘do good’. The terrain is characterised by complexity in terms of the multiple locations of the evidence across different disciplinary traditions, by weakness and ambiguity in terms of association and causation and by the influence of contextual factors on board characteristics and effectiveness. For the public sector there is an added complication that ‘performance’ cannot be measured solely by the usual financial metrics such as return on investment, favoured by the corporate sector, but by service excellence, social value or social performance and also equity and efficiency. Effectiveness in the non-profit sector is thus a social judgement created interactively through the process of reality construction. 154

This initial review nevertheless indicates that there is much that resonates with the work of boards in the public sector and that is helpful in explaining what the role and purpose of the boards are. As appendix 1 to The Healthy NHS Board notes (p. 40),155 each of the theories highlight particular and important aspects of the role of boards. Agency theory clearly articulates the need to monitor the activities of management. Stewardship theory, on the other hand, offers the power of the ‘joint endeavour’. Resource dependency theory highlights the impact of external influences and leveraging of expertise. Stakeholder theory is persuasive about the need for organisational and societal inclusivity. Theories about board power point to the need to be cognisant of the dynamics of boards. Frameworks for board activities remind us of the need for covering off the range of essential tasks in cycles or calendars and also the need to modulate the style of board working along a continuum from transactional (for compliance) to transformational (for major generative strategic change) leadership.

We now examine the distinguishing features of non-profit boards including social enterprises, public sector boards and health-care boards (which may fall into one or other of the first two categories or indeed form part of the private for-profit sector).

Non-profit boards

Pointer and Orlikoff156 argue that, although they are stakeholders and not stockholders, and they are volunteers with no direct economic interest in the organisation, the obligations of non-profit board members are essentially the same as in the commercial sector. They argue that the board acts as the agent of stakeholders and is required to advance their interests and in ways that benefit them. This relates to agency theory, which carries assumptions around the protection and control of owners' (or in this case stakeholders') interests. Drawing from Carver’s policy governance model,100 Pointer and Orlikoff suggest that non-profit governance should be based on a set of universal principles (they name 64).

Despite an argument that the primary aim of NPOs is survival, through fund-raising, fees and grant gaining, there is an expectation157 that non-profit boards will mimic corporate sector boards. These authors found that, in practice, together with greater diversity in composition, they deliberate and operate in ways that are distinctive from their corporate counterparts and are more likely to engage in operational management and to embrace a stakeholder model of board working. It is argued that boards of directors generally play a relatively more active part in guiding and controlling NPOs than for-profit firms. 158,159 They ensure compliance with stakeholder interests, communicate with the public and establish trust-based relationships that can generate additional resources. 160 The board is the custodian of the organisation's social mission,159 while working to discourage managerial opportunism and protect stakeholder interests. 161 Studies have demonstrated that the NPO board can significantly impact organisational performance, while also having a direct influence on the behaviours of managers and employees within these organisations. 162 Cook and Brown107 found in their study of NPOs that, in particular, having greater organisational awareness and clarity of shared managerial responsibilities were associated with the boards of more effective organisations. Chait et al. 32 trace recent changes in the characteristics of NPOs that have consequences for their boards. The managers have developed from administrators to sophisticated leaders and, in turn, their trustees are becoming more like managers: ‘Non profits want a Noah's Ark of professional experts. As a result many boards resemble a diversified consulting firm with specialties in law, labor, finance, marketing, strategy and HR’ (p. 4),32 which predisposes them to managerial work, presenting both a challenge and an opportunity in terms of board focus and dynamics. The composition and dynamics of NPO boards relate closely to a stewardship theory about boards (the joint endeavour with interests in common) as well as stakeholder and resource dependency frames, which view board members as reflecting community constituencies as well as acting as valuable boundary spanners.

There is a growing body of empirical evidence to support particular behavioural dimensions as a source of value creation in NPOs. As Coombes et al. 139 report, it is has been demonstrated that the board's vigilance in setting expectations and clarifying responsibilities,163 active participation in developing board members164 and willingness to invest more time165 and to work in a decentralised way34 with regular reviews of its own effectiveness166 are associated with performance outcomes. This study by Coombes et al. 139 found links between an entrepreneurial orientation and board characteristics of cohesiveness, activism and strategic focus and these were also associated with enhanced social performance although not financial performance. This echoes Gabrielsson's39 findings in medium-sized companies that entrepreneurial posture was associated with actual involvement of boards in decision-making and control.

Brown et al. 167 found that gender, experience as a non-profit board member, service on other non-profit boards, mission attachment and training were the most consistent predictors of confidence and participation in board activities.

Context within the non-profit sector has been found to be important. Callen et al. 151 showed for a sample of US non-profits that board mechanisms related to monitoring (in accordance with agency theory) are more likely to be effective for stable organisations, whereas board mechanisms related to boundary spanning (resource dependency) are more effective for less stable organisations, which the authors see as a confirmation of Miller-Millesen's150 contention that, because the non-profit environment is often more complex and heterogeneous than the for-profit world, no one theory describes all tasks of non-profit boards.

Social enterprises can be conceived as a subset of NPOs, with both social and business goals as well as social ownership. In the UK, these are not just a conceptual category but also increasingly a policy vehicle for the delivery of welfare services. 168 Spear et al. 168 have developed a typology of social enterprises that includes mutuals, new-start social enterprises, trading charities and public sector spin-offs, of which the last is most relevant for this study. The authors go on to identify the specific challenges for these organisations, particularly in the early phases of establishment, which include transfer of staff out of the statutory sector, selection of appropriate governance and management mechanisms and more ambitious arrangements for the involvement of users.

In the case of not-for-profit and government-owned corporations, research by Nicholson and Kiel56 has suggested the importance of an explicit statement of organisational goals and values if the board is to monitor its performance in relation to owner or member expectations. Performance in not-for-profit and also in government-owned corporations can be measured against such goals as fulfilling the organisation's mission, success in mobilising resources and staff effectiveness, in addition to financial performance. 169

Public sector boards

Created for public boards, Carver's170 policy governance model enables public boards to govern by making public values explicit, crafting the expression of those values for practical managerial effect. One intended effect is more authoritative boards as well as more empowered management; another is greater integrity in the relationship between the public and its boards. The ‘owner representative’ role of the board is the source of both board authority and board obligation for servant-leadership to answer to the public, discerning, determining and fulfilling the general will, and rising above the agendas of particular interest groups. 170,171 Carver sees public boards as a derivative of ownership not of management, focused on ends not means, and, in contrast with the dominant paradigm of the non-profit sector delineated in the previous section, quite separate from and not jointly engaged with management in delivery of the organisation's objectives. Carver (p.61)170 cites JS Mill (p.117)172 in support of his thesis: ‘talking and discussion are their proper business, while doing, as the result of discussion, is the task not of a miscellaneous body, but of individuals specially trained to it’. It could be argued that to some extent this view chimes with stakeholder theory (the servant-leader notion) embedded in agency theory (the strict separation of action from monitoring).

The normative position, at least since the advent of new public management principles,25 is that public sector boards should follow the example set by the commercial sector. There has been some concern expressed that there are transferability problems and issues of institutional isomorphism. 173 This is a pressure to conform to prevailing social norms and, in this case, when governance structures, rituals and procedures are copied and reproduced without regard for their fitness for purpose for the public sector, as well as there being concerns about blurred accountabilities, the absence of truly independent chairpersons because of appointment processes, the subversion of formal authority and the absence or weaknesses of safeguards against political patronage. 174

School boards

In a further embedding of new public management principles and practices in the case of school education, government reforms in the UK have devolved key responsibilities to governing bodies as part of the ‘local management of schools’ policy in England and Wales. 5 These school governing bodies are now corporate bodies with responsibility for quality of education provision, finance and staffing. Three main roles for governing bodies for schools are to set the strategic framework within which the head teacher will manage the school on a daily basis, to support the work of the school, while offering challenge through regular monitoring and evaluation of progress against agreed objectives, and to ensure accountability through the provision of information both to, and from, the governing body. 175 In terms of being held to account, and in a further decentralising twist, and a playing out of stakeholder theory, there is some evidence to suggest that governors have a stronger sense of accountability to parents and students than to government, inspecting bodies or local education authorities. 176 The term ‘critical friend’, which was first used in the education sector in relation to the role of the school governor, has now been imported for use elsewhere, particularly in relation to one of the key functions of public sector boards. It relates to both agency and stewardship theories, supporting notions of both challenge and support.

