Part 3: Strategic direction
3.1
In this Part, we discuss:
- why setting a clear strategic direction is important for effective governance;
- the main findings from our work; and
- how well each entity performed against our expectations.
Why is setting a clear strategic direction important for effective governance?
3.2
Boards have a central role in setting their organisation's strategic direction. Strategic direction-setting includes setting realistic medium and short-term outcomes, priorities, and expenditure/investment choices and budgets.
3.3
Input into strategic thinking and planning to prepare a coherent strategy is of fundamental importance to effective governance.
3.4
We expect boards to set the strategic direction of their organisations. Boards need to contribute to, and challenge, the strategic planning process, based on an understanding of stakeholder expectations and the wider context that their organisations operate in.
3.5
Once established, a board needs a shared and strong understanding of its organisation's strategic direction and to use that understanding to inform its decisions.
3.6
An organisation's board has a role in maintaining oversight of the main activities the organisation is carrying out to drive its strategic direction – for example, significant change projects such as restructuring. Boards need to balance this role with maintaining the important distinction between governance and management activities. The process through which the board agrees the organisational strategy, its explanation in the strategic plan, and strategic activities should include identifying how the board will be kept informed of progress against the main activities.
3.7
Boards must consider how they maintain oversight of any significant deviations from strategy, emerging risks, and delivery of planned benefits from any significant change programmes. This is particularly important when entities have limited resources to carry out significant change or redevelopment programmes.
Main findings about strategic direction
3.8
Overall, the boards were appropriately engaged in setting the strategic direction of the entities.
Setting strategy
3.9
The boards demonstrated a strong and shared understanding of the strategies for their organisation. Board members were able to explain the strategic direction of their organisation and how this strategic direction aligned with the broader strategies set by their primary stakeholders – for example, a ministry or local authority. Boards demonstrated that they were using strategic direction to make decisions and assess the organisation's performance.
Working with others
3.10
We saw some entities working effectively with others in the sector to understand and work towards sector-wide outcomes and activities. This is important in determining the strategic direction of the organisation and the key strategic activities.
3.11
However, the sector can do more to ensure that entities are working together to deliver sector-wide outcomes. The positive work that is being done by entities throughout the sector to understand sector-wide outcomes and activities could be better translated into action, with oversight and direction from the boards.
3.12
The level of engagement with external stakeholders in the preparation of strategies varied among the six entities. Overall, more could be done to increase the involvement of stakeholders in strategy. We discuss stakeholder engagement in more detail in Part 5.
The entities' performance
3.13
Figure 2 sets out the criteria we have used to assess each entity's performance for the strategic direction aspect of governance.
Figure 2
Framework for assessing a board's performance – strategic direction
| Assessment rating | Criteria |
|---|---|
| Leading | The board draws on its knowledge of the wider strategic outcomes associated with the cultural, arts, and heritage sector and the Government's strategic priorities. The board places strategic direction at the centre of all decisions it makes. There is a strong alignment between strategic outcomes and performance assessment. |
| Comprehensive | Strategic direction is comprehensively documented and aligned with strategic vision. There is a shared understanding of strategy, which drives decision-making. Stakeholders are consulted in the preparation of strategic documents. The board demonstrates shared understanding of the factors responsible for the organisation's success. |
| Progressing | Strategic direction is documented and aligned to the strategic vision. The strategic direction is aligned with the expectations of stakeholders. The board demonstrates an understanding of the key factors responsible for the organisation's success. |
| Developing | Strategic direction is documented and partly aligned to strategic vision. Stakeholders are partly involved in preparing strategic documents. The board demonstrates some understanding of factors responsible for the organisation's success. |
| Ad hoc and limited | Strategic direction is somewhat documented but inconsistently understood. The board demonstrates limited understanding of factors that contribute to achieving strategic outcomes. |
Auckland Art Gallery
3.14
We assessed Auckland Art Gallery's performance on strategic direction as "Comprehensive".
3.15
The board and management team at Regional Facilities Auckland and the management team at Auckland Art Gallery have a shared understanding of the strategic direction of the Gallery. This strategic direction was well documented and understood by the board and management, and was well explained in the board papers we reviewed.
3.16
We saw evidence that the board's understanding of Auckland Art Gallery's strategic direction is used to inform decision-making. For example, the board agreed to hold the "My Country" exhibition even though it was forecast to operate at a loss. The board understood that the Gallery's strategic direction includes the cultural value and cultural outcomes of an exhibition, as well as the potential for profit, and any losses could be offset by other exhibitions likely to receive high visitor numbers.
