How to take decisions

In addition to all the other problems you knew you had, you can now add the risk that your decisions might not be lawfully taken. Unfortunately, it is quite easy to get it wrong. The consequences can be horrendous, causing expense and delay, and even resulting in the abandonment of otherwise great proposals.

In addition to all the other problems you knew you had, you can now add the risk that your decisions might not be lawfully taken. Unfortunately, it is quite easy to get it wrong. The consequences can be horrendous, causing expense and delay, and even resulting in the abandonment of otherwise great proposals. 

We thought this would be a good time to reflect on best practice in decision-making and share our top tips with you. This article is written with NHS bodies in mind, but the corporate governance principles it sets out are applicable to all types of organisation. 

Right Person/Body

Your constitution (if you are an Foundation Trust(FT)), standing orders, standing financial instructions and committee terms of reference will tell you who should be taking the decision. These are normally pulled together in a “scheme of delegation” (SOD), but bear in mind that the SOD (rather like the NHS Constitution) is just a summary of powers and rights that reside in the other documents, so you will need to make sure that the SOD is updated as changes are made to the documents from which it derives its authority. 

A point for FTs here is that standing orders commonly say that decisions reserved to the board of directors can be taken by named individuals (often the chair and the chief executive (CE), sometimes in consultation with other non-executive directors) where the decision is urgently required. That doesn’t work for FTs unless the Chair and CE are formally constituted as a committee. This is because an FT’s decisions have to be taken by the board of directors, who can only delegate to committees formed entirely of directors or to an executive director. As Monty Python might have said, “Chairman’s action is right out.” 

Right information/right time

This is topical, given the Parliamentary ructions last week, where John Bercow had to suspend the sitting of the House of Commons to allow for the distribution of the Government’s Brexit white paper. In doing so, he interrupted the Brexit Minister, who had already opened the debate on the white paper even though no one else had seen it, much less considered it. Having said that, if a decision cannot be postponed it is still better to have the information late than not at all. 

If a decision is taken without sufficient/correct information, there is a risk that the decision will be based on a mistake of fact, which could of itself be grounds for a legal challenge. In an extreme case, boards might even stray into Wednesbury unreasonableness territory (again, a ground for judicial review). In addition, the Monitor NHS Provider Licence requires FTs to adopt the principles of best practice in corporate governance, which must surely include The Intelligent Board and its emphasis on ensuring that boards have sufficient information to take decisions, but not so much information that the directors are overloaded. 

Follow your rules…but don’t have too many

All NHS bodies have formal rules of procedure. They cannot be ignored and should be followed unless (a) there is a defensible reason not to do so, and (b) the rules allow for procedure not to be followed. A common mistake here is to simply suspend the standing orders (as allowed under most NHS bodies’ standing orders), without recognising that the same paragraph says that no business can be transacted during the suspension. 

It flows from the last point that the more rules you have, the more likely it is that you will break one. Our recommendation is that rather than setting out masses of complex rules (for example) about motions at a meeting, it would be better to leave these matters to the discretion of the chairman of the meeting. 

Be clear about what you have decided

While it is rare for there to be a formal vote at NHS bodies’ meetings, in our experience NHS boards and committees are much clearer about what decision they have taken than their equivalent in the private sector. This can be both a help and a hindrance. In the minutes of most private sector boards, it is unusual for discussion to be recorded and this means that it is much harder to criticise the reasoning behind the decision. 

For the NHS however this is often not an option, partly because it is poor corporate governance and partly because of the number of statutory duties on NHS boards to “have regard” to guidance or statutory principles. Packed within these two words are the requirements that the guidance or principle to which the duty relates must be considered and, if the board wishes to divert from it, then they should minute that fact and the reasons for not following the guidance/principle. 

Take advice

If you have a difficult decision to take, it may help if you ask an external adviser for their advice. If you are old enough to remember the Guinness trial, then you might remember Roger Selig’s successful defence, which was along the lines of: “we asked our lawyers and other advisers about it and they couldn’t see anything wrong. How can you criticise us for relying on their expert advice?” 

Of course taking advice may not be helpful if the answer you get just points out that on the one side you have the devil and on the other you have the deep blue sea. We think that an adviser should be prepared to tell you what they would do in your shoes. We drum this into our lawyers with our Outstanding Client Service requirement for “advice that actually provides advice”, which is one of our five “essentials”. 

Get someone else to take the decision

Although the heading is consciously facetious, there is a serious point for those to whom decision-making has been delegated under an organisation’s corporate governance framework. In the same way that novel, contentious and repercussive decisions are outside delegated limits and have to be referred up to the Treasury, there is a good argument for referring really difficult decisions up to the board of directors. 

One reason is that, as the highest authority within your organisation, it will be a better place to take decisions that carry significant financial, regulatory or reputational risks – what in other contexts might be refer to as “bet the company” decisions. Another is that having the decision taken by a larger and more diverse group of executive and non-executive directors may mean that the consideration and decision are qualitatively better. Think “two heads are better than one”.

Our content explained

Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.

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