Unlike in other public sector bodies (e.g. in health), the stakeholder model is very apparent in the composition of school governing bodies, with typically up to eight categories of governors from the different constituencies of interest (e.g. staff, parent, education authority, faith group) and between nine and 20 governors depending on the size and category of school. 175

In practice, Farrell177 found that school governing bodies were often not involved in strategic leadership or policy direction, with head teachers more likely to play the lead role in these areas. The Joseph Rowntree Foundation has reported that governors are under-resourced to carry out their full range of functions and experience some confusion over their representative role compared with their expert contributions in support of the work of the school, and that a smaller and more strategic body may be better suited to fulfil the governance requirements. 178 Both the Centre for Public Scrutiny179 and PricewaterhouseCoopers180 have also recommended a more slimline governance model, including a separation of the executive and scrutiny functions of the governing body, which would bring the structure of school bodies more in line with local government governance structures.

The governing bodies of the new school academies initially set up to take over failing schools in deprived areas, and now advocated for all as a key plank of government education policy, mark a radical departure from the stakeholder approach. Academies are state-funded all-ability schools, but they are also companies limited by guarantee with charitable status. The original academies have smaller boards and the sponsor or governing body is allowed, by agreement with the government, to appoint the majority of the trustees (governors) and to determine the governance arrangements.

Health-care boards

The literature on health-care board governance is dominated by empirical studies of (mainly US) hospital boards. Of 209 article abstracts reviewed, 120 were specifically about hospital boards. Some, for example Alexander's series of US hospital governance surveys,181–185 relate to boards both in the non-profit and in the public or government sector, and distinguish between these only as a second-order consideration. Nevertheless, there are a small number of studies about UK health-care boards that have tracked over time, with the advent of new public management principles, the rise of corporate governance arrangements that borrow heavily from the private sector, and more latterly a growing preoccupation with issues concerning the clinical quality of services. 25,186–190

Boards in general

The most cited authors in the practitioner literature are Garratt33 and Carver,100 with Cadbury's219 report on the financial aspects of corporate governance (Box 9) leading the field internationally in relation to influential government guidance. In addition, there are publications from consultancies and professional representative bodies as well as from academics with a practitioner focus.

Guidance of relevance for health care and English NHS boards

As Francis3 remarked, there has been no shortage of guidance for NHS boards. Table 10 provides a timeline of the key guidance and briefing documents intended for the NHS issued over the past decade. In addition, there has been guidance for health-care boards from other countries, in particular the USA and Canada, that has been influential [e.g. from the Institute for Health Improvement (IHI), the Institute of Medicine, the Canadian Patient Safety Institute and the Canadian Council on Health Services Accreditation]. As with the guidance and practitioner literature aimed at boards in general analysed earlier, we have chosen to summarise the key documents intended for health-care boards using the framework of purpose, structure, focus and dynamics and we have related the main themes back to the main theories about the purposes and practices of boards.

Introduction

Having examined the various, sometimes competing or opposite theories about boards and the associated explanatory frameworks, and mapped how these are aligned to the practitioner and prescriptive literature and guidance, we now turn our attention to assessing the empirical evidence about how NHS boards can contribute to organisational performance. As in earlier chapters, we offer an analysis first from the general literature and second from the literature related to health-care boards.

Empirical evidence about boards in general and organisational performance

We identified 70 abstracts addressing this topic area and reviewed the full text of 64 papers meeting our criteria for relevance (see Chapter 1 for methodology).

Of the 43 empirical papers, the majority are from the for-profit sector, from a wide range of different sectors and countries (Figure 5). They are generally statistical analyses of existing data sets and are of variable methodological quality. Figure 6 shows the focus of the papers. Some problems of endogeneity are acknowledged. 265 The analyses test a number of different theories of governance (e.g. agency, stewardship, stakeholder, contingency), although underpinning theories are not always made explicit. Within the analytical models, the measures of performance employed are generally financial, for example return on investment, return on sales, return on equity, return on assets, Tobin's q. This last is the ratio between the market value (stock price) and the replacement value of the company's assets. High Tobin values encourage companies to invest. Other (non-financial) measures studied include largely process measures, administrative efficiency, allocative efficiency, attendance at board meetings, board focus on monitoring and quality of board monitoring and advisory functions.

FIGURE 5.

Countries of study of papers providing evidence about boards in general and organisational performance.

FIGURE 6.

Focus of papers providing evidence about boards in general and organisational performance.

A number of different elements of board governance were scrutinised, coming from the studies themselves and the board composition variables identified in Chapter 2 in relation to theories and frameworks, and emanating from the priorities identified by our advisory group. These included:

• board size

• board composition (executives and non-executives, female representation, ethnic diversity)

• duality of chairperson/CEO role

• independence of audit committee

• inside directors' shareholding

• knowledge (cumulative and diversity)

• active character of trustees

• intensity of board monitoring

• board independence in relation to different strategies (efficiency vs. innovation).

Key messages emerging from the reviewed papers

Empirical evidence about health-care boards and organisational performance

We identified 20 abstracts as relevant to this topic area and reviewed 17 empirical papers meeting our criteria for inclusion (see methodology in Chapter 1). All but one present data from US studies; they are predominantly hospital based and in the not-for-profit sector. Several papers report different aspects of the same study.

Seven of the empirical studies were conducted before 1989 and, therefore, there may be an issue about the continued relevance of the findings; nine studies date from 2000 onwards. The majority of studies use financial measures as indicators of hospital performance; some use published indicators of care processes and mortality. Many of the studies use published data to distinguish between high- and low-performing hospitals and then compare and contrast their governance processes and structures. A number of studies are methodologically weak with small sample sizes or detailed methodology not reported. There may be an issue with common source variance. 120 Effective performance is contested and difficult to assess in the non-profit sector, considered by Herman and Weaver154 as a social judgement created interactively through the process of reality construction. Notwithstanding these constraints, we root our main findings in the focus of the empirical studies themselves, around structure, strategic orientation, service quality and financial performance, board practices and processes.

A study comparing corporate and philanthropic models of governance suggests that corporate models are associated with increased operational efficiency, increased market share and increased volume of adjusted admissions. 193 In the same study, hospitals with a corporate governance configuration (i.e. smaller, narrow membership, greater management participation, strategic focus, scrutiny of CEOs, competitive positioning) were more likely to respond to major change by diversification or merger and less likely to experience closure.

A strong focus on strategic planning is most often mentioned as a determinant of board effectiveness (see, for example, Bradshaw et al. 120). Boards have been analysed using Miles et al.'s277 strategy typology of defender-, prospector-, analyser- and reactor-orientated organisations, which posits that successful organisations adapt to their environments through making the appropriate choice of strategy. Briefly, the defender organisation restricts innovation and focuses on efficiency; the prospector organisation seeks new opportunities and stresses experimentation, service or product development and innovation; the analyser organisation combines characteristics of defender and prospector depending on which of its product or service areas are stable and which are dynamic and changing; and the reactor organisation does not have an explicit strategy. In competitive compared with static environments, different board types are predictors of board effectiveness, for example in competitive environments prospector and analyser boards tend to be successful; in less competitive environments there is a less clear relationship between board orientation and success. 200

High-performing hospitals have a quality subcommittee; greater expertise and formal training in quality; quality is reported as a higher priority for board oversight and CEO performance evaluation; boards are significantly more familiar with current performance and significantly more involved in reviewing quality data; and more time is spent on clinical quality at board meetings and this is greater than the time spent on financial performance. 278

Board practices that are associated with better performance in processes of care and mortality include having a board quality committee, establishing strategic goals for quality improvement, being involved in setting the quality agenda for the organisation, including a specific item on quality in board meetings, using a dashboard with national benchmarks for clinical quality, patient safety and patient satisfaction and linking senior executives' performance evaluation to quality and patient safety indicators. Physician involvement in the board also appears to enhance quality performance. 207,279 Key mechanisms linked to these board practices are signalling a visible and steady board leadership for quality, effective organisational structures for overseeing quality, and will–execution–constancy of purpose.

Boards with strong financial performance exhibit stronger internal behavioural dynamics, including the chairperson's relationship with the CEO, the level of challenge and openness in decision-making, the interpersonal climate, and processes, for example the timely sharing of relevant and accurate information, the board's role in advising and challenging management, and board education. 280 CEO–board participation significantly enhances hospital financial performance, but there is no evidence that the CEO job contract or performance evaluation influences performance. 281 This supports a managerialist (as opposed to an agency) perspective.

There is evidence of a strong strategic focus in higher-performing boards, alongside the board not being overly cautious in the light of politics. The greater the match between board structure and hospital strategy, the stronger the hospital's financial performance. 217 Prospector hospitals had the largest and more occupationally diverse boards. 204

Boards of high-performing hospitals are more fully engaged in key governance processes and the prevailing governance culture is more interactive and proactive. 279 In relation to a proactive governance culture and use of information, there is some evidence of a relationship between the use of dashboards (specifically those that are shorter, more focused and more frequently reviewed, and those that address clinical quality, patient safety and patient satisfaction) and hospital performance. 207,259

Conclusions

The evidence is based on empirical studies of variable quality and there is an absence of evidence around linkages. The evidence from empirical studies of boards in general highlights once more the relevance of contextual factors; it indicates that it is important to take account of the internal and external environment in the choices that boards make about diversity, board size, proportion of insider and outsider directors, strategic focus and balance of time spent on advisory/partnering as distinct from monitoring functions.

