A. Relationships

Good relationships between Ministers, Crown entity boards and their senior managers, and departments are essential for a department to perform its role in relation to Crown entities. The parties must share a common understanding of their roles, responsibilities and interactions. The legal separation of Crown entities from the Crown, coupled with Ministers' expectations for professional relationships between departments and entities, can make this a complex relationship to manage.

Ministers want to build and maintain constructive and professional relationships with each of their entities that recognise the statutory role and the responsibilities of each party. In general this will be aided by:

• the Minister, department and board having a clear and agreed understanding of their respective roles and that of any agent supporting the Minister⁴
• the Minister setting the Crown's expectations of the entity, including the supply of information allowing the Minister to be held to account by the House
• departments and boards representing the others' views in accurate terms, and
• the Minister, department and entity⁵ each adopting a 'no surprises' approach⁶.

Departments will help Ministers to put such arrangements in place. A memorandum of understanding or relationship letter between a department and a Crown entity is often used to clarify the services that a department performs - whether on behalf of the Minister, or to assist the Minister in carrying out his or her functions.

Effective monitoring is built on a foundation of good relationships. Capable monitoring departments and entities say that interaction at the senior management and staff levels of each organisation underpin good relationships between boards and Ministers. Crown entity boards, chief executives and senior managers, as well as departments, must ensure effective working relationships are in place. In large entities in particular, entity management and staff often have best access to the understanding, detailed knowledge and performance data underpinning a good monitoring relationship.⁷

In their engagement with entities, departments should be mindful of the Crown's desire for a constructive relationship, without losing sight of the Crown's fundamental interests in transparency and long-run performance. Departments should engage with entities as a 'friendly critic' (at times acting as an advisor or sector leader) without prejudicing their primary role as the agent of and adviser to the Minister, or undermining the board's direct lines of accountability to the Minister. Striking a balance will not always be easy.

⁴ This requires clear communication of, and agreement on, roles.

⁵ Note that an ICE making quasi-judicial decisions can tell Ministers when sensitive decisions are due, but may only tell Ministers the actual result when the decision is made public or otherwise released.

⁶ For an ICE making quasi-judicial rulings, 'no surprises' would not include advance notification of its decisions. The Minister could however expect to know of the ruling no later than other affected parties.

⁷ Crown entity staff are responsible to their board. Boards may restrict access by monitoring departments to their staff. This may signal performance or relationship risks that the Minister should be aware of.