When people think of best practice in government, two things come to mind, benchmarking and national award winners.  While both represent best practice, there is another approach which is growing in use and importance.  This is the Good Governance Framework. The Good Governance Framework is the concept of identifying and listing the best practices in government.

It is part of a national trend to systematize management practices. In this respect it is kin to bench marking and the assessment of performance for national awards. It, however, is geared towards both behavior and management practices.  Thus, its scope is philosophically broader. In addition, it represents the desired standards of the public administration profession.

An example is the framework’s development and evolution in the United Kingdom. The evolution shows how Enterprise Risk Management (ERM) has not only become a staple in the idea of good government practice but has evolved into an international standard of best practice.  (Parts of this piece come from the forth coming book, “Risk Based Thinking for Government”, authored by Kline and Hutchins.)

Good Governance Framework in the United Kingdom

In 2004, The Independent Commission on Good Governance in Public Services, issued a report entitled “The Good Governance Standard for Public Services”. The Commission was organized under the auspices of the Office for Public Management and The Chartered Institute of Public Finance and Accountancy (CIPFA).  Its purpose was to develop a standard by which government performance, throughout the nation, could be guided and evaluated. The report listed six elements which constitute good governance.  These are:

1. Focusing on the organisation’s purpose and on outcomes for citizens and service users.
2. Performing effectively in clearly defined functions and roles.
3. Promoting values for the whole organization and demonstrating the value of good governance through behavior.
4. Taking informed, transparent decisions and managing risk.
5. Developing the capacity and capability of the governing body to be effective.
6. Engaging stakeholders and making accountability real.

In 2007, the Society of Local Authority Chief Executives and Senior Managers (SOLACE) in conjunction with CIPFA conducted a similar examination.  It resulted in the adoption of the good governance elements of the Commission on Good Governance.  Its report was entitled: “Delivering Good Governance in Local Government: Guidance Note for English Authorities”.  Thus, the Good Governance framework became formally endorsed by SOLACE, the local government professional association.

In 2013, CIPFA, in conjunction with the International Federation of Accountants (IFAC), issued a Consultation Draft entitled “Good Governance in the Public Sector – Consultation Draft for an International Framework”.  In 2014, the framework was adopted as, “International Framework: Good Governance In The Public Sector”.  The CIPFA members are accounts and auditors in the U.K. The IFAC has members from 129 countries and represent 2.5 million accounts around the world.  There are seven elements in the international framework.  These are:

1. Strong commitment to integrity, ethical values, and the rule of law
2. Openness and comprehensive stakeholder engagement
3. Defining outcomes in terms of sustainable economic, social and environment benefits
4. Determining the interventions necessary to optimize the achievement of intended outcomes
5. Developing the capacity of the entity, including the capability of its leadership and the individuals within it.
6. Managing risk and performance through robust internal control and strong public financial management
7. Implementing good practice in transparency and reporting to deliver effective accountability.

The key difference from the 2004 framework and the international framework was the addition of sustainability.  Risk management remain the same, while the remaining elements were retained, but stated differently.

The international framework indicates that risk management and internal controls are integral parts of the organization performance measurement system.  The elements of an effective risk management system, listed in the framework, are consistent with international standards, such as ISO 31000:2018. According to the framework, effective risk management should include:

1. Implementing a risk management framework.
2. Defining the entity’s risk management strategy, approving the limits for risk taking, where feasible, and determining the criteria for internal control.
3. Integrating the processes for managing risk into the entity’s overall governance, strategy and planning, management, reporting processes, policies, values and culture.
4. Reviewing key strategic, operational, financial and fraud risks regularly and division responses consistent with achieving the organization’s objectives and outcomes.
5. Engaging staff in all aspects of the risk management process.
6. Monitoring and reviewing the risk management framework and processes on the regular basis
7. Reporting publicly on the effectiveness of the risk management system through an annual governance statement.

In 2016, CIPFA and SOLACE issued a new edition of Delivering Good Governance in Local Government: Framework. This framework is to be used by local governments in conducting and reporting annual governance statement.  With the issuance of the new edition, the framework’s elements became an audit standard for local governments in the U.K.

Conclusion

The evolution of the framework shows how a guide moved to an audit standard and in the process became an international best practice.  While the verbiage and some of the focus has changed, like the new emphasis on sustainability, the inclusion of ERM has been present since 2004.   ERM’s inclusion in the audit guide and international good governance frame work,  indicates that ERM is considered a professional standard.

Bio:

James J. Kline is a Senior Member of ASQ, a Six Sigma Green Belt, a Manager of Quality/Organizational Excellence and a Certified Enterprise Risk Manager.  He has over ten year’s supervisory and managerial experience in both the public and private sector.  He has consulted on economic, quality and workforce development issues for state and local governments.  He has authored numerous articles on quality in government and risk analysis. jeffreyk12011@live.com