In a recent literature review on board effectiveness for the NHS Institute for Innovation and Improvement, Selim et al. 9 concluded that there was no one best way to achieve an effective board as general principles had to be applied to the circumstances, strategic focus and stage of development of the particular organisation. A series of general principles did emerge from this review, including a focus on the ‘right’ structure, people, culture, tasks, information, processes and follow-through, but the case for the extent to which these are applicable to the NHS was not made. 9

The evidence about relationships between organisational cultures and performance in the NHS is emerging; it is becoming clearer that culture does matter and that certain cultural characteristics are associated with better performance in some domains. 8 Although prescribed as important, there is little evidence, however, to link positive chairperson and chief executive relationships (the ‘two at the top’) with board or organisational performance,282 although there is some (weak) evidence from within the NHS283–285 as well as from outside286 indicating that poor relationships between these two can negatively affect board and organisational performance. A recently published report on new governance arrangements in the NHS287 suggests that aspects of organisational performance, particularly the use of resources, might be associated with some aspects of board working, in particular the contribution of clinicians, the presence of highly influential non-executive directors and chief executives who exert moderate to high control but do not behave autocratically. The impact of board members on the quality of services is more difficult to detect. 287 In particular, evidence about the impact of the board on quality and safety performance outcome measures is weak. 237

The evidence from our review nevertheless suggests that high-performing health-care boards are more fully engaged in key governance processes and have explicit structures and processes in place for the oversight of quality, for example a quality subcommittee, greater expertise and formal training in quality, more time spent on quality at board meetings and regular use of quality dashboards. There is also evidence to suggest that high-performing boards have a stronger strategic focus and in competitive environments display characteristics of prospector and analyser types. This relates to an emphasis on the performance/innovation rather than the conformance/monitoring dyad within Garratt's33 framework of board tasks. It appears that increased physician contribution to boards enhances performance. Are physicians likely to be prospectors/analysers in orientation rather than defenders/reactors? Finally, there also appears to be support for smaller boards with a narrow membership as opposed to larger, philanthropic-style boards;193 these boards appear more able to respond to profound organisational change.

Board appraisal and evaluation

Ingley and van der Walt289 propose that formal board appraisal be used as a starting point to develop the board. They recognise that there is a lack of appetite for rating and reviewing one's peers on a board, the ‘horizontal’ approach being far more culturally difficult than the traditional ‘vertical’ approach. Reasons for the inherent resistance to undertake board appraisal, which is often conducted by the chairperson, sometimes assisted by peer review, include a fear of damaging board relationships and board dynamics, a perceived lack of relevance to a top-level decision-making body, cost and time problems and discomfort about evaluating peers. Unease and ambivalence regarding the nature and worth of board evaluation is often shared by the executive directors. But the authors maintain that appraisal is important to uncover strengths and weaknesses, provide an opportunity to discuss individual skills gaps and allow the board to see how roles can be enhanced.

In a similar vein, Kiel and Nicholson290 propose a tool for whole-board evaluation. They suggest that, by evaluating the whole board, the individual, the board and the whole organisation benefit in the areas of improving board leadership performance, greater role clarity, better teamworking, strengthening of accountability and improving decision-making processes. They propose seven key questions to address in a formal board evaluation process (Box 11).

They also discuss the frequency with which such reviews should be undertaken and emphasise a continuum rather than a prescriptive approach.

Sponbergs291 suggests a variety of tools for board evaluation such as the chairperson asking each individual for their opinions, the use of one-to-one interviews, questionnaires or a board retreat dependent on the issue and circumstances. Carretta et al. 292 and Swiecicki293 also emphasise the importance of individual appraisal as an opportunity for critical reflection.

Board development

Tsui et al. 127 assert that more successful boards use continual board development. They would encourage board members and executives to participate regularly in conferences and workshops to increase their efficiency. They are in favour of external experts undertaking reviews of the way that the board is working and also carrying out and facilitating board development. We explore below the contribution played by attendance at conferences and workshops to board development in more detail and also the role of external facilitators.

In relation to general board development, Garratt294 discusses the concept of the learning board in the sense that the board uses itself as a resource for continuous learning. As outlined in Table 8, Garratt proposes a 2 × 2 matrix with a vertical axis of internal to external perspective and a horizontal axis of short-term to long-term orientation in relation to essential board tasks. The four quadrants are identified as:

• policy formulation

• strategic thinking

• supervising management

• ensuring accountability.

The argument runs that by ensuring that equal time is spent in all of the quadrants, in an iterative annual rhythm, reinforced by away days every 3 months or so, the board will discharge its responsibilities effectively as this cycle of activities drives, in turn, the whole organisation. Garratt221 also discusses the use of interventions to assist a board to continually learn and develop, including the use of external world information [e.g. a political, physical, economic, social, technological and trade (PPESTT) environments analysis], comparative world information (the performance of the organisation against competitors and customers) and internal world information (how well the board is working).

Coulson-Thomas295 also proposes concepts and strategies of a learning board, without actually using that phrase. He argues that board directors have training and development needs (which are different from those of managers), but yet many corporate training and development programmes do not reach into the boardroom. Lakey296 uses the terminology of ‘board education’, which is prevalent in the non-profit sector, and proposes a nine-step model for building a better board. Lakey's proposed board education activities are outlined in Box 12.

Boulton297 argues that one way to review and institutionalise board development is to establish a board committee, which might be the nominations committee, with a specific remit to recommend improvements in the board's operations, including the nomination of directors to fulfil the needs of a more effective board.

Board retreats

Kovner et al. 298 discuss the merits of boards having retreat time to get away from the pressure of routine and immediate decisions. The main aspects of a retreat are for members to stop and reflect on what is making the board function well and what is hindering the process. Other key aspects are for the board to identify and own the issues that they will discuss. The authors elect not to determine the optimal length of such an intervention. They did identify that a retreat is probably held when the organisation is in a stable rather than in a crisis phase. Ward299 also discusses the merits of a corporate retreat, ensuring that there is adequate time put aside for the session, that there is a strong rationale and an agenda set for the event and that the board should consider using experts as and when appropriate. There also needs to be evaluation criteria and follow-up from such an event.

Pointer and Orlikoff156 also discuss the merits of annual board retreats, the aim being to help a board to grow, prepare for the future, rejuvenate, change and, overall, become more effective. This focus relates to the generative governance dimension of board work identified by Chait et al. 32 and to the quadrant relating to strategic direction in Garratt's33 framework. They have identified eight thematic areas that could be discussed on a retreat, which are highlighted in Box 13.

Echoing the suggestions made in Board development, these authors also suggest that an external facilitator is one of the most critical ways to add value to such activity.

Board dynamics and board development

We have seen in Chapter 2 that there have been numerous references to boards as a ‘black box’ and attempts to unpack that in relation to board dynamics. First, with regard to leadership, Heracleous300 saw the board of directors as the ultimate leaders of the organisation and, using a broad and historical perspective on theories and practices around leadership, identified the repertoire of leadership styles that a board may wish to take up. These relate in part to the main competing theories about boards outlined in Chapter 2, for example the agency view that boards need to seek compliance from management. The board leadership styles grid is outlined in Table 12. Where we can identify an association between a leadership focus and style and a board theory we have highlighted this in italics.

Second, in relation to the board as an effective team, Senior301 applied Belbin's302 team roles to boards at different points in the organisational life cycle, identifying the traits outlined in Table 13 as being most useful at different stages. Her research was undertaken on 11 board teams from both private and public sector organisations to test the proposition that a balanced board will be a high-performing team. The research identified that the weakest individual roles in the sample were monitor evaluator, plant and resource investigator. The plant and resource investigator roles are both associated with having new ideas and seeking out resources. The monitor evaluator is the intelligent checker of details and evaluator of options. This shines a light on the need for a board to critically evaluate potential weaknesses in relation to preferred team roles, for example insufficient appetite for innovation, which has been found to be an important orientation for boards in certain contexts, or lack of attention to monitoring in circumstances in which boards need to exact efficiencies from the organisation and decrease agency costs.

Third, in relation to decision-making, there are different models to help boards work systematically through making a decision and then justify why that particular decision was taken. Ross and Lane303 identified a seven-step model to guide the board when making decisions (Table 14).

