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The Corporate Governance of Agencies in Ireland Non CorporateGovernanceAgencies-Prelims.qxd 22/11/2005 17:32 Page 1 The Corporate Governance of Agencies in Ireland Non-commercial National Agencies CorporateGovernanceAgencies-Prelims.qxd 22/11/2005 17:32 Page 2 CorporateGovernanceAgencies-Prelims.qxd 22/11/2005 17:32 Page 3 CPMR Research Report 6 The Corporate Governance of Agencies in Ireland Non-commercial National Agencies Anne-Marie McGauran Koen Verhoest Peter C. Humphreys CorporateGovernanceAgencies-Prelims.qxd 22/11/2005 17:32 Page 4 First published in 2005 by the Institute of Public Administration 57-61 Lansdowne Road Dublin 4 Ireland in association with The Committee for Public Management Research www.ipa.ie © 2005 with the Institute of Public Administration All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or any information storage and retrieval system, without permission in writing from the publisher. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library. ISBN 1-904541-30-5 ISSN 1393-9424 Cover design by M&J Graphics, Dublin Typeset by the Institute of Public Administration Printed by BetaPrint, Dublin CorporateGovernanceAgencies-Prelims.qxd 22/11/2005 17:32 Page 5 CONTENTS Acknowledgements ix About the Authors x Executive Summary xi Chapter 1: Introduction 1 1.1 Setting the scene 1 1.2 Structure of the report 2 Chapter 2: Agencies - what and why? 4 2.1 What are agencies? 4 2.2 Agencies: why? 4 2.3 What are agencies set up to do? 7 2.4 How is agencification occurring internationally? 8 2.5 What factors influence the establishment of agencies internationally? 10 Chapter 3: Characteristics of agencies 14 3.1 Autonomy of agencies 14 3.2 Accountability/performance contracting 17 3.3 Factors which influence the autonomy and accountability of agencies 20 3.4 Do agencies ‘work’? 22 3.5 What problems occur with agencification, in terms of public governance? 24 3.6 Conclusion 27 Chapter 4: Research objectives and methodology 29 4.1 Terms of reference 29 4.2 Some key definitions and concepts 30 4.3 The survey 33 4.4 The case studies 35 Chapter 5: An overview of Irish public sector agencies 38 5.1 Number and types of Irish agencies 38 5.2 Legislative establishment 40 5.3 Trends over time 42 5.4 Parent departments and offices 43 v CorporateGovernanceAgencies-Prelims.qxd 22/11/2005 17:32 Page 6 5.5 Policy areas 45 5.6 Functions 46 5.7 Summary 48 Chapter 6: Non-commercial national level agencies - creation and features 50 6.1 Functions and policy areas 50 6.2 Age of agencies 51 6.3 Size of agencies 51 6.4 Legal status and form of agencies 52 6.5 Reasons to set up an agency 55 6.6 The process of setting up an agency 56 6.7 Assessment and recommendations 57 6.8 Summary 65 Chapter 7: The autonomy and accountability of non- commercial national level agencies in relation to human resources 67 7.1 Introduction 67 7.2 Numbers 70 7.3 Salaries 73 7.4 Recruitment 75 7.5 Promotion and tenure 76 7.6 Accountability of agencies on HR issues 78 7.7 Conclusion and recommendations on HR issues 81 7.8 Summary 85 Chapter 8: Autonomy and accountability of non- commercial national level agencies in relation to financial management 87 8.1 Source of funding 87 8.2 Overview of financial management autonomy 88 8.3 Shifting budget between functions 91 8.4 Carrying budgets from year to year 92 8.5 Savings and provisions 94 8.6 Taking out loans 95 8.7 Setting tariffs 96 8.8 Accountability of agencies in relation to the use of financial resources 97 8.9 Financial Reports 100 vi CorporateGovernanceAgencies-Prelims.qxd 22/11/2005 17:32 Page 7 8.10Summary 110 Chapter 9: Policy autonomy and accountability of non-commercial national level agencies 112 9.1 Introduction 112 9.2 Role of agencies in the national policy cycle 114 9.3 Types of agency strategy documents 116 9.4 Accountability - reporting 119 9.5 Accountability - targets and performance indicators 120 9.6 Accountability - rewards and sanctions 121 9.7 Conclusion and recommendations on policy issues 122 9.8 Summary 123 Chapter 10: Governance structures in the non- commercial national level agencies 125 10.1 Boards and governance of agencies 125 10.2 Functions and role of boards 125 10.3 Board appointment mechanisms and composition 127 10.4 Monitoring the CEO 131 10.5 The role of the CEO 132 10.6 Conclusions and recommendations 133 10.7 Summary 134 Chapter 11: The relationship between the non- commercial national level agencies and their parent departments: a case for relationship management 136 11.1 Introduction 136 11.2 New roles for the parent department 137 11.3 Contacts between department and agencies 142 11.4 Liaison units at two levels 143 11.5 Skills, capacities and attitudes for building trust- enhancing relationships 144 11.6 Performance agreements 146 11.7 Conclusions 