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Effective governance can mean the difference between a successful museum, that reaps the rewards of higher visitor numbers, unique partnerships and increased funding for example, to one that struggles to keep its doors open. Here Yasmin Khan speaks with consultant Stephen Feber, who has been providing creation and production services to the cultural sector for over 30 years, about what makes best practice for museum boards ................................ What’s your experience of governance of museums in the UK? ................................ I currently run the Museums and Resilience Leadership Programme which I founded in partnership with Dr Nick Winterbotham and the Black Country Living Museum, funded by Arts Council England. As a consultant, my particular focus is on the creation, development and sustenance of resilient, well governed and effectively managed organisations. I have developed and operated eleven museums, visitor attractions and sites in the UK, as a curator, Chief Executive or Director. I’ve been a board member of the Museums Association and the Association of Independent Museums, among others. ................................ Are boards getting it right? ................................ Yes and no. In effective organisations there is a close linkage between governance, leadership and management. In practice that means a good working relationship between the chairman or chairwoman and the CEO or Director informed by timely, accurate and appropriate information. It’s the Director’s job to make sure this flow of knowledge to the board is working well. It’s a judgement call and boards vary in their appetite for detail but as a general rule of thumb they only need to know enough to make good quality decisions which guide the strategic development of the organisation in a way which is aligned with its overall purpose. ................................ Where this isn’t working and where governance capability is limited, weak leadership ensues and failure can be quite spectacular, as in the case of Keeping Kids Company and the Mid Staffordshire NHS Foundation Trust. There is a very well established body of good practice in terms of board behaviour which applies equally publicly owned and operated organisations and charitable trusts. Sitting behind this are the new 2015 SORP regulations and the Charities (Protection and Social Investment) Act 2016, which are partly a response to a climate of unease about the quality of governance; they provide a tightening of the regulatory framework, better analysis of income sources and assets and a welcome strengthening of the powers of the Charity Commission. ................................ Good board practice with this tightened legislative and regulatory regime should help improve the behaviour of boards and avoid disasters like Kids Company, which are thankfully rare in the cultural sector. ................................ What key trends are you noticing? ................................ There is no doubt that the cultural sector operates in a more complicated social, legislative, financial and regulatory framework than it did 20 years ago. The advent of the Lottery, fuelling very significant building and refurbishment programmes, the growth of commercial sponsorship, increasing emphasis on earned income and the rapid decline of public funding for the sector, have all created complexity. Although the overall number of charities in the UK has remained relatively static, and of course not all arts and museum organisations are run by Trusts, there has been a significant trend in the establishment of Trusts to own and operate them. ................................ Alongside this change in the cultural sector, is a long running transfer of former statutory services, like social care, housing and health, to charitable operation. This has meant a very significant increase in capital and revenue funding flowing through the not for profit world, a much larger asset portfolio under ‘third sector’ control and a concomitant increase in demand on governance capacity; there is greater requirement for good trustees and the job they have to do is also more exacting.
I would say there are five interlinking areas museum boards must bear in mind: .
1. The ‘Balance Sheets’ — it’s essential that governance focuses on the acquisition and development of strong balance sheets, both cultural and financial. Cultural and financial asset depth is vital if organisations are to be resilient and persist and thrive over time. Surprisingly often, in our experience, too little attention is paid to these critical areas by Boards and senior management teams. Having a strong asset base makes a material difference to the resilience of organisations, their confidence and their appetite for calibrated risk-taking. Weak balance sheets, both cultural and commercial, render organisations vulnerable and less creative.
2. Knowledge systems — well run organisations have effective, timely and accurate systems for translating data into information, then into knowledge and finally into wisdom. It’s important that these are well structured to measure return on investment financial, cultural and human. Good processes and procedures for organisations exist to provide, for example, contribution analysis by activity area or good cash flow forecasting. These should dovetail seamlessly with the new SORP regulations 2015.
3. Long-term thinking — it’s remarkable how often cultural organisations which exist to make a difference over the long term operate with short term horizons. There should be a balance between strategic planning and tactical response to the changing environment. Strong balance sheets and effective knowledge systems are only really effective when guided by clarity of purpose. Clarity of purpose only emerges from rigorous internal debate and good quality strategic planning
4. Dynamics — even with the above three factors operating well, organisations sometimes go off track when there is a change of Board members, particularly when a new Chair takes the helm. The quality of relationship between the Chair and CEO is often the decisive factor. The subtleties of managing Board dynamics and therefore the nature of leadership provided by the Chair and the CEO or Director should not be underestimated. Good practice in terms of rotation, selection and induction is crucial; Understanding, analysing and reacting to dynamic change in relationships between the Board and senior staff is an essential dimension to good governance. ................................ On the surface Boards whether within the charitable sector, Local Government system or the directly funded DCMS museums and galleries, can appear robust and substantial; the portraits of Board members and their impressive CVs, shown on websites can be misleading. In reality they can be fragile, indeed, mercurial. Having a Board of the ‘great and the good’ whether in a local, regional, national or international context does not guarantee good governance. Boards may be composed of individuals powerful in their own spheres of activity but can be challenging personalities to manage. Connection, influence and diversity are essential at Board level for organisational resilience although this places a premium on strong leadership by the CEO, senior team and the Chair.
5. Radars — in the traditional strategic planning processes, boards and senior management teams can use standard SWOT process to look at their internal strengths and weaknesses, coupled with a PESTLE framework that acknowledges the long-term vision for the organisation, to take stock of emerging trends in the political, economic, social, technical, legal and environmental worlds. This calibrates and tunes the ‘organisational radar’. Radar is also a shorthand term for the essential networking and forward thinking dimensions of governance and it is a key part of the linkage between the Board and the senior management team. Although networks of influence, affiliation and membership have always been critical for those fulfilling the governance role, this has become much more important given the increasing complexity of the environment for arts organisations and museums.
What is the perennial challenge for boards? ................................ There is a two-way flow between the management, operation and leadership of the organisation at the paid staff level and the board. You can think of this as a perpetual flow between, at the bottom level data collected from interactions and transactions, which is then translated into information, knowledge and finally wisdom. In a well governed organisation wisdom isn’t the sole province of the board; anyone in the organisation can become well-informed and wise providing they understand the strategic direction and purpose of the operation. If the flow from data to information, knowledge and wisdom isn’t working well then different parts of the organisation can get out of sync; a board can be detached from critical knowledge and take ill-informed governance decisions. Effectively the movement between each level and back again is one of filtering and decision-making. It’s a subtle process that needs constant attention; the price of liberty and good governance being eternal vigilance. ................................ Yasmin Khan is a Cultural Consultant. Twitter: @ya5min_BL
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