Topic 1.5 The Importance of Governance and Compliance in the Public Sector

In this section, we examine in more depth the meaning and nature of public sector governance. We do this by discussing various perspectives, and by providing some state, federal and international definitions and actioning approaches around public sector governance, and encourage you to continue to examine these in the light of the critical importance of governance in the public sector.

Public sector governance encompasses:

• an emphasis on public value and public values;
• a recognition that government has a special role as a guardian of public value and values;
• a belief in the role of public sector management as a service to and for the public; and
• an emphasis on citizenship and democratic collective governance.

Overall, public sector governance might be thought of as the oversight that helps citizens, as a collective, reflect on the expected and actual public value created by policies, programs, projects, and other efforts (Kernaghan, 2003)^[1] and that supports the various public undertakings when the value is clear and the cost reasonable (Bryson et al, 2014)^[2]. This public value governance is focused on delivering the overall set of outcomes encompassed by public sector value. The role of government agencies has evolved over time. Public sector managers, who once developed objectives (what should be done), guided service delivery (how things should be done), and chose the tools for achieving outcomes, now are part of a network of a community of members from multiple sectors, that includes public-minded public sector managers.

Citizens as participants have become problem-solvers, co-creators and are actively involved in the mindset of governance as well as being voters, clients, customers, and public opinion generators. Various real-time sharing technologies have hugely influenced the way that citizens participate in, and communicate and interact with the various government agencies. Citizens can ‘rate’ just about every aspect their civic lives.

The role of public sector policy makers, and managers is nuanced, more ambiguous, and part of a complex system. Government agencies can be a “convenor, catalyst, and collaborator – sometimes steering, sometimes rowing, sometimes partnering, and sometimes staying out of the way”; thus managers and elected participants must create public value so that “what the public most cares about is addressed effectively and what is good for the public is pursued” (Bryson et al, 2014, p. 4).

Increasingly, the imperative is for managers to act within the context of ambiguous policy direction, to consider alternative delivery mechanisms, and to use pragmatic decision criteria. Accountability is multi-faceted – so not only hierarchical and market-driven, but encompassing community values, politics, professional standards and citizens’ interests. So public sector managers must understand public sector value, public values, the public sphere, and overall the importance of how these concepts are articulated, what the expectations are that shape the potential outcomes, and how these are measured, assessed and communicated.

Public value accounting is a mechanism that decides if and when value has been delivered given that government assets have been used; that those assets include government resources and the respective authority to use them; and that the overall sets of costs and benefits have been considered, but including the comprehensive balancing of the welfare of and responsibility to, affected others in the light of a just society (Bryson et al 2014).

Effective agencies focus on achieving good governance. Bryson et al (2014) suggest that some of the principles that are noted as important for the implementation and oversight of public sector governance mechanisms include:

• Strategy – involves planning and structures, such as strategic and operational planning, organisational structure and having defined and appropriate roles and responsibilities
• Culture – relates to leadership and integrity, demonstrated in leadership structures and behaviours, executive oversight of strategic decisions, embodiment of leadership principles, conduct and values, employee engagement and commitment to service delivery
• Relations – refers to communication and reputation, shown in internal and external communication and relationships, striving for a reputation for excellence, working effectively across organisational boundaries
• Performance – relates to effectiveness and efficiency, through performance monitoring and evaluation systems and process, both at an individual and organisational level, as well as performance reporting
• Compliance and accountability – this involves meeting statutory and other obligations, through audit, delegation of authority, and having policies, processes and plans to manage finances, risk, human resources, as well as ethical, equal opportunity, occupational health and safety and record keeping obligations.

The following statement from the APSC Building Better Governance publication makes a strong argument for a holistic approach to considering strategy and governance.

Good governance is about both performance and conformance. Performance relates to how an agency uses governance arrangements to contribute to its overall performance and the delivery of goods, services or programmes. Conformance relates to how an agency uses governance arrangements to ensure it meets the requirements of the law, regulations, published standards and community expectations of probity, accountability and openness.

This means that, on a daily basis, governance is typically about the way public servants take decisions and implement policies. A healthy evaluation environment also uses ‘audit’ processes and outcomes to support and enhance organisational governance.

Conclusion

In Module 1, we have encouraged you to appraise the role of strategy in delivering public value, and of the importance of governance in the public.

As we move into the next module, keep in mind the importance of value in the public sector context, and continue to reflect on the direction and action tools – strategy and a business model.

To deliver on desired outcomes, organisations must identify, muster and enable the various resources necessary. It must also have a clear understanding of the environment in which it operates. Hence, in Module 2 we first build a template of the strategy journey, we explore a set of tools that enable a comprehensive picture of the organisation’s environment, and we suggest a means by which the organisation can attempt to match its capabilities to that environment.