Good governance in practice

The Court of Audit has carried out a background study of good governance as practised at institutions working in the public domain. We looked at organisations in the education sector, the care sector and the housing sector. We also considered institutions that enter into alliances to provide cross-sector services. We concentrated on the two aspects of good governance in which both the policy makers and the institutions themselves are the most interested: internal supervision and stakeholder service.

Good governance in policy

Good governance is embedded differently in the policies in place for the education, housing association and care sectors. Despite the differences, however, we found that good governance in all sectors is associated with greater independence from central government. The expectations regarding the benefits of good governance in the various sectors diverge. The care and housing association sectors expect good governance to improve accountability for the quality of their work. The Minister of Education, Culture and Science (OCW) goes a step further and defines good governance as a precondition for quality. All three sectors agree that good governance stands or falls on good managers.

Good governance in practice

Internal supervision

In all three sectors, both the policy makers and the institutions themselves have high expectations of internal supervision. We concluded that the implementation of internal supervision is vulnerable, partly because of the high expectations. We identified the following three risks:

1. internal supervisors fulfil several, potential conflicting functions;

2. supervisory boards are independent but rely on management for the information they receive;

3. formally, no one can intervene if a supervisory board does not work correctly.

Stakeholder service

Expectations are also high with regard to the service provided to stakeholders. And just like internal supervision, implementation is not yet fully crystallised. The institutions have not succeeded in organising their stakeholder service so that the service can deliver what the institutions expect of it. The identification of relevant stakeholders and the management of expectations are two areas that deserve serious consideration.

Good governance at alliances, scale of operations and relationships

In all three sectors, we found that individual institutions enter into alliances with other organisations. These alliances are often cross-sectoral, with institutions from different sectors joining forces. It is thought that alliances will improve the quality, accessibility and affordability of the service. The main point for concern is the tension between rules and practice: rules and financing are organised by sector, whereas institutions are increasingly offering services that transcend sectoral boundaries. Experience with good governance at alliances has shown that there is still a great deal of uncertainty. The relationship between supervisory boards and alliances, for example, is uncertain and the service provided to stakeholders is more complex.

Themes for the future

The background study also looked at a number of themes for the future. It considered the conflict that can arise between the social legitimacy of an institution (especially at local level) and its political steering (also at national level). Another theme for the future is the implementation of the four Ps of good governance: principles, processes, performance and people. There seems to be fairly broad consensus on the principles of good governance. But the processes, performance and people are more difficult. What is the right attitude for a manager? When is the service provided to a stakeholder good? And when does a social enterprise get things right? Our study found that there was no consensus on the answers to these questions.

Current status

The background study was submitted to the House of Representatives on Tuesday 30 September 2008.