Garratt221 also discusses the use of ‘mind maps’ to generate multiple possibilities and help to optimise decision-making and using De Bono and Markland's304 six thinking hats to ensure that the board can explore all possibilities. He refers to the TIP model (Thinking Intentions Profile), which has six main categories, and relates this to frameworks for board governance, particularly Chait et al.'s32 fiduciary, strategic and generative modes, as indicated in Box 14.

Fourth, in relation to individual effectiveness, there are also personal tools that board members can assess themselves against to gain further insight, understand their personal contributions and own their emotions. Emotional intelligence is the capacity to understand our emotions and manage them effectively, and to understand and effectively manage the emotions of others. 305,306 Over the past two decades, emotional intelligence has emerged as an aspect of effective leadership, with evidence suggesting that emotional competencies rather than intellectual capabilities are the differentiating factors in job performance. 306–308 This is a new and developing area of study. Hopkins et al. 309 identified the importance of emotional intelligence in a school governance context and studied the relationship between emotional intelligence and effective board governance. The authors found that there were specific emotional competencies central to effective school boards and that there was a relative lack of emotional self-awareness and optimism in the boards studied.

Contingency factors

Coulson-Thomas295 cautions that standard solutions for board development can be particularly dangerous. The development needs of individual directors and the board as a whole will reflect the nature, situation and circumstances of the organisation. Chambers and Higgins310 also reported that board development activity needs to be ‘situational’, for example relating to the newness or maturity of the board as well as dependent on the particular board role requiring attention.

Bonn and Pettigrew311 identified that board development is seen as critical to all organisations, but that needs vary according to the organisation life-cycle stage. Four key life-cycle stages were identified (Box 15), and we have mapped on to these the board theories, frameworks and development activities that might fit each. The box shows that board development may be needed most in the mature phase of organisations, and this resonates with the view of Jas and Skelcher87 and others that there is a danger of boards swinging between acting in stress mode when there is a crisis and falling into inertia or at least coasting during times of (apparent) stability. The authors leave us with a number of research questions to address around the life-cycle stages and the development of the board of directors. These include the need to investigate the transition between the stages. How, for example, do organisations effectively manage the transition between life-cycle stages? How long do directors stay on board after the organisation has evolved to a new life-cycle stage and what are their reasons for leaving? Is the life-cycle stage of the organisation a consideration for directors to join a board?

Board development in health care

What does a good board look and act like? Holland and Jackson164 identified six dimensions of board competency essential to effective governance, which are outlined in Box 16. Similarly, Kane et al. 312 undertook a series of 73 interviews in nine hospitals in the USA and identified five key questions that a board would need to consider to ensure its competency and functionality. These are listed in Box 17.

The review of guidance and research evidence for The Healthy NHS Board155 suggests that skills development is thought to be important in creating effective boards around the areas of leadership and corporate skills. It also identified board dynamics and evaluation as important in ensuring that the board is fit to undertake its roles and responsibilities.

Bullivant313 has identified a range of interventions that can be applied to health-care boards to improve performance, many of which have been identified earlier in this chapter. He refers in particular to the annual board review, which is a requirement of Monitor's code of governance. 247 This is an expectation that all boards undertake an annual rigorous evaluation of their performance and that of committees. In parallel, Bullivant313 also recommends that boards should undertake a review to ensure that they have mature processes in place covering Garratt's33 key board tasks in relation to mission, vision, strategic direction, prioritisation, monitoring and accounting to stakeholders. He proposes that board members should complete a diary in order to facilitate the discussion and keep focus, with real examples of issues to be addressed. He also discusses the NHS Leadership Academy314 and its checklist to stimulate thinking and discussion about the outcomes that the board requires. Bullivant's313 paper identified 16 different board development interventions (Box 18).

Storey et al. 315 propose the use of a model based on the European Foundation for Quality Management (EFQM) identifying the enablers of understanding roles and purposes of boards, agreeing values and principles, identifying congruent board behaviours and understanding process.

Drawing on practitioner literature, the NHS Institute for Innovation and Improvement developed a board development tool for foundation trusts and aspiring foundation trusts. The tool measures board effectiveness and is intended to be completed by all members of the board. At the very centre of the model is organisational purpose. The tool is structured in three tiers that help to describe any effective board: gaining clarity and insight, clarifying priorities and defining expectations and holding others to account and seeking assurance.

The tool identifies eight facets to be explored:

• board composition

• board engagement

• governance structure

• board agenda

• board reporting

• board dynamics

• chairperson's leadership

• performance evaluation.

This model was evaluated by PricewaterhouseCoopers in February 2010. 316 The key findings of the evaluation were that most boards considered themselves to be performing well prior to undertaking the board development tool, which was in the main viewed as an external checklist. Overall, participants were satisfied with the board development tool and thought it to be effective as a diagnostic tool – the majority of participants agreed that the board development tool was effective as a starting point for consideration of how boards could develop. Effective facilitation was viewed as crucial to the success of the board development tool. This echoes findings below about the deployment of external facilitators.

Board development can be delivered in a number of ways. From the health-care sector, Boggust et al. 317 proposed a four-stage longitudinal non-accredited intervention that lasted for approximately 9 months. The four stages were:

1. briefing to give the chairperson and chief executive the opportunity to decide on the right approach for them to take

2. diagnostic phase, involving two workshops with the whole board to help them understand themselves, their context and content, strengths and weaknesses and relationships in the wider organisation

3. development phase, a process of priority setting and development of strategy

4. implementation stage in which the plans are implemented and the arena set for continuous improvement.

The authors also noted that, although broad governance principles apply to every board, circumstances differ. Each board has to be seen as unique and receive a bespoke programme to meet its needs.

In comparison with the four phases, Chambers and Higgins310 identified four different types of board development dependent on what the needs of the board collectively and its individual members were:

1. Exploratory development. This is related to the generative governance mooted by Chait et al. 32 (see Chapter 2) around organisational renewal, unlearning organisational practices that have become unhelpful by diagnosing new opportunities, new performance measures and new control systems. Cross-cultural exchanges are an example of exploratory development to help boards gain different perspectives and insights into problems and issues that they may be facing and in circumstances in which there are some real choices around strategic development and opportunities, in contrast with transformational development, described below, in which a step change or paradigm shift is required but the direction is already known or sketched out.

2. Transformational development. This encompasses, first, visioning work to ensure that the organisation knows where it is heading, by assessing, mapping and checking both the internal and external strategic environment, and, second, cultural change programmes to ensure that board decisions and behaviours are congruent with the mission and with expectations for the rest of the organisation. Transformational development activity is connected to the long-term and performance axes of board tasks on Garratt's33 framework and to the strategic governance component mooted by Chait et al. 32 (see Chapter 2) relating to the work of the board in business planning.

3. Development of generic capabilities. Generic capabilities of board members include effective board participation comprising constructive challenge, chairing of committees and understanding statutory duties. These capabilities can be gained through open accredited or non-accredited programmes, for example as run by the UK Institute of Directors, or by one-off attendance at conferences or seminars. This relates to the fiduciary governance aspect of the work of board members as highlighted by Chait et al. 32

4. Development of specific capabilities. Specific capabilities of board members relates to sector- or domain-specific expertise and may cover induction, familiarisation with the business, finance, and knowledge and understanding of relevant technical products or services. This chimes with the theory about the expertise required of the ‘engaged board’, as described above.

Bullivant313 has cited the quality and role of facilitators as being essential to the effectiveness of interventions for board development and the need for effective commissioning of facilitation services. He identified that a good facilitator needs to be confident, experienced, able to listen as well as talk, flexible, wise and experienced, and the roles that a facilitator can play are as critical friend, expert advisor and challenger.

Sponbergs291 also suggests that an external person might be helpful, depending on board appetite and also the content and context of what is being worked on. The term he uses is ‘trusted outsider’ who could attend meetings to observe and give feedback on team expertise and dynamics. He does add a caveat here that the person would have to understand how boards operate.

Chambers and Higgins310 indicate that facilitators can be used in at least two distinct ways, either as a single intervention to do a specific piece of work, for instance a board away day or a retreat, or to build up a long-term relationship with a board, for example to aid in longitudinal board development. The authors identified five different styles of facilitation that could be used to aid a board, drawing from Cockman et al.'s work. 318

1. Acceptant – involving listening, encouraging storytelling and exploring narratives – helpful in diagnostics, shaping organisational culture and understanding the impact of emotions on the individual and organisation. This echoes Bullivant's313 view about the need for facilitators to be good active listeners.

2. Catalytic – helping the board to gather information, synthesise and make sense of the information and use the information to make better, more grounded decisions.

3. Confrontational – offering challenge to ensure that the organisation and the board are congruent in word and deed, similar to Bullivant's313 idea of the facilitator as critical friend.

4. Prescriptive – providing expert advice to the board on whatever areas the board are deficient in, echoing Bullivant's313 notion of the expert advisor.

