police Governance
Police Governance Presentation to the April 2015, CAPG Summit on Police Governance: Governance Change and Pressures around the World Thoughts on the trending issues in police governance: “Are we there yet? Reflections on 25 years of police governance” presentation to the CAPG Conference, August, 2014. |
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Why Governance and the Public Sector: More than Ever Before
Governments around the world create various forms of arms length organizations and unique forms of governance and oversight for them for a number of reasons. The range is extensive and often quite specific to the situation. Governments all have large commercial operations over which they retrain an ownership interest, often manifest in the board of directors. Many other functions are delegated to arms length organizations where, for a variety of reasons, specialized oversight boards or commissions are created. It is in this realm that this paper will find its focus.
The study of governance has generally focused on the private sector. There is a rich literature on governance theory and practice as well as a wealth of research. As Davis and Useem have pointed out, governance in that sector addresses “the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment.” [i] This leads directly to the application of agency theory in defining the governance relationships. The application in this area is to ensure that governance structures and processes ensure that the agent is sufficiently constrained and aligned that he or she complies with the principal’s best interests. [ii]
The application of agency theory to public sector governance certainly, on its face, appears to be a sound one. As argued in the traditional view of agency theory[iii], the creation of a board or commission to provide oversight to a particular agency of government would strengthen the notion that the principal, in this case the state, wants to strengthen its control over the agent, in this case a special purpose body or discrete entity within the array of government structures. The question that arises in any survey of the many oversight mechanisms of agencies in the public sector is why here and not there? Why does not the normal political/bureaucratic oversight model (call it ministerial or departmental control) prove insufficient? There is little to suggest a consistent application of specified criteria in the creation of specialized oversight entities. However, some patterns are discernable. Oversight bodies that could come under the broad rubric of governance may be created when:
· An agency of government is created to operate in a near commercial, generally off-budget environment but with residual public policy goals. In other words, the agency is not fully privatized, but rather operates mostly in the private sector but with public interests or ownership. Many postal services operate in this manner.
· An agency of government, while still within the ambit of political direction, operates a highly specialized service that requires expert governance. Many publicly owned financing entities would fit into this category.
· A public entity is created by public law, but operates with full independence. In this instance, governance oversight is needed to ensure principal interests are aligned. An example here would be a public hospital, university or educational authority.
· A public agency is responsible for a service or function that is highly specialized but has to operate with considerable independence from daily political direction while still requiring oversight in the broader public interest. Police and security agencies come readily to mind.
While a typology of this kind would appear to follow a track of logic, addressing those agencies of government that are remote from direct political control or in need of highly focused control, the simple reality is that the application of this typology would, in scanning many countries, appear to be random. Some agencies have some form of principal-based governance and some do not. Even within the range of Canadian police services, which serve as the foundation for this paper, governance practices varies widely across the country. Therefore, one could readily catalogue a wide array of boards of directors appointed to oversee public agencies. The number would be impressive. However, any notion of consistent application of the principal-agency concept by use of such governance practice would prove elusive. This is perhaps one of the key realities of public sector governance practice. In the end, the authority to govern comes from the government that has created such entities. Further, when the government chooses to not create such entities, it opens the possibility of direct political intervention in the functioning of such agencies. This paper cannot address the issues inherent in that possibility. Suffice it to say that the issue is a complex one. In the end, the decision to create specialized governance of agencies is a matter of public policy. From the perspective of the skills needed to provide effective governance, this relationship must be noted. Often specialized oversight bodies are created to strengthen public interest oversight. Often they are created to create a buffer between direct political interference and the agency that must maintain some independence in both practice and form. Often such oversight is designed to strengthen either transparency or representivity. In all cases, those who serve on such boards are at a nexus between a meta-principal – the government – and the agent. They are in essence titular principals acting for a meta-principal or owner but with the goals of the agency in mind and often in trust as well. The potential for tension is inherent.
Corporate governance is therefore a valid line of inquiry for public administration. In fact, as governments seek different ways to deliver services, often through arms length arrangements, the question of oversight and governance grows more important. Having boards not simply as tokens but also capable of governing will become increasingly important. The need to have the skill set to govern in this complex environment follows logically.
Public sector corporate governance is anything but uniform. In fact it is widely distributed with the oversight boards of arms length agencies being part of a complicated mix of accountability and policy direction not the be all and end all of it. As noted in one government publication, “The board of directors plays a central part in governance. Its general role is to cultivate the organization’s short and long-term success consistent with the organization’s mandate and objectives, and to do so in an accountable manner. When discharging its responsibilities, the board oversees the affairs of the organization, supervises management through the chief executive officer (CEO), and sets standards for organizational conduct.”[iv] However, the powers that it has to do that vary dramatically.
[i] Davis, Gerald F., and Michael Useem. 2000. “Top Management, Company
Directors, and Corporate Control.” In Andrew Pettigrew, Howard Thomas, and
Richard Whittington (eds.): Handbook of Strategy and Management. London: Sage.
[ii] Jensen, Michael C., and William H. Meckling. 1976. “Theory of the Firm:
Managerial Behavior, Agency Costs, and Ownership Structure.” Journal of Financial Economics 3:305–60.