3.17
The board has considered how the operations of the different business units of Regional Facilities Auckland can help Auckland Art Gallery deliver its strategic outcomes. For example, the Gallery shares back-office resources such as marketing and human resources with other Regional Facilities Auckland business units, which supports operational efficiencies and financial sustainability.
Creative New Zealand
3.18
We have not assessed Creative New Zealand against this aspect of effective governance. Because new members to the Arts Council had recently been appointed when we did our audit, the Arts Council had not had a chance to be fully involved in preparing or challenging the strategic direction of Creative New Zealand.
Govett-Brewster Art Gallery
3.19
We assessed Govett-Brewster Art Gallery's performance on strategic direction as "Progressing".
3.20
Govett-Brewster Art Gallery's strategic direction, outcomes, and performance expectations are documented, but detailed information is not published. This is because Govett-Brewster Art Gallery is a small component of larger long-term planning for New Plymouth District Council.
3.21
Govett-Brewster Art Gallery has a relationship with several trusts and foundations, but interviewees noted that these organisations had limited involvement in preparing the Gallery's strategic documentation. We expect funding bodies to be consulted in the strategy-setting process. This would help align each group's understanding of the strategic direction and their contribution to it.
3.22
There is some shared understanding among board members of Govett-Brewster Art Gallery's desired strategic direction after the Len Lye Centre has been completed, but the current focus is on the immediate requirements of the building development.
Te Māngai Pāho
3.23
We assessed Te Māngai Pāho's performance on strategic direction as "Comprehensive".
3.24
The board understands Te Māngai Pāho's strategic purpose and objectives well. Interviewees had a shared understanding of the long-term strategy and how this aligned to Te Māngai Pāho's objectives.
3.25
The board has strategic oversight of the organisation through being actively involved in developing Te Māngai Pāho's strategy and direction. For example, the board was heavily involved in developing Te Māngai Pāho's Right-Shift framework.9
3.26
The board demonstrated passion for promoting and revitalising Māori language and culture. Interviewees demonstrated awareness of the potential implications of the Māori Language Strategy and Māori Language Bill for Te Māngai Pāho. The board has engaged with Te Puni Kōkiri to understand and contribute to this strategy and has linked its strategic priorities to the Māori Language Strategy.
Te Papa
3.27
We assessed Te Papa's performance on strategic direction as "Progressing".
3.28
Te Papa's recent focus has been on improving its financial sustainability and embedding the restructuring that began in 2013. At the time of our audit, Te Papa was operating under an interim senior management structure until the new chief executive was appointed.
3.29
Board members acknowledged that they could have had more oversight of the restructure – such as looking at whether restructuring decisions were aligned with the strategic plan. The board acknowledged that a requirement for more specific reporting on the progress of Te Papa's major organisational projects would have helped identify financial risks at an earlier stage.
3.30
The focus on financial sustainability during 2013 and 2014, along with the change in senior leadership, has restricted the time the board has spent on setting Te Papa's strategic direction. Board members recognise that the new chief executive will provide the board and Te Papa with a good opportunity to confirm Te Papa's strategic direction.
Wellington Museums Trust
3.31
We assessed Wellington Museums Trust's performance on strategic direction as "Comprehensive".
3.32
Wellington Museums Trust reviews its strategic direction each year. The 2014-18 strategic plan was prepared using a "bottom up" approach that allowed all staff to be involved in its preparation through their business unit. The strategic direction of Wellington Museums Trust is aligned to Wellington City Council's 2040 vision.
3.33
The board had a shared understanding of the strategic direction of Wellington Museums Trust and the main factors that influence its ability to deliver its strategic outcomes. The board's decision-making and actions reflect this understanding. For example, the recent appointment of a board member with strong digital knowledge reflects the Trust's strategic focus on enhancing digital engagement opportunities.
3.34
Wellington Museums Trust's key performance indicators are aligned to the strategic plan and actions within the plan. For example, both virtual visitation and physical visitation numbers are measured, reflecting the Trust's digital strategy.
3.35
We saw evidence of how Wellington Museums Trust works with other organisations from the sector to deliver sector outcomes. For example, it is working with Wellington's nationally significant institutions to refine practical teaching and learning programmes about citizenship. However, this emphasis on working with others was not as evident during our interviews with trustees as it is in the Trust's accountability documents.
9: Individual attitudes to learning te reo Māori have been described on a spectrum from "zero" (on the left) through "passive" to "active" (on the right). In this context, encouraging a shift to the right means trying to soften attitudes towards learning or maintaining Māori language and culture, and increasing the likelihood of speakers of te reo Māori to speak it in certain situations.