This article was previously published on the Leadership Foundation website.
The House of Commons Public Accounts Committee, and others, has accused the Corporation of making excessive severance payments to senior managers when they left the BBC, which were not in the public interest. Aside from the issues about who in the management/governance chain was informed about the payments, fundamental issues have been raised about the BBC’s current governance structure.
The BBC is a corporation constituted by Royal Charter. The current Charter runs to 2016.
The BBC Trust is responsible for looking after the interests of the licence payers and ensuring the Corporation is run in the public interest.
The Trust establishes protocols, policies and guidance, which governs the operation of the BBC. The Chairman of the BBC chairs the BBC Trust. The DG is not a member of the Trust, although normally attends its meetings.
The responsibilities of the Trust’s Remuneration and Appointments Committee include ‘high-level strategic issues relating to executive remuneration’, but the Committee only considers and approves the remuneration of the Director General (DG) and not other members of the Executive team.
The Executive Board of the BBC, chaired by the DG (the Chief Executive), overseas the day-to-day operation of the Corporation. Membership of the Executive Board comprises 7 executive directors (including the DG) and 4 non-executive directors.
There is a clear separation between the Trust and the Executive Board. Comparisions with the dual structures of many German companies, who operate with both management and supervisory boards, and the BBC have been made. See, for example, 'Politicians are responsible for the BBC's infighting'.
The debate about the size of the severance payments made by the BBC has led to comments that the issue ‘fell down the gap’ between the responsibilities of the Trust and the Executive Board. Further, the issue has led to opinions that the existing governance structure ‘is not fit for purpose’. A suggested solution is that the BBC should have a unitary Board of Directors (populated by both executive and non-executive directors), with Ofcom acting the external regulator. Ironically, this change would be to revert back to the governance model the BBC had before the current arrangements were instigated.
On 11 September 2013 the BBC announced it would conduct a formal review of its internal governance procedures.
Issues raised for governors and governing bodies
Not withstanding issues around the governance structure, the case of the BBC highlights the need for organisations, including HEIs, to be sensitive about issues which potentially ‘cross the boundaries’ between governance and management.
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