Why is it important for organisations to consider reputation and credibility as a strategic priority rather than an operational matter?
I’ll start off with what I think is important in the charitable sector, although I would also want to say to this audience that these are important factors in any governance context. In the charitable sector, the trust and confidence of the communities with which we work and in which we work is really critical to our effectiveness. Reputation and credibility go directly to the level of trust and confidence we draw on from the community. That’s absolutely about strategy because it’s about our ultimate effectiveness in what we’re here to do.
‘Community’ has a really broad meaning for us. It means all sorts of different things to all sorts of different people. For social service organisations, where I generally do a lot of my day job, the community will be people using those services; people supporting those services either as paid workers or in the volunteer workforce; or the people creating the policy environment in which services are being delivered.
So reputation and credibility are important in all of those relationships, and that’s a strategic as much as an operational matter. Operationally day to day you need to have an eye to reputation and credibility but it absolutely has to be part of your strategy.
I’m also on the board of a national arts organisation and their credibility and reputation are equally important but those challenges might play out in different ways. You’ve got audiences who you may never know in a personal sense, but they’re absolutely part of your community. You’re getting reviewed publicly in the newspapers. You can do your very best to build and sustain your reputation but a bad review can deal a serious blow for an arts organisation. But that’s the reputational landscape arts organisations work in.
What steps does Health Justice Australia (generally) take to engage its stakeholders and maintain public trust in its operations given that they’re so diverse?
The principles I follow to do that are: transparency and accountability. Those are the principles that really underpin the trust and confidence that people have in charitable organisations and NFP organisations more broadly.
The work I did as part of my Fulbright Professional Scholarship in Nonprofit Leadership was absolutely about this. I’ve drawn on examples from the US around philanthropy and charitable work, and then I continue to practice those principles in my work.
For Health Justice Australia, we’re a start-up, a new national charity, but we were born out of a national movement integrating healthcare and legal services. And so we have this very strong national network that is really our primary stakeholder group. Our work in setting up this organisation and developing its strategy has drawn very heavily on the input and involvement of those stakeholders.
We tested what has become our organisational strategy (which is a public document) with those stakeholders, face-to-face and in group consultations with opportunities to provide high level input or quite detailed feedback on that documentation.
Because they’d been drivers of the creation of the organisation, we really saw those stakeholders’ buy in to our strategy as incredibly important. As we’ve moved through the first and second years of starting up to now being established and growing, those stakeholders continue to be really critical relationships for us. For example, those stakeholders all provided a starting point at our first national conference last year which brought together 200 people, flying in from across the country and internationally, from a whole range of professional practices and NFP organisations.
That strategy has really played out in terms of cementing a good supporter base that has continued to see the organisation thrive.
Do those stakeholders’ interests ever conflict and if so, how to do you mediate those competing interests?
Not yet, but one of the priorities for this organisation is developing research around health justice partnerships which is the space that we work in. The service model brings lawyers into healthcare teams to provide access to free legal advice for patients who need it. We don’t deliver those services but we support them in terms of their effectiveness and expansion. And the first way we’re working to provide that support is through a ‘National Evaluation Framework’.
Once you start evaluating effectiveness, ideally you’re looking for a good news story but there will be lessons about what’s not working. So we have been preparing our networks for what that might look like. Again the conference we held in October was the starting point of that, we made it very clear that as we start to evaluate this work, we’ll be working with those services about what the research is finding in terms of where we’re making an impact, where we may not be making an impact, where there are clear things services could do to be more effective.
While we would want to do that from a constructive and a productive approach, we will also be publishing the findings of the research so there will be public accountability on us and that will have an impact on those stakeholders.
At every stage of developing our strategy, we’ve tested it with our stakeholders. Having engaged them in that process, it might be a rocky road. We may have results from evaluations that people don’t like, but they know that it’s coming and they understand why we’re doing it. They’ll be part of designing the methodology and the strategies. That buy-in gives us a strong set of relationships to test and navigate some of that rocky road to come.
We’ve really been trying to lay the groundwork for moving from cheerleader to change maker. It means moving away from being a cheerleader of a concept to being able to drive a conversation about changing how services meet the needs of the communities that they’re here to support.
Do you believe there is a ‘trust crisis' in the NFP sector?
I want to defuse this idea about a trust crisis as there are a lot relativities that are worth keeping in mind. The data I am aware of shows trust in charities has declined slightly recently, but trust in charities is still very high compared to other institutions. And the relativities relate to much lower levels of trust in business and government and justice institutions like police. That needs to be part of the conversation we are having which, at its heart, should be about community engagement, community control. I think declining.
