The Importance of Government Engagement for Board Directors

Amongst finance, risk, strategy, oversight, compliance and share/stake holders, board directors could be forgiven for thinking engaging with government is an afterthought. Yet government engagement is one of the few areas that crosses over every single board director’s responsibility and should be an agenda item on every board meeting.

Government engagement is a catch all term we started using almost a decade ago because we felt that terms like lobbying, advocacy and campaigning didn’t quite capture the importance, nuance and detail required to ensure government is aligned to your organisation. Since then, we have seen many organisations shift their language, and recognise the importance of an “entire board” and “entire organisation” approach to working with government.

Organisations typically work with government for two primary reasons:

• They want money, funding for projects or commercial agreement with government;
• There is regulatory, legislative, compliance or other rules that they seek to change, adjust or revise – to either benefit them, or disadvantage competitors in the marketplace.

Beyond these main reasons are dozens of smaller, but equally important reasons. Everything from promotion and marketing, endorsement, profile, positioning, and validation - through to wanting to shift the dial on a policy issue or make significant change in our community. Whatever your specific reason, every business is impacted by government - which makes up over one quarter of the economy, and regulates every single activity a business undertakes in one way or another.

Boards therefore have a curious balance around government engagement - it is the only operational role which crosses every single legal and governance role of the board.

So, let’s dive into the various areas of board responsibilities and some of the questions you should be asking around government engagement.

Financial

What percentage of revenue or margin of our business is dependent on government spending, directly and indirectly? What timeframes, management arrangements and oversight do we have on government contracts, agreements and similar? How does the board assure delivery and outcomes, or reduce dependencies in this space?

Risk

What role would regulatory changes have on our organisation? What monitoring do we have in places for early warnings on policy, regulatory or legislative settings? Do we proactively engage in shaping changes, or position defensively?

Strategy

How dependent on government and government decisions are we around our strategy? Did we consider their actions, election cycles and political views on the viability of our strategy? How do we continue to assess strategy with changing government environments?

Oversight

What amount of time, talent or resources do we allocate towards engagement with government? Do we have relationship management plans in place? Do we spend and invest as much time as a percentage for government funding as we do other sources (salespeople, philanthropic, fundraising etc)? What reporting would we like from management on our organisation’s position with governments?

Compliance

Do we map every piece of regulation and legislation which impacts and regulates our work and report it periodically to the board? Do we monitor when we are operating outside certain compliance areas (from workplace safety to environmental emissions)? Is each board director aware of every regulation and legislation which governs all elements of our work? How can you ensure compliance or management?

Shareholder and stakeholders

Is government one of these? If so, how? What is our management process? What about escalations? What if a client has an issue and raises with government, how would we respond? When does the board get notified?

A board member’s role encompasses all of these questions and more, so government engagement should be a standing agenda item for every board meeting - and you should be very concerned if the organisation you are on the board for doesn’t have much to report under this agenda topic.

It is critical for boards to be forward thinking as well. What policy and regulatory changes may you want to see, or want to defend on? How will this shape your organisation or business into the future?

A number of years ago we developed a framework for boards to do just this, capture and understand their role in government. The framework has four parts:

• Strategic - what do you want from government, how does government impact your organisation?
• Tactical - how do you interact and engage with government now, and into the future?
• Problem - what government problems do you cause or solve, and how do you articulate that?
• Solution - what government solutions can you provide, develop or assist with and how do you talk about them?

While a simple four step process, including this as part of your board and strategy process is key to starting your journey around government engagement at board level. Thinking ahead as to what you may wish for from government (at all levels) across a number of quantum and timeframes is also invaluable.

Government engagement is critical for other areas of your board responsibilities as well.

Reputation management is one such example, where government engagement can help organisations manage their reputation and build trust with stakeholders. Engaging with government in this sense demonstrates an organisational commitment to responsible business practices and can help build positive regulatory relationships.

Government can also be an accelerator for innovation for boards, by working with them to shape policies and regulations, organisations can help create an environment which fosters and supports innovation, while driving competitiveness and de-risking major projects or activities.

Government is also the vehicle for many organisations, especially social purpose organisations, to grow and expand - bringing capital, capabilities, insights, data and focus to wide issues and problems, which any one organisation or business could not solve.

So, it is definitely time to remove government relations as a board director afterthought, as you may be breaching your finances, risk, strategy, oversight, compliance and share/stake holder obligations if you do.

This article was originally published in the Better Boards Conference Magazine 2023

Further Resources

Practical Steps to Good Governance and Risk Management

Planning for the Election: Government Relations for Not-for-Profits

Board Evaluation - Increasing the value-add of directors