5. Reflective – holding up a mirror that situates the board in the wider system or sector environment and using the facilitator's expert knowledge of the context for peer comparison and insight.

Chambers and Higgins'310 exploratory empirical study found that, although all five styles were found to be relevant according to circumstances, the confrontational facilitating style was most useful to a board and the prescriptive style least useful. Table 15 maps the kinds of board development in relation to the NHS that fit with Garratt's32 cycle of board tasks and also the associated facilitation style that may be the most appropriate.

Stanton319 identified that boards in the NHS have to contextualise the organisation's history, life stage, financial and clinical inheritance, range and scope of the services it provides and overall demographics of the people it provides services for. There is a particular concern around the board of governors in foundation trusts. In response to ambiguity around the role of the governors (as distinct from the board of directors) referred to in Chapter 3, and drawing from theories about boards with particular reference to the two-tier Rhineland model and the mutual tradition, Gregory70 has proposed a governors' role and responsibility framework (GRRF) (Figure 7). The details of the framework are provided in Appendix 2.

FIGURE 7.

Governors' role and responsibility framework.

Conclusions

A review of the general literature and the literature relating to board development in health care has revealed a wealth of largely prescriptive guidance based on review of theories or anecdotal experiences of developing boards. Table 16 offers a map of board development tools according to circumstances or contexts. We are at the stage of being able to map the range of interventions and their relevance in context, mechanism and (desired) outcome terms and this is portrayed in Table 17. There are some clues in relation to the role of a facilitator in board development. Further research is called for to determine the part played by facilitators as enablers here. What is not possible is to determine the effectiveness of board interventions, as there are no significant studies on this, other than self-reports. There is thus a lack of evidence on the underlying empirical basis for the tools and a lack of evaluation of the impact of the interventions.

We identified five areas where board development approaches should be more focused given our previous analysis of board theories, board practices and the impact of boards on organisational performance. We found, first, an inadequate focus on the existence of competing board theories and models. For example, the consequences of starting from an agency position as opposed to a stewardship or stakeholder or managerialist position are not explored in any of the board development approaches that we identified. Second, in relation to the social purpose of health-care organisations, board development may not be giving primacy to developing the skills of the board in addressing clinical quality. Third, in the balance of board tasks, we did not find that board development frameworks drew sufficiently from the elements of fiduciary, strategic and generative governance. Fourth, there is inadequate focus on contingency thinking, for example organisational evolutionary theories, stable compared with unstable environments and the type of organisation led by the board. Finally, the evidence suggests that boards in some circumstances may do well to focus strongly on strategy, but that the way in which they might enact this task will vary according to circumstances. We could not find much evidence of a corresponding emphasis on developing the quality of strategic thinking and decision-making by boards in board development programmes.

Understanding about boards in the NHS context

There is not a simple theory about how boards should operate. We have outlined a realist interpretation framework of board theories, contextual assumptions, mechanisms and intended outcomes. This suggests that the use of certain models for boards may be more appropriate than others, depending on what the priority is in terms of organisational outcome. We have identified some support for the emerging theory of high trust, high challenge and high engagement as a default theoretical position, but with less empirical evidence for the first part of this triadic framework. A high degree of board challenge (see below for references) has been acknowledged in all sectors as being associated with the avoidance of governance failures and, similarly, high engagement is associated with better performance. High trust emanates from stakeholder and stewardship theories around the notion of a collective managerial/public custodian endeavour and a focus on performance improvement and thus has intuitive appeal for organisations with social goals. It therefore has a sound theoretical foundation but without the same degree of empirical evidence that can be attached to it.

We have identified some important distinguishing characteristics in the public and non-profit sectors, including social enterprises:

• social performance (public value) as well as financial performance is a core purpose73,139,154,157,159,168–170

• non-profit board members sometimes invest more of their time and are more predisposed to ‘managerial work’ than their for-profit counterparts32,157,159,205

• public boards may suffer from ‘institutional isomorphism’ in which governance structures, rituals and procedures are copied and reproduced from the private sector without regard for their fitness for purpose for the public sector157,173

• accountabilities on public boards may be blurred as a result of the influence of political patronage, class hegemony and the subversion of formal authority. 67,68,174

Effective board composition, structures, processes and behaviours in the NHS

In addition, specifically in the health-care sector, we found:

• evidence of the importance of an appropriate organisation–environment linkage reflective of resource dependency theory134,141,153,194,195,200–202,210

• increasing embeddedness of health-care governance, that is, as part of a complex superordinate and subordinate governance network134,153,183,202,211–213,314,315

• hybridised corporate and philanthropic models of governance, particularly in relation to board size, representation, payment of fees for board members and committee structure191,192

• little involvement in the setting of strategy, as distinct from endorsement of strategy. 186–188,190

Many authors argue that board practices do vary according to circumstances, in both the private and the public sectors. As well as national, geographical, cultural, organisational size, sectoral and service differences, the following are often mentioned152,191,192,194,200,201,211,216,217 as key variables:

• organisation life cycle (start-up, mature, decline)

• stability compared with transformation or crisis

• degree of professionalisation

• degree of competition or market pressures.

Choosing the appropriate mechanisms (whether it be around board composition, board focus or board behaviours) to achieve the desired outcomes appears to be important according to the particular situation. For example, for stable organisations, increased monitoring and a strengthened rein on a powerful CEO or chairperson if he or she has been in position for some time may be indicated (in accordance with agency theory), in contrast to a focus on boundary spanning and on the external environment (in accordance with resource dependency theory) in circumstances of turbulence and threat.

Understanding about how NHS boards can affect organisational performance

We examined empirical studies about boards in general and about health-care boards to establish how NHS boards can affect organisational performance. Although we found an absence of evidence about linkages between context, mechanisms and desired outcomes, the relevance of contextual factors is well highlighted. This is in stark contrast to the guidance available to boards analysed in Chapter 4, which we found is generally predicated on a one-size-fits-all or universalised approach.

Evidence from empirical studies indicates the importance of taking into account the internal and external environment in the choices that boards make about diversity, board size, proportion of insider and outsider directors, strategic focus and the balance of time spent on advisory/partnering as distinct from monitoring functions. In addition, there was some contradictory evidence and contingent relationships between variables indicating some demiregularities (e.g. a focus on gender diversity is advocated in some circumstances, such as when there is a need for improved monitoring, and not in others). The following evidence is of particular interest and lends further support to a theory about the dynamics of an effective board in relation to high challenge, high trust and high engagement as outlined in Chapter 1, modified in Chapter 2 in the light of our developing understanding about the linkages between different contexts and desired outcomes and further modified as a result of the relative lack of empirical evidence around the importance of a high level of trust on boards:

• The benefits accrued by larger boards, particularly in relation to increased monitoring, are outweighed by higher agency costs, informational asymmetry and communication and decision-making problems. 178–180,193,270,271

• Improved monitoring can come at a cost of weaker strategic advising and greater managerial myopia. Firms with boards that monitor intensely exhibit worse acquisition performance and reduced corporate innovation. 120,186,274

• Board processes (the way that information is gathered, knowledge is built and decisions are made) are more important than structure and composition. 39,167

• Evidence suggests that top-performing non-profit boards in the USA use more recommended board practices such as board self-evaluation and development programmes. 120,139,163–165,203,204

• Studies comparing corporate and philanthropic models of governance in health care suggest that corporate models are associated with increased operational efficiency and increased market share. 193

• For high-performing hospitals and those with better performance in processes of care and mortality there is greater physician involvement at board level, a quality subcommittee and greater expertise and formal training in quality; quality is reported as a higher priority for board oversight and CEO performance evaluation; boards are significantly more familiar with current performance and significantly more involved in reviewing quality data; more time is spent on clinical quality at board meetings (greater than the time spent on financial performance) and there is evidence of will–execution–constancy of purpose. 193,196,206–208

• Boards with strong financial performance exhibit stronger internal behavioural dynamics, for example the chairperson's relationship with the CEO, level of challenge and openness in decision-making, interpersonal climate and systematic implementation of board processes such as the timely sharing of relevant and accurate information, advising and challenging management and regular board education. 202,203,322

• Boards of high-performing hospitals are more fully engaged in key governance processes, including a strong strategic focus, and the prevailing governance culture is more interactive and proactive. 134,202,203,205

Governance failings in health care

It is instructive at this point to consider selected failures in health-care organisations [see Chambers (p. 388)189] that can, at least in part, be attributed to failings in governance and to relate these to the themes developed in this study.

