getting to grips with governance

1
getting to grips with governance

• Ivan Cooper
• Director of Advocacy
• The Wheel
• October 2008

2
What is Governance?

• who is in control of the organisation?
• whats the difference between governance and
  management?
• who are the governers?
• whose interests do the board represent?

3
governance and management

• are distinct yet overlapping

Governance
Management
4
Main principles of good corporate governance

• The best boards
• provide leadership how?
• are accountable for what, to whom and how?
• accept clear responsibility how?
• review performance and renew themselves why?
  how?
• clearly delegate how? and to whom?
• ensure director integrity - why? how?
• are open and responsive to whom?

5
the best boards provide leadership how?

• By accepting responsibility for
• directing affairs
• ensuring solvency
• delivering objectives / outcomes
• By setting and monitoring clear strategic
  direction
• By avoiding becoming involved in day to day
  operational matters

6
the best boards are accountable for what, to
whom and how?

• For ensuring / monitoring that the organisation
• performs well
• is solvent
• complies with its obligations
• By
• internal controls, processes and procedures
• managing risk
• audit committee
• Ensuring focus on equality and diversity
• To whom? who are the stakeholders?

7
the best boards accept clear responsibility how?

• The board should organise itself to discharge its
  responsibilities effectively by having
• clear director duties and responsibilities
• clearly understood role of the chairperson
• clearly understood role of chief executive
  officer
• terms of reference for committees
• board members provided with timely information
  good organisation is required
• directors with relevant skills and experience
• directors provided with support to develop

8
the best boards review performance and renew
themselves why? how?

• To ensure the boards and the organisations
  effectiveness
• conduct regular review of strategy
• terms of reference / job descriptions for
  committees / and for directors (we have them for
  staff!)
• performance appraisal - of board as a whole, of
  subcommittees, of individual directors (we do it
  for staff!)
• strategy for renewal and recruitment of new board
  members to create diverse, energised, board

9
the best boards clearly delegate how and to whom?

• by setting out the functions of officers,
  sub-committees and the CEO (who in turn sets the
  functions of other staff) AND by monitoring their
  performance
• clarity of roles is vital in any delegation
• Delegation must be effective (enough authority
  must be delegated for discharge of duties and
  reporting-back must be of high quality)
• terms of reference for committees, advisory
  groups!
• good monitoring by board committees reporting
  back to the board!

10
the best boards ensure director integrity - why?
how?

• Directors should act according to high ethical
  standards and ensure no conflict of interest the
  best interests of the organisation must come
  first in all decision-making
• ensure no personal benefit
• identify conflicts of interest if they arise
• probity clear guidelines for receipt of gifts
  etc
• code of conduct should be provided to directors

11
the best boards are open and responsive to whom?

• The boards should be open, responsive and
  accountable to its users, beneficiaries, partners
  and others with an interest in tis work
• know your stakeholders
• communicate and consult with each regularly
• be open about work
• involve stakeholders in work (not just
  communication)

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Governance Checklist 1

• Is there clarity about the governing body?
• Is there a focus on long-term direction?
• Are boundaries between governance, management and
  operations clear?
• Does your governing body adhere to the main
  principles of governance above?
• Do your governing body members understand their
  role?
• Can you identify your internal/external
  stakeholders?
• Do you know what your stakeholders expect?

13
Governance Checklist 2

• Are your organisations existing structures and
  processes still valid?
• Do you have an up to date strategic plan?
• Do you have processes to manage risk?
• Does your governing body understand the long-term
  financial position?
• Do you have plans for recruiting and renewing
  your board and are directors skills appropriate?
• Do you have a plan to develop your directors?
• Do you have a board handbook / code-of-practice?