149 11.8 Summary 149 Chapter 12: Towards a new approach to agencies 151 12.1 Summary of the main findings 151 12.2 Summary of recommendations 156 12.3 Three scenarios for the governance of agencies 162 12.4 Putting the recommendations into practice - a scenario for the governance of Irish agencies 172 vii CorporateGovernanceAgencies-Prelims.qxd 22/11/2005 17:32 Page 8 Notes 175 References 179 Appendix 1 The database of 601 agencies operating in Ireland in Autumn 2003 185 Appendix 2 The 211 non-commercial agencies operating at national level (the survey database), Autumn 2003 215 Appendix 3 The survey questionnaire and cover letter 226 Appendix 4 Validity of the survey data 246 Appendix 5 Explanation of matrices 249 Appendix 6 Case study interview schedule - main topics discussed 253 viii CorporateGovernanceAgencies-Prelims.qxd 22/11/2005 17:32 Page 9 ACKNOWLEDGEMENTS We owe a large debt to the agency and department personnel who took part in this research, and without whom there would be no study of Irish agencies! We are grateful to all of those who completed questionnaires on their organisation, and to those who took part in the case study phase. We thank you for your time, interest and enthusiasm, both for your work and for our study. Above all, the authors would like to thank the Committee for Public Management Research for its support, encouragement and guidance throughout this study, which is the first phase in a major and innovative programme of cross-national research. At the Instituut voor de Overheid, the Institute of Public Administration would particularly like to thank Professor Geert Bouckaert, who played a key role in supporting this study as part of his programme for an international study of the importance of state agencies. We would also like to thank Bram Verschuere, Anita Van Gils and Inge Vermeulen for their work on the web version of the survey questionnaire. We also thank the FWO Vlaanderen (Flemish Scientific Board) whose funding facilitated Koen Verhoest’s stay in Ireland. We would like to thank Karen Isaac and Jeanette Mair for their research assistance compiling the agency database and tracking down survey responses. Anne-Marie McGauran Koen Verhoest Peter C. Humphreys ix CorporateGovernanceAgencies-Prelims.qxd 22/11/2005 17:32 Page 10 ABOUT THE AUTHORS Dr Anne-Marie McGauran is a Research Officer at the Institute of Public Administration, Dublin, where she manages the study investigating the autonomy and accountability of Irish agencies. She is also a Research Associate and part-time lecturer at the Centre for Gender and Women’s Studies, Trinity College Dublin. From 1999 to 2004 she worked as Head of the NDP Gender Equality Unit in the Department of Justice, Equality and Law Reform. Dr Koen Verhoest is Assistant Professor at the Public Management Institute (Catholic University of Leuven, Belgium) where he specialises in research on public management and governance, including relationships between the state, agencies, companies and community and voluntary organisations. In 2005 he worked as a Visiting Research Fellow at the Institute of Public Administration, Dublin, on the governance of agencies. He is involved in the ‘Comparative Public Organization Data Base for Research and Analysis - network’ (www.public- management-cobra.org), which is a cross-national research network on the governance of agencies. Dr Peter Humphreys is Executive Director: Research at the Institute of Public Administration. He has nearly thirty years’ professional research and management experience at local, regional, national and international levels both in Ireland and the UK. Between 1989 and 1997, he was National Director of Research and Statistics at the Equal Opportunities Commission in Britain. Since returning to Ireland in 1997, he has authored or co-authored a number of major studies on the Irish public sector, particularly in the areas of quality management, HRM, equality/diversity and the changing structure and role of the Irish public sector. x CorporateGovernanceAgencies-Prelims.qxd 22/11/2005 17:32 Page 11 EXECUTIVE SUMMARY Introduction Internationally ‘agencies’1 have gained increasing importance as organisations which carry out public governance functions. This has led to the consideration of the extent to which agency numbers have grown in Ireland. What is their importance? And how are they governed? This report provides a comprehensive description of agencies in Ireland. It outlines their current numbers, and looks at their role, function, corporate governance and accountability relationships. Key issues for the future governance of Irish agencies are also identified. The report is based on three phases of the research. First a database of 601 agencies currently operating in Ireland was compiled.
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