• Grantham Hospital (UK): Beverley Allitt, a nurse, murdered a number of babies in her care. The inquiry (1994) found inter alia that the approved human resources recruitment policy had not been followed in the appointment process to her post at the hospital. 323 This study (see summary in Understanding about how NHS boards can affect organisational performance) has found that hospitals with better processes of care and lower mortality have greater doctor involvement on the board itself and the board prioritises the oversight of clinical quality. The Healthy NHS Board155 places emphasis on the board role in shaping organisational culture and behaviours, and undertaking board development and evaluation.

• North Bristol NHS Trust (UK): In 2003 there was a £44M overspend; independent review found relationship breakdowns and failings within the finance directorate, internal audit, executive team and board, who had all failed to spot and track the growing deficit This literature synthesis (see summary in Understanding about how NHS boards can affect organisational performance) has found that high-performing health-care organisations, in particular those with a stronger financial performance, have boards that are more fully engaged in key performance processes and the prevailing board culture is more interactive and proactive, providing the CEO with both advice and challenge.

• Walter Reed Army Medical Center (USA): In 2007, the Washington Post exposed neglect, dirty and rundown facilities and labyrinthine bureaucratic processes for soldiers attempting to access care and treatment. This resulted in a series of dismissals of evermore-senior service officials responsible for the Center and for the wider health-care system providing for serving soldiers and veterans. Health-care governance is increasingly embedded in broad and complex systems and networks in which accountabilities can be blurred. Systematic board focus on clinical quality of care is associated with superior performance.

• Mid Staffordshire NHS Foundation Trust (UK): The Francis report3 in 2010 found that the board lacked focus on the job of a hospital in terms of caring for patients and had poor levels of insight and a confused system of governance. A common theme we have found emanating from the literature on public and non-profit boards is that their core purpose is assuring social performance (securing public value) in addition to financial performance. Drawing from evidence from the health-care and the private sector we have also identified the importance of boards having a strong grip and high levels of engagement, although the need for this will vary according to prevailing circumstances.

Board development tools, techniques and interventions

In Chapter 5 we map the range of board development tools, techniques and interventions. We are at the stage of being able to map the range of interventions and their relevance in relation to context, mechanism and (desired) outcome configurations. This is an advance on existing guidance for boards, which, as we have seen in Chapter 3, is generally predicated on there being one best way. There are some clues in relation to the importance of the role of an external facilitator in board development. 292,310,313

What is not possible is to determine the effectiveness of board interventions as there are no significant studies on this, other than self-reports. There is thus a lack of evidence on the underlying empirical basis for the tools and a lack of evaluation of the impact of the interventions.

We identified five areas where board development approaches should be more focused, given our previous analysis of board theories, board practices and the impact of boards on organisational performance. These are:

• more emphasis on the existence of competing board theories and models

• further attention to the three elements of fiduciary, strategic and generative governance

• primacy to developing the skills of the board in addressing clinical quality

• exploration of contingency thinking, for example organisation evolutionary theories, stable compared with unstable environments and the type of organisation led by the board

• understanding of the board role in shaping strategy, according to circumstances.

Questions of particular interest to members of the advisory group

Members of the stakeholder and advisory group (see Chapter 1) identified a series of questions that they would find useful for this study to address. Our analysis of the literature has provided an opportunity to offer some insights while emphasising (a matter that was entirely understood by the group) that simple answers to these questions are not possible. The main areas where we were able to make progress, and which are pertinent to both future practice and research, are:

• What are the role and purpose of NHS boards? In what ways are these the same as or distinct from other boards? To what extent are diffusions of governance models, for example in relation to financial performance from other sectors (e.g. the commercial sector), applicable to the NHS? What is not transferable?

  • Distinguishing characteristics of boards in the public, non-profit (including social enterprises) and health-care sectors are analysed in Chapters 3–5 and summarised in Understanding about boards in the NHS context and Effective board composition, structures, processes and behaviours in the NHS. We have identified a strongly held view coming from the literature on boards in the public and non-profit sectors that social performance criteria should be considered as important as financial performance criteria. In the health-care sector this would translate as a need for attention to be paid by boards equally to the patient experience and outcomes and to finances and service efficiency. This is a fundamental difference between the two sectors. The realist methodology has revealed that effective boards in both private and public sectors face choices and should moderate their approaches in relation to board composition, focus and behaviours, according to circumstances, for example the degree of stability, turbulence, threat and competition in the external environment, start-up compared with established organisations, the need to minimise risk, and the power and length of tenure of the CEO. Beyond the existence of doctors on boards, the preconditions for a relentless focus by the board on clinical quality of care are not well understood.

• What is the range of contributions that board members can usefully make? What are the respective roles of specialists/experts (e.g. clinicians) and generalists and what contributions can they make? What is the role of the chairperson in running the meeting, framing the discussion, ordering the agenda? What is and could be the role and function of the board of governors in foundation trusts in comparison to the role and function of the board of directors?

  • The role of the board and particularly the non-executive directors in shaping, formulating and evaluating strategy is a recurring theme and there is some evidence that this activity has been comparatively neglected on boards in the English NHS. The presence of insider experts on the board (particularly medical clinicians) appears to be of value in ensuring superior performance, both clinical and financial. The role and function of boards of governors in foundation trusts is explored above (see Chapter 3, especially Health-care boards, and Chapter 6, especially Board development in health care) and in Appendix 2. There is overall a lack of empirical evidence on the impact of the composition of health-care boards on organisational performance.

• How important is diversity (style, gender, background, knowledge and ethnicity) for dynamics and effective board working? When?

  • Issues of diversity, specifically in relation to gender, are explored in Chapters 2 and 4 on theory and guidance around board composition. There are four main lines of argument: the need to tap into the widest possible talent pool; the fact that diverse boards understand their stakeholders better; it prevents ‘groupthink’; and the increasing (recent) evidence that women on boards are associated with better firm performance.

• What questions should this study be asking in the light of forthcoming changes in the NHS (e.g. for foundation trusts, clinical commissioning groups)? What are the lessons from the evidence about effective boards that are applicable to clinical commissioning groups?

  • The lessons are summarised in the first four sections of this chapter. The study indicates the importance of boards of provider organisations, including foundation trusts and social enterprises, balancing financial demands with considerations of continuous monitoring and improvement of clinical performance. Clinical commissioning groups are start-up organisations, which according to the evidence might do well to focus on boundary spanning to establish productive interorganisational relationships locally and nationally. There is also evidence that a predominantly insider expert board (e.g. with GPs filling the majority of the positions) to develop strategy and services may be timely in this early stage. In subsequent phases, a revisiting of board composition and focus may be necessary to ensure vigilance against unnecessary risks and to re-evaluate strategic priorities.

• What kinds of board development are effective and in what circumstances? What is a good balance between individual and collective board development?

  • Evidence on this was missing in the general literature as well as in the literature on health-care boards. Our conclusions about the focus for board development in the light of emerging evidence about effective boards are summarised in Chapter 6. The conclusions include more emphasis on the existence of competing board theories and models and further attention to the three elements of fiduciary, strategic and generative governance, developing the skills of the board in addressing clinical quality and understanding of the board role in shaping strategy, according to circumstances.

Areas for further research

There is not a simple theory about how boards should operate. The synthesis of the diverse literature about general and health-care boards leads us to a better understanding of what kinds of boards (in relation to composition, focus and dynamics) operating in specific contexts may be conducive to certain organisational outcomes. Some of the literature around the impact of health-care boards on performance is quite heavily US focused and there remains a problem of transferability of that evidence to other contexts. There remain gaps in our knowledge and understanding about the impact of boards on performance and about the importance of context. Much board development is hypothesised on incomplete understanding of the role and purpose of boards in context. We suggest three main areas for further research:

1. Given the presence of mimetic institutional isomorphism, according to which we argue that the NHS may have copied governance structures and processes from other contexts, we would recommend further empirical studies on the question of the composition of NHS boards, replicating some of the studies that we have analysed which have taken place outside health care. This would include questions of board size and the issue of the philanthropic compared with the corporate model, the proportion of non-executive directors (lay members) compared with managers, length of tenure, diversity and the background and expertise of non-executive directors. This would offer an evidence base for the first time around board composition for the NHS.

2. We know that there is research under way investigating the question of board governance and patient safety. 324 Broadening this somewhat, our analysis of non-profit, including social enterprise, and health-care boards leads us to an understanding that NHS boards do have social performance (public value) as well as financial performance as a core purpose, but permission for an overarching focus on clinical quality may be only just emerging. We recommend a study to complement the mainly US studies that identifies the conditions under which this focus on clinical quality, encompassing clinical effectiveness and patient experience as well as patient safety, is allowed to flourish.

3. We could not find studies that evaluated the impact of board development tools, interventions and programmes on organisation outcomes. This was a gap in the general literature as well as in the literature on health-care boards. We therefore recommend an empirical study that investigates associations between board development activities and organisational performance, and the role of external facilitation, mindful of the mediating effect of different health-care system contexts. This would offer an understanding for the first time of the contribution of board development to higher organisational performance.