[iii] Levinthal, Daniel. 1988. “A Survey of Agency Models of Organization.” Journal
of Economic Behavior and Organization 9:153–185.
[iv] Best Practice Guidelines, Government of BC, 2005
Governments around the world create various forms of arms length organizations and unique forms of governance and oversight for them for a number of reasons. The range is extensive and often quite specific to the situation. Governments all have large commercial operations over which they retrain an ownership interest, often manifest in the board of directors. Many other functions are delegated to arms length organizations where, for a variety of reasons, specialized oversight boards or commissions are created. It is in this realm that this paper will find its focus.
The study of governance has generally focused on the private sector. There is a rich literature on governance theory and practice as well as a wealth of research. As Davis and Useem have pointed out, governance in that sector addresses “the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment.” [i] This leads directly to the application of agency theory in defining the governance relationships. The application in this area is to ensure that governance structures and processes ensure that the agent is sufficiently constrained and aligned that he or she complies with the principal’s best interests. [ii]
The application of agency theory to public sector governance certainly, on its face, appears to be a sound one. As argued in the traditional view of agency theory[iii], the creation of a board or commission to provide oversight to a particular agency of government would strengthen the notion that the principal, in this case the state, wants to strengthen its control over the agent, in this case a special purpose body or discrete entity within the array of government structures. The question that arises in any survey of the many oversight mechanisms of agencies in the public sector is why here and not there? Why does not the normal political/bureaucratic oversight model (call it ministerial or departmental control) prove insufficient? There is little to suggest a consistent application of specified criteria in the creation of specialized oversight entities. However, some patterns are discernable. Oversight bodies that could come under the broad rubric of governance may be created when:
· An agency of government is created to operate in a near commercial, generally off-budget environment but with residual public policy goals. In other words, the agency is not fully privatized, but rather operates mostly in the private sector but with public interests or ownership. Many postal services operate in this manner.
· An agency of government, while still within the ambit of political direction, operates a highly specialized service that requires expert governance. Many publicly owned financing entities would fit into this category.
· A public entity is created by public law, but operates with full independence. In this instance, governance oversight is needed to ensure principal interests are aligned. An example here would be a public hospital, university or educational authority.
· A public agency is responsible for a service or function that is highly specialized but has to operate with considerable independence from daily political direction while still requiring oversight in the broader public interest. Police and security agencies come readily to mind.
While a typology of this kind would appear to follow a track of logic, addressing those agencies of government that are remote from direct political control or in need of highly focused control, the simple reality is that the application of this typology would, in scanning many countries, appear to be random. Some agencies have some form of principal-based governance and some do not. Even within the range of Canadian police services, which serve as the foundation for this paper, governance practices varies widely across the country. Therefore, one could readily catalogue a wide array of boards of directors appointed to oversee public agencies. The number would be impressive. However, any notion of consistent application of the principal-agency concept by use of such governance practice would prove elusive. This is perhaps one of the key realities of public sector governance practice. In the end, the authority to govern comes from the government that has created such entities. Further, when the government chooses to not create such entities, it opens the possibility of direct political intervention in the functioning of such agencies. This paper cannot address the issues inherent in that possibility. Suffice it to say that the issue is a complex one. In the end, the decision to create specialized governance of agencies is a matter of public policy. From the perspective of the skills needed to provide effective governance, this relationship must be noted. Often specialized oversight bodies are created to strengthen public interest oversight. Often they are created to create a buffer between direct political interference and the agency that must maintain some independence in both practice and form. Often such oversight is designed to strengthen either transparency or representivity. In all cases, those who serve on such boards are at a nexus between a meta-principal – the government – and the agent. They are in essence titular principals acting for a meta-principal or owner but with the goals of the agency in mind and often in trust as well. The potential for tension is inherent.
Corporate governance is therefore a valid line of inquiry for public administration. In fact, as governments seek different ways to deliver services, often through arms length arrangements, the question of oversight and governance grows more important. Having boards not simply as tokens but also capable of governing will become increasingly important. The need to have the skill set to govern in this complex environment follows logically.
Public sector corporate governance is anything but uniform. In fact it is widely distributed with the oversight boards of arms length agencies being part of a complicated mix of accountability and policy direction not the be all and end all of it. As noted in one government publication, “The board of directors plays a central part in governance. Its general role is to cultivate the organization’s short and long-term success consistent with the organization’s mandate and objectives, and to do so in an accountable manner. When discharging its responsibilities, the board oversees the affairs of the organization, supervises management through the chief executive officer (CEO), and sets standards for organizational conduct.”[iv] However, the powers that it has to do that vary dramatically.
[i] Davis, Gerald F., and Michael Useem. 2000. “Top Management, Company
Directors, and Corporate Control.” In Andrew Pettigrew, Howard Thomas, and
Richard Whittington (eds.): Handbook of Strategy and Management. London: Sage.
[ii] Jensen, Michael C., and William H. Meckling. 1976. “Theory of the Firm:
Managerial Behavior, Agency Costs, and Ownership Structure.” Journal of Financial Economics 3:305–60.
[iii] Levinthal, Daniel. 1988. “A Survey of Agency Models of Organization.” Journal
of Economic Behavior and Organization 9:153–185.
[iv] Best Practice Guidelines, Government of BC, 2005