When an NFP experiences a drop in trust or a crisis situation, what steps should they take in the short term to reassure their stakeholders? How can NFPs prepare for those situations?
The first step is internal discussion about what the problem is and what is the best solution to that problem, and then what do we need to communicate about that. Depending on the severity and likelihood of public interest, as CEO I would be bringing the board into those discussions in the very early stage and then at the point where we’ve got a proposed strategy for action. At a minimum, you want your board to be backing you as a CEO as well as the strategy and response – it is important to test that response with the board to gain their strategic input. Ideally your board is out there providing some of that voice themselves.
I think we need to recognise we’re long past the stage where you can brush things under the carpet or smooth things over. That we’re in an environment where access to information, the dissemination of that information, the availability of data and the dissemination of that data means information gets out very quickly. We’re potentially not even in the position to control it. We need to take a really strong leadership position in that information that we’re putting out.
So then the question is who are you putting that information out to? For organisations that have a lot of public engagement, they may have a strong media profile or a high brand recognition in the public, I think you need to be up for public statements that put on the record the charity’s view, the board’s view, the governance approach around the situation.
To some extent they might try and provide some background, but the critical question is: what are we doing to address it?
In our case, as a start-up, we have made in-roads into public engagement and we’ve had a bit of media but the brand recognition for us is still very much within the stakeholders with whom we’ve got direct relationships, rather than the general public.
How would you rate solutions to the ‘trust crisis’ like creating a new ‘Head of Trust’ roles or ‘Trust and Safety’ departments at NFPs, like Uber and Airbnb have done?
Context always matters. For organisations like Uber and Airbnb, there’s a business model those companies have been running and then there’s a message they have about the sharing economy. That message is really trying to engage with notions of community. Those companies have fallen foul of those messages because their business model hasn’t supported those messages. A ‘Head of Trust’ that has a line of sight over that within a corporate operation like those makes sense.
For the charitable sector, the starting point for me is that trust in us is critical for what we do in the community, at every level. In a charitable organisation you need to mainstream that approach. You run the risk of not being able to do that if you locate that all in one position, rather than seeing that as part of everyone’s business.
Size also matters. There are charities in Australia with 100s of millions of dollars in income, massive programs, a structure where there are clear distinctions between different parts of the organisations or its activities, and all that can make mainstreaming quite difficult. For those organisations, it may be that you want someone championing trust internally.
For the majority of charities in the country, which are small organisations who might have one or two full time equivalent staff, might have a couple of hundred thousand in income, you’re not going to be creating a dedicated role but you need to be thinking about this all the time in all of your operations and in your strategic direction.
You absolutely need champions, but they can’t be the only people holding the can. There’s a whole culture that needs to back that in. AICD has been running a really strong conversation about organisational culture in the past year. It would be interesting to bring that into this conversation as well – culture is what supports trust and confidence; its’ what builds transparency and accountability.
As the CEO of an NFP, what is integral to your healthy relationship with your board?
I’m very lucky with my board that the Chair is herself a jobbing CEO, so there’s a very good and very explicit insight into the difference between operational matters and the role of the CEO in implementing that, and strategic matters and the role of the board in overseeing them.
That’s also reflected in the boards that I’m a member of, where the Chairs of those boards are also jobbing CEOs. So I’m constantly working in an environment where there’s very clear respect for those boundaries.
In terms of my own relationship with my Chair, we speak regularly and then we have a sense of what are the issues where we might need an ad hoc conversation. We’ve also been really explicit that as the organisation is a start-up, so too is the board. We’ve had really clear discussions about the governance evolving as the organisation does. We started with the size of the board being the minimum that we needed for our charity registration (three). As the organisation grows in size and revenue, so too will the board.
A good example of a board’s conversation transitioning as an organisation does is our approach to culture. Originally I was a CEO of one, so the ‘organisational culture’ priority for the board was my self-care as a start-up CEO. Now that we’ve moved to a staff team, we are starting to consider broader questions about organisational culture, such as managing work-life balance. I’ll be putting that on the agenda for the Chair to consider how the board looks at that. Alongside that we’ve been developing all the organisational policies that recognise that we now have staff, like leave, delegations, etc.
The principle that underpins my relationship with my Chair and board is: no surprises. No surprises in terms of strategic challenges that hit the board without notice. Our Chair and our board need to be briefed about the things that might be coming, things that might come to them in their capacity as board members.
Tessa Boyd-Caine will be a panellist for the session ‘NFPs and the trust crisis’ at the 2018 Australian Governance Summit in March. The go-to event for Australia’s director community is fast approaching capacity. Book your place today.