Concluding remarks

As clinical commissioning groups form and their boards start to meet, as NHS trusts continue to oversee the planning and delivery of health services, they may take some comfort from the fact that the evidence is not there (and unlikely ever to be) that there is one right or wrong way to go about effectively discharging their governance role. This study has shown that we should be wary of prescriptive guidance which carries that underlying assumption. It is in our nature, however, to abhor a vacuum. A practitioner guide for NHS boards and clinical commissioning groups will accordingly be developed using the findings from this study, which will offer some steer about the choices that boards face around composition, focus and dynamics, drawing from the theory and evidence that this realist review has illuminated about the potential consequences of those choices.

Contribution of authors

Naomi Chambers (Professor of Health Policy and Management), as chief investigator, designed the study and led the main review, report writing and editorial process.

Gill Harvey (Reader in Health Management) advised on methodology, contributed reviews of specific research questions and compiled sections for the final report.

Russell Mannion (Professor of Health Systems) advised on the overall design and conduct of the study and contributed to the report writing.

Julian Bond (Senior Fellow) contributed reviews of specific research questions and compiled sections for the final report.

Jane Marshall (Academic Engagement Librarian) assisted with the design and conduct of the literature review.

Disclaimers

This report presents independent research funded by the National Institute for Health Research (NIHR). The views and opinions expressed by authors in this publication are those of the authors and do not necessarily reflect those of the NHS, the NIHR, NETSCC, the HS&DR programme or the Department of Health. If there are verbatim quotations included in this publication the views and opinions expressed by the interviewees are those of the interviewees and do not necessarily reflect those of the authors, those of the NHS, the NIHR, NETSCC, the HS&DR programme or the Department of Health.

RQ3: impact of boards on performance

Aim: To assess the empirical evidence on how NHS boards can contribute to organisational performance.

Research question 3: What is the empirical evidence (positive and negative) on the impact of NHS boards on performance, including at different stages in the performance cycle?

Propositions to be explored in the literature:

• 3.1 High-performing boards take a critical perspective on how they measure and control for organisational performance.

• 3.2 Boards prioritise quantifiable and more easily measurable areas of performance.

• 3.3 Hearing and using patient and staff perspectives and patients' stories are important in framing board business.

• 3.4 Boards in the NHS may have more influence on financial performance than on clinical performance (does finance trump quality?).

• 3.5 ‘Greater’ (however measured) contribution of non-executive directors on boards is associated with higher organisational performance.

Background to the governors' role and responsibility framework

Reproduced with kind permission of William Gregory. ⁷⁰

The GRRF adopts a similar approach to the leadership qualities framework (LQF) to introduce each primary and enabling element of the framework by providing a headline description and indicating why it is an important element of the specified governor role. The results of the structured questionnaire (chapter 6 and appendix B) are also used to evidence the relevance of each element, where appropriate.

There then follows a tabulation of the different levels, and associated characteristics, at which each role elements can be performed from ‘zero’ to ‘three’. The zero level is intended to describe characteristics that are likely to be evident when the role element is not being performed effectively, with levels one to three showing progressive sophistication.

Where characteristics have been developed from published material this is referenced accordingly. Where evidence from the interviews in Chapter 6 is used to support a characteristic this is indicated by the use of ‘Interviews’.

D2 Fiduciary Role

D3 Supervision Role

D4 Representation Role

References

1. Aims/Objectives

The aims of this proposed literature synthesis are to provide intelligence for enhanced NHS board effectiveness, to understand the strengths, weaknesses and gaps in existing theories about boards and to offer a practical guide for NHS boards for their development. The 4 objectives and research questions in more detail are:

Objective 1: To explore the main strands of the literature (for example in corporate governance, behavioural economics, organisational studies, organisational strategy, organisational psychology, public management, healthcare management) about boards and to identify the main theoretical and conceptual frameworks which relate to the structure, purpose, functions, behaviours and effectiveness of boards

Research question 1: Where are the main disciplinary sources of ideas about boards and what are the principal theories, conceptual frameworks and main paradigms?

Objective 2: To understand to what extent the experiences of NHS boards match these theories and to provide an explanatory framework for understanding the characteristics of effective boards in the NHS

Research question 2: How can theories and evidence about how boards operate in general help NHS boards in their work, in particular in the light of recent and forthcoming changes to the structure and governance arrangements in the NHS?

Objective 3: To assess the empirical evidence about how NHS boards can contribute to organisational performance

Research question 3: What is the empirical evidence (positive and negative) about the impact of NHS boards on performance, including at different stages in the performance cycle?

Objective 4: To map and evaluate different approaches to board development including diagnostic tools, models of assessment and facilitation, and identify how these approaches relate to theories about board effectiveness and to their impact on organisation performance

Research question 4: What are the different approaches to healthcare board development and which are likely to work best in different contexts and types of NHS organisations?

2. Background

3. Need

There is a need for reducing the variation in organisation performance across the NHS (for example, as measured by the quality and safety of care provided and efficiency and productivity) for which boards hold ultimate responsibility. By exploring how effective boards can add value here, this research will benefit patients and improve service efficiency. In the wake of the publication of the Francis Report (2010) into the failings at Mid Staffordshire NHS Foundation Trust, the chief executive of the NHS has emphasised the role of boards as guardians of patient safety. The NHS Confederation, which represents the NHS board member community, has expressed the need for more detailed analysis of the complex issues around the cultures and characteristics of boards (NHS Confederation, 2005).

Interest in how boards can control and influence organisations as complex as those that make up the NHS is likely to continue and indeed to be increased, particularly in the light of recent failings in patient safety and in view of the quality, innovation, productivity and performance (QUIPP) agenda, and as the scale of efficiencies required begins to bite.

With the advent of sweeping NHS reforms in the years up to 2012, David Nicholson has also reiterated the contribution of boards to provide the necessary challenge and support. The findings of this evidence synthesis will also be highly relevant as GP commissioning consortia begin to determine their own governance arrangements. The findings will also be timely as discussions and decisions about different forms of integrated boards take place, for example with regard to the proposed local health and well being boards and the strengthening of the ‘local democratic legitimacy’ of the NHS as envisaged by the White Paper, Equity and Excellence: Liberating the NHS (Department of Health, 2010).

Findings from this study will affect healthcare management practice through highlighting the contributions that boards can make. The study will use and build on a developing body of knowledge in relation to healthcare governance, organisational culture and performance which have been subjects of other funded SDO studies (for example, Sheaff, 2004, Davies, 2005, Mannion, 2010).

4. Methods

The study is an evidence synthesis of a diffuse literature in relation to boards and organisation performance with particular reference to healthcare boards and with special emphasis on the NHS. A literature review commissioned for the NHS Institute on board effectiveness concluded that ‘. . . there is no agreement among researchers on the best framework for identifying, measuring and discussing characteristics of effective boards . . . There has been a lack of clear definition of concepts and a reliance on incomplete research models. This means that there is little convergence on terminology, definitions and findings’ (Selimet al, 2009:5). The terrain is characterised by some complexity in terms of the multiple locations of the evidence across different disciplinary traditions, by weakness and ambiguity in terms of association and causation (and direction of causation) and by the influence of contextual factors on board characteristics, performance and effectiveness. Given this complexity, a conventional systematic review, with its emphasis on a hierarchy of evidence and randomised controlled trials as the research design of choice to address questions of effectiveness, would not be appropriate. Indeed, a traditional systematic literature review would almost certainly be unable to take account of the multiple and inter-connected variables that influence boards and their performance.

A realist angle on the other hand emphasises the contingent nature of the evidence and addresses questions about what works in which settings, for whom, in what circumstances and why (Pawsonet al, 2005). Given that boardroom practices have been described as a ‘black box’ (Selimet al, 2009), this seems a sensible approach to take: the study will aim to open that ‘black box’. A realist synthesis also emphasises an iterative approach between programme theory and predicted theory (ibid) and we therefore propose this for our over-arching research design.

Realist synthesis belongs to the family of theory driven review. It starts with knowledge and theory and ends with more refined knowledge and theory, along the way ‘stalking and sifting’ ideas and empirical evidence (Pawsonet al, 2005). In our case, the synthesis will address questions in particular about how boards operate, in what circumstances, and why, the influence that boards have on organisational performance, and the effectiveness of tools and techniques for board development. The focus is therefore very much on mechanisms rather than on boards per se. Realist review learns from, rather than controls for, real world phenomena, thereby providing an acknowledgement, for our study, that no two boards are the same in human composition, context or stage of development. The limitation of realist synthesis is that it is a method which is still in development with a relatively small number of studies under its belt (Pawson 2006). However, from the reviews and literature published to date, it is an approach that appears to address the limitations of more traditional systematic review methods when dealing with complex social interventions across different circumstances, and using a range of mechanisms and with varying underlying beliefs and assumptions (Greenhalghet al, 2007). Its focus is on offering explanations rather than judgements, and developing principles and guidance rather than making rules. For the purposes of this review, we believe this is a more appropriate course of action to take – it will offer insights for practitioners to take note of and make use of and will offer a valuable addition to the armamentarium currently available to members of NHS boards.

