11 May 2018 by Richard Tacon and Geoff Walters
People are divided on whether the code improve practices or is an expensive burden
The past few years have been particularly challenging for the sport sector in the UK. A number of sports organisations have faced substantial media and government scrutiny, following allegations of doping and bullying and concerns over safeguarding and athlete welfare.
This scrutiny has led to important questions being asked about the state of sport governance and, in particular, the role that boards – and individual board members – of sport organisations play.
In December 2016, UK Sport and Sport England, the two non-departmental public bodies responsible for investing public funding in, respectively, elite sport in the UK and mass participation sport in England, launched the UK Code for Sports Governance.
This followed the pledge made in the government sport strategy in 2015 to develop such a code, a pledge that partly reflected the specific concerns outlined above and partly reflected the more general modernisation drive in the public and non-profit sectors.
“The research drew on in-depth survey responses from more than 100 board members across 56 organisations”
Although codes of governance are not new to the sector – UK Sport, Sport England and the Sport and Recreation Alliance have all developed various guidelines since 2004 – what is different about the new code is that it puts in place a mandatory requirement that all funded organisations comply in order to receive public funding.
The code also introduces three tiers of organisation, with the requirements for those organisations categorised as Tier Three more stringent than those categorised as Tier Two and Tier One.
It also includes the need to produce a governance action plan, overseen by UK Sport or Sport England, which has to set out how they have achieved the requirements, or what they need to do to comply.
Six months on from the launch of the code, in June 2017, Moore Stephens, the accounting and advisory network, and Dr Richard Tacon and Dr Geoff Walters from the Birkbeck Sport Business Centre – a dedicated research centre in the Department of Management at Birkbeck, University of London – began joint research to evaluate the state of governance in the UK non-profit sport sector.
The research drew on in-depth survey responses from more than 100 board members across 56 organisations and was published in March 2018 as ‘The State of Sports Governance’.
The report examined a number of important structural issues, such as board size, composition, remuneration and recruitment, as well as a range of important behavioural issues, such as strategic planning, decision-making, conflict resolution and board-management relationships.
Of particular interest, however, was how board members within the sector feel about the code: what they feel are its strengths, its weaknesses and its likely effects.
The research found that the vast majority of board members feel the code will have a definite impact on the board. 33% stated that it would require significant changes and 64% that it would require minor changes; only 3% felt that it would require no changes at all.
In fact, this has been manifested over the past year or so, with a number of boards of national governing bodies (NGBs) of sport finding it difficult to get the necessary governance changes voted through that would make them compliant with the code.
The survey then probed board members’ views in more detail. Many felt that the code has improved, and will continue to improve, practice in the sector.
For example, one respondent commented: ‘The code is a framework that will ensure consistency within sports governance. It is a simple and practical set of rules that make common sense when applied.’
In particular, this was felt to be important when dealing with volunteers. As one respondent commented: ‘[It] offers a good guide to what needs to be introduced and monitored, especially when dealing with volunteers and how such volunteers need to behave.’
“Without the potential financial penalties for non-compliance, it is highly unlikely that some of the requirements of the code would have been passed”
Interestingly, a number of board members felt that the code would be useful in ‘opening up’ discussion of governance – in a sense, forcing it onto the agenda.
As one respondent put it: ‘For those NGBs who have challenges in evolving their governance, it will aid them significantly in dealing with membership and other stakeholders who have differing agendas inconsistent with those boards.’
Another stated: ‘It has been the catalyst for modernising [our] governance structure. Without the potential financial penalties for non-compliance, it is highly unlikely that some of the requirements of the code would have been passed, particularly term limits for council membership.’
Beyond this, a number of board members highlighted the positive role the code might play in organisations’ capacity to demonstrate good governance externally.
For example, one respondent said: ‘The code will assist with our own credibility, both internally with all our stakeholders and externally with our partners, especially commercial partners, to have confidence that we are a well-administered and managed organisation, conscious of the systems we have in place, the work we undertake and the risks we manage.’
However, a number of respondents also highlighted drawbacks of the code. The most frequently discussed was the time commitment involved in demonstrating compliance, particularly for small organisations.
In addition, a number of respondents discussed the additional administrative costs it would entail. As one respondent put it: ‘At an initial stage, it is taking a significant amount of time to respond to as an organisation and this is requiring individuals both paid and unpaid to be diverted from assigned tasks.
‘This, if the excessively detailed paperwork required continues, will mean that staff and volunteers will have to be assigned to working on meeting the outcomes of the code as part of full time roles. In a small organisation, the appropriateness of this needs to be considered.’
A number also mentioned the difficulties caused by the very tight timescales imposed since the launch of the code.
Beyond this, a number of respondents raised fundamental concerns about the nature of the code. A majority felt that it represented a ‘one-size-fits-all’ approach, which, even taking into consideration the various tiers of compliance, was inappropriate for some organisations.
As one respondent said: ‘It is a ‘one-size-fits-all’ code that feels very driven by the need for change in the governance of one or two major sports and does not recognise the very varied landscape that sports organisations operate in.’
Another said: ‘Certain aspects of the code simply do not apply to our organisation, but as compliance is 100% necessary, it results in actions being taken to “tick a box” that do not improve the organisation or even relate to what it does.’ Another made a similar point: ‘It could end up being a sledgehammer to crack a nut.’
“The code feels driven by the need for change in the governance of one or two major sports”
The concern around box-ticking emerged in a number of responses. As one respondent put it: ‘Governance codes can introduce a “tick-box mentality” and there are aspects of [our] governance structure, which require modernisation, which the code does not address. It is a risk that in seeking to push through further governance reform, the fact that [we are] fully compliant may reduce the appetite to do that.’
Some also felt that, despite its stated aim to focus on culture and values, the implementation of the code would have the opposite effect: ‘The code feels like a measuring tool.
‘I am concerned that organisations spend their time ticking the box rather than addressing the culture and values of the organisations which, if highlighted as critical to the organisation’s progress, can address the decision making required to embed the code into organisations.
‘The embedding of the code in the normal workings of the organisation has to be the aim and to date I am unconvinced that this is being achieved due to the way the adherence to the code is being implemented.’
Finally, a number worried about the effects the code would have on those willing and able to serve as board members.
The code imposes strict term limits and a number questioned this: ‘The imposition of term limits on councillors will reduce the sustainability of the membership. The nine-year term will mean many members will leave at the same time.
‘We will lose a large percentage in a single year and this will impact the effectiveness of the organisation, as those large numbers will need to be replaced and trained. It will weaken the membership and damage the organisation by removing significant levels of experience and expertise.
‘This aspect was ill thought through and should be reviewed. The worst impact of this is that younger members, in their 30s, 40s and 50s will have to leave the organisation at a time when they have much to offer. This is a serious flaw.’
Overall the research flagged positive and negative aspects. For some it usefully forced governance onto the agenda and made real improvements possible.
But for others it has created difficulties and generated criticism over certain specific, inflexible requirements and the manner of its implementation.Is it a catalyst for change, then, or a sledgehammer to crack a nut? Or perhaps both?