Public sector governance: Balancing purpose and pressure

Governance is never one-size-fits-all. While the principles of good governance are universal, their application in the public sector takes on an entirely different form – one shaped by public scrutiny, fluctuating policy mandates and a heightened duty to deliver social outcomes.

From local government and school boards to universities and Crown entities, the pressures on public sector directors are intensifying. These roles are critical, complex and increasingly caught in the crosshairs of political change, where expectations are high and the consequences of missteps are often public.

Public sector governance is nonetheless rooted in the Four Pillars – purpose, compliance, culture and performance – but how they are interpreted and enacted is uniquely public in character.

Purpose is about delivering public value, not shareholder returns. Whether it’s improving educational outcomes, building resilient infrastructure or enhancing environmental wellbeing, boards must balance often competing demands and finite resources to achieve outcomes that matter to citizens, not just customers.

Compliance goes beyond ticking boxes. It is multidimensional, tethered not only to legislation and fiduciary duty but also ministerial directives, Treaty obligations, procurement requirements and public sector codes of conduct.

Culture is equally vital, as trust and social licence are non-negotiables in public governance. Transparency, fairness and accountability are not aspirational, they are foundational, and decisions made in the boardroom are often played out under public scrutiny.

Performance, meanwhile, is not just about profit, but the long-term impact of services and infrastructure. It is complex and context-dependent, where short-term decisions must be balanced against intergenerational objectives and community resilience.

In the private sector, boards often operate with the benefit of a stable strategic framework. By contrast, public sector boards must remain responsive to political change. Long-term goals can be recalibrated overnight due to elections, ministerial reshuffles or shifts in policy direction.

The result is a persistent state of strategic flux, in which directors must provide steady stewardship while being prepared to pivot, often with limited notice. This duality, the need to be agile yet anchored, is one of the defining tensions of public sector governance.

Boards must carefully balance short-term service delivery with long-term transformation. They are expected to align with ministerial direction, maintain operational independence and deliver equitable outcomes – all while managing financial constraint.

This has been particularly visible in tertiary education governance where recent RNZ coverage has exposed significant losses and quality assurance concerns. The tension between public good and productivity imperatives is a live and difficult issue for many institutions.

The challenge of reconciling competing expectations has also emerged in the context of water sector reform. The Local Government (Water Services) Bill, introduced in 2024, sets out to overhaul how water services are governed and delivered. While the ambition is to improve quality, safety and efficiency of these essential services, the proposal raises critical governance considerations.

At the Institute of Directors, we have highlighted the opportunity to strengthen governance of water services and infrastructure through this reform, if approached with clarity and intent. We emphasised the importance of strong foundations, including clearly defined accountabilities, the appointment of skilled and independent board members, and systems designed to build trust and support effective decision-making.

In our submission, we also acknowledged the structural constraints that local government governance must operate within, including the disruptive influence of political terms and the difficulty of maintaining long-term strategic planning amid electoral cycles. We advocated for governance models that are not only technically sound but also resilient to political fluctuations, able to stay focused on enduring community outcomes over decades rather than terms.

Unlike the private sector where success is often measured by growth, profit and market share, success in the public sector is more nuanced, and often more constrained. Governance capability can be uneven, development is often under-resourced, and strategic consistency is frequently undermined by policy churn, fiscal restraint, or short-term funding models.

This is precisely why public sector governance and the role of its directors matters. While they may not control all outcomes, they are responsible for holding true to purpose amid uncertainty. Good governance connects long-term vision to action, grounds accountability in practice and turns policy intentions into real-world impact.

If the public sector is to meet the scale of challenges it faces, from climate change to technological disruption, educational equity to civic resilience, then it must be equipped with governance that is bold, independent and future-fit.

This means prioritising investment in director capability, safeguarding governance independence, aligning strategy with long-term needs rather than political convenience, and recognising the essential role that public boards play in upholding the democratic, social and ethical infrastructure of New Zealand.

Governance in the public sector isn’t just about service delivery, it’s nation-building.