In considering alternative approaches, we are mindful of an analysis of alternative approaches to systematic review (see Table 1 below) which underlines that only realist synthesis meets the criteria for focusing on mechanisms rather than whole programmes. In our case, this will allow us to look at discrete aspects of boards (composition, methods of working, governance arrangements and so on) rather than having to consider ‘the board’ as the overall unit of analysis.

An example of the successful use of a realist synthesis was in relation to the public disclosure of healthcare information about performance. One of the outputs of this research was a theory map which exposed differences between programme theories and theories in use, which is a key aim of this proposed study: the illumination of differences between how boards ‘ought ‘to be working and current board practices. One of the members of this research team (GH) contributed to that work and also to the authorship of a seminal article on the topic (Pawsonet al, 2005). To illustrate how theory mapping would work in this study, there is some evidence (and exhortation in current guidance) for a triadic proposition (a programme theory) that a combined culture of high trust, high challenge and high engagement by non executive directors on boards is associated with better organisation performance (Chambers and Cornforth, 2010). There is also evidence of some of the consequences of a distortion of these behaviours (Selim, 2009). Figure 2 below provides an example of the potential development and refinement of a theory map in relation to this:

FIGURE 2.

An initial ‘theory map’ of board dynamics.

One of the principles of realist synthesis is the importance of sense making. The meta-narrative mapping approach to synthesising evidence is attractive because it acknowledges different disciplinary traditions and changes to dominant narratives over time (Greenhalgh, 2004). This approach was deployed to illuminate changing paradigms across different disciplines in understanding about the diffusion of innovations (ibid). Board governance is also a good example of where the dominant narrative has changed, with a shift away from the discourse of agency theory within the political science discipline to a more hybridised one in which, inter alia, board dynamics within the organisational behaviour discipline is now playing a significant contribution. We therefore propose using a meta-narrative mapping exercise within a realist framework specifically to address our first research question which is to identify and explain the rise and fall of dominant theories about the role and functioning of boards.

A key test for SDO funded studies is that the research questions and subsequent research findings are relevant and usable for the target audience who are responsible for the organisation and delivery of healthcare. In accordance also with realist review principles, we would therefore suggest that the research questions are provisional, as we would plan to hone and refine these with a joint expert advisory and stakeholder group formed of researchers active in the relevant discipline areas, together with the target audience of board members and managers. We would plan to convene this group once on a face-to-face basis in Manchester and to run a facilitated workshop early on in the study to elicit programme theories about board structures, processes, dynamics, development and impact on organisation performance and to guide the development of the research questions. Contact would be maintained electronically during the study with members of the stakeholder group and in particular the provisional findings would be checked out with them. This embeds the ‘linkage’ between practitioners and researcher communities which is advocated as a key characteristic of realist synthesis and helps to move findings from research into practice (Lomas, 2000). We would like to emphasise that the interaction with NHS board members and others in the advisory group is part of the synthesis process and in order to improve the process of sense-making and interpretation of the literature that we are reviewing and will not involve any empirical data collection.

We would anticipate that, in addition to the academics, stakeholder group members would include at least one ‘ordinary’ non executive director and one Foundation Trust governor, one board chair, one chief executive, one executive director, one opinion leader with a national-level interest and role in board development, a contact each from the NHS Confederation, Monitor, the Foundation Trust Network, the NHS Appointments Commission and from the board development team at the NHS Institute for Innovation and Improvement.

In terms of the detailed plan, it is summarised in Table 2, with more detail about the search strategy provided in Table 3 as this lies at the heart of the study. It is important to note that the four objectives with their associated research questions are closely inter-related. For example arriving at an understanding about different approaches to board development (the final objective) will be founded on literature on theories about boards, their application in NHS contexts, and evidence about how boards affect organisation performance. Equally, although Table 2 suggests a sequential set of phases, in realist review, there is an iteration between the phases, so for example it is likely that theories about boards and explanations about the characteristics of effective boards in NHS contexts will be shaped and reshaped throughout the course of the study.

It is important to cover the territory comprehensively. This involves examination of board theory and practices in the corporate and non profit as well as government sectors, and across academic disciplines (for example corporate governance, public management, leadership, institutional economics) using expected search terms such as ‘board governance’ and ‘board development’ but also ‘organisation strategy’ and ‘organisation performance’ as well as snowballing techniques. Databases that will be searched include ABI-Inform, Business Source Premier, Medline, Embase and HMIC. In addition to building on previous relevant SDO studies (for example, Sheaff, 2004, Davies, 2005, Mannion, 2010), we understand that a research proposal (principal investigator: Russell Mannion) on the effective board governance of safe care: an investigation into the relationship between Trust Board practice and patient safety in NHS Hospital Trusts has been recommended for funding subject to satisfactory responses to comments (NIHR SDO Call 10/1007 – Patient Safety in Healthcare Organisations) and we will ensure that there are synergies between the two studies with the sharing of papers and so on.

In relation to managing the potential volume of papers, from diverse sources, the purposive sampling strategy will set strict boundaries in relation to relevance, allowing for iteration. Data extraction, and inclusion/exclusion is less linear than in traditional systematic reviews and decisions here will call for pre-existing knowledge of the subject area and the exercise of judgement on what to include/exclude from the review (drawing on advice from the research team and stakeholder group as required).

5. Contribution to collective research effort and research utilisation

The first knowledge product will be the main evidence synthesis report for NIHR SDO which will provide intelligence for enhanced NHS board effectiveness, founded on an analysis of the strengths, weaknesses and gaps in existing theories about boards, and on insights into the particular contexts, mechanisms and outcomes that can be identified in relation to the potential for high performing boards in the NHS. The second main knowledge product will be a practical guide for NHS boards for their development. The third will be a seminar in London arranged by the applicant researchers for members of NHS boards to present, discuss, debate and disseminate the findings and to promote the distribution and use of the guide. This seminar will provide an opportunity for participants to relate the study findings to their own circumstances and contexts. A further knowledge product will be presentation at two conferences (one academic and one practitioner) for wider dissemination of the theoretical and practical findings of the study. It is suggested that the suitable practitioner conference would be the NHS Confederation as that is the prime conference for NHS board members (CEOs, chairs, executive and non-executive directors). It is suggested that the suitable academic conference would be at the European Health Management Association, which provides a ‘meeting point’ for researchers, teachers, managers and policy makers with an interest in healthcare. It is also anticipated that the outcomes of the study will be submitted for publication in at least one high ranked peer reviewed academic journal (for example the British Journal of Management) as well as in a practitioner journal (for example the Health Service Journal).

6. Plan of Investigation

The monthly project timetable is provided in Table 4 below.

7. Service users/public involvement

As this is an evidence synthesis, the requirement for public involvement is not as central as it would be for an empirical study. Given the realist synthesis that we have chosen however we have emphasised the need for linkage with practitioners as well as with researchers acting as critical friends. The plan is therefore for the expert advisory and stakeholder group to include individuals from the ‘ordinary’ non executive community.

We would plan to convene this group once on a face-to-face basis in Manchester and to run a facilitated workshop early on in the study to elicit programme theories about board structures, processes, dynamics, development and impact on organisation performance and to guide the development of the research questions. Contact would be maintained electronically during the study with members of the stakeholder group and in particular the provisional findings would be checked out with them. This embeds the ‘linkage’ between practitioners and researcher communities which is advocated as a key characteristic of realist synthesis and helps to move findings from research into practice (Lomas, 2000). We would like to emphasise that the interaction with NHS board members and others in the advisory group is part of the synthesis process and in order to improve the process of sense-making and interpretation of the literature that we are reviewing and will not involve any empirical data collection

We would anticipate that, in addition to the academics, stakeholder group members would include at least one ‘ordinary’ non executive director and one Foundation Trust governor, one board chair, one chief executive, one executive director, one opinion leader with a national-level interest and role in board development, a contact each from the NHS Confederation, Monitor, the Foundation Trust Network, the NHS Appointments Commission and from the board development team at the NHS Institute for Innovation and Improvement.

8. References

This protocol refers to independent research commissioned by the National Institute for Health Research (NIHR). Any views and opinions expressed therein are those of the authors and do not necessarily reflect those of the NHS, the NIHR, the HSR programme or the Department of Health.