Editorial: Councils must be better at management

Rob Campbell. Photo / Chris Gorman

Editorial

Rob Campbell, once one of the sharpest young minds in the trade union movement, has kept a lower profile since his thinking changed radically in the 1980s. He took his talents to the boardrooms of industry and built such a reputation that he is now a professional director of numerous listed companies and chairman of four of them. One day last week he took part in an Auckland seminar called "leadership in governance" and challenged one of the most powerful shibboleths in the administration of companies and public bodies these days.

"Governance", in modern management theory, is distinct from management. Governance is the setting of goals, policies and priorities and not the execution of these things, which must strictly be left to managers. Governance is what boards of directors are supposed to do and managing should be left to the chief executives and those under them. That is the theory. In practice, Mr Campbell observed, most companies need directors to be more active.

"Be a director, not a governor," he said at the Future Auckland Leaders alumni dialogue session last Wednesday. "The cynic in me wonders whether "good governance" is something we observe before something significant goes wrong, and 'bad governance' is what we comment on afterwards."

How true. When something goes badly wrong in the execution of a decision - and it is only at that level things usually go wrong, governance deals in broad principles that are unlikely to be at fault - the directors will wish they had done something to avoid it.

"Any director who has considered the depth and hands-on nature of their obligations in respect of health and safety or issuance of new securities," Mr Campbell continued, "will find it very hard to maintain the distinction between governance and management so beloved of governance experts."

Among those who should be applauding his candour are elected members of the Auckland Council, indeed all councils.

Nowhere has modern governance theory been imposed more strongly than in local government. In Auckland, the elected council is constituted the "governing body" to distinguish it from the chief executive and senior officials who are empowered to make implementation decisions.

The separation of roles probably works even less well in the public sector. Accountability in the private sector operates mainly on financial performance - measures that are more straightforward than the political pressures and employment protections that operate in the public sector.

Controversies have arisen in Auckland over the consequences of implementation decisions made by management staff of the Auckland Council that have caught elected members by surprise.

Worse, the elected members are given so much work of little substance in the name of governance that some complain they have too little time to attend to citizens' practical problems. This has to change. Hopefully Mr Campbell's comments have resonated in high places.