Liberate Your BoardA Pathway to Policy Governance

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Frustrations of a Board Member

Most operate as a member of a committee of management but are interested in a governance model

Often frustrated with organisational ‘busi-ness’ Thought they were going to make a difference to

their community – but just ended up with more work

Thought they would have a leadership role but ended up one of the workers – and unpaid

Seem to spend (waste) a lot of time talking about operational issues and very little time talking about strategic issues

Need a strategic focus developed in a strategic plan but can’t find the time or the willingness to do it

Concerned about their liability as a board member but not sure how to manage the risk

Not sure what their role is as a board member – the Manager seems to run the show

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Ponderings of a Board Member What actually is the role of the board?

What is my role as a board member?

What is the role of the Manager

How do the two work together?

How do we know if the organisation is going OK?

How well is the board going?

How do we know the Manager is doing a good job?

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How Boards Have Operated in the Past? Spent a lot of time discussing anything that

anyone wants to discuss

Delegating the same job to more than one person

Monitoring performance with no criteria to judge

against

Failing to clarify the most important organisational

value of all – the purpose of the organisation

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Policy Governance Model Is a model of board governance based on the

underlying assumption that the board has the final (and legal) responsibility for the actions, outcomes and outputs of the organisation

The board operates through a set of policies across a range of areas that are implemented by the staff of the organisation who are under the direction of the Manager

The model relies upon the board operating at the strategy and policy level and the staff operating at the operational level – with a clear separation between the two

The board oversees the operations of the Manager by setting limitations representing the values the board see as most important in the way the organisation operates

The linkage between the board and the staff is through the Manager

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Why a Policy Governance Model? Addresses most of the concerns raised by board

members – particularly committee of management members

Provides clear policy statements indicating: The role of the board The role of the Manager The relationship between the two The role of the strategic plan

Provides a proven way of managing risk within the organisation

Improves the efficiency of board management (reduces time)

Makes recruiting board members easier Makes recruiting and employing a Manager more

successful Addresses many of the concerns raised by funding

bodies regarding: strategic direction, risk management governance procedures within applicant

organisations how the organisation minimises risk for the funding

body

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What a model of corporate governance will do The model is applicable:

Whether your organisation has staff or not (but easier if you have)

To startup or continuing organisations To for-profit, not-for-profit and public sector

organisations The model builds powerful boards but is still

attractive to Manager’s because it: Provides greater authority for the Manager Provides greater autonomy and flexibility for

the Manager Provides clear lines of responsibility for the

Manager The model does not create the situation where the

question needs to be asked: Who is running the organisation – the Board or

the Manager?

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Who wins – Who loses

All parties win with a policy governance model

because the roles, responsibilities and

accountabilities are clear (if you don’t like it you

don’t join at the outset). However:

If in the past the board has been rubber

stamping everything the Manager does – then

the Manager loses some power

If the board has been actively involved in

operational management – then the board loses

some power

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Some FAQ’s

How do you run your existing model whilst

developing the new one?

Development and implementation of a policy

governance model cannot be done

incrementally

The new model is developed whilst while

continuing to run your existing model

The changeover occurs when the organisation

is ready

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Some FAQ’s

What policies do we develop first? Role of the board Role of the Manager Relationship between the board and

Manager Strategic objectives

How do we start? Use the generic set of policies provided

and then customise them for your organisation

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Some FAQ’s

Should we hire an outside consultant? Only if the consultant knows the policy

governance model thoroughly Who should lead the process?

The person on the board who is most familiar with the model – this may or may not be the chairperson

Should the Manager lead? The board should not give the role of board

governance to the Manager – the Manager should be involved – but not lead

What happens to our current policies and procedures Tends to work best by discarding current

policies – better with a fresh start

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Some FAQ’s

How long does it take? More than likely – over a period of several months The bulk of the work can be done in 3- 4, three-hour

sessions Is there a way we can ‘try before we buy’?

Yes – develop policies and then see to what extent they address existing issues

Does every board member have to be in favour of the move to policy governance? Adopt the way you usually make board decisions – it

is a board decision! How much detail do we need to include in a

policy? As much (or as little) as it takes for the board and

the Manager to reach a common agreement. Commence with the broad detail and provide more specific detail as required

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Some FAQ’s

How does the adoption of policy governance increase the chance of obtaining government funding?

Clearly shows how the funded project fits into the strategic direction of the organisation

Shows how, by managing risk, your organisation is able to minimise the risk funding bodies have addressing:

Legal risk Commercial risk

Provides for the development of operational procedures including:

Financial management Staff management reporting

How does the adoption of policy governance decrease the time spent at board meetings and increase board effectiveness:

minimising time spent discussing operational issues maximising the time spent on monitoring board

performance Maximising the time spent on organisational performance

and policy development Maximising spent on identifying potential opportunities and

threats and responding to them

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Board Governance Policies Overarching Board Commitment Governing Style Board – Owner Linkage Agenda Planning Role of Chairperson Board member’s Code of Conduct Board Committee Principles Board Member Induction Cost of Governance General Manager Constraint Treatment of Customers Treatment of Staff Financial Planning and Budgeting Financial Status of Dreamtime Child Care Services Emergency Manager Succession Asset Protection Remuneration and Benefits Communication and Support to the Board Public Affairs Unity of Control Accountability of the Manager Delegation to the Manager Monitoring Manager Performance

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Board Governance Policies - Examples

Role of the BoardGoverning Style

The Board will govern with an emphasis on: Outward vision rather than internal pre-occupation Encouragement of diversity of view-points Strategic leadership more than administrative detail Clear distinction between Board and Manager roles Collective rather than individual decision-making Pro-activity rather than reactivity

In the process of doing this: The Board will cultivate a sense of group responsibility. The

Board, not the staff, will be responsible for excellence in governing

The Board will direct, control and inspire the organisation through the careful establishment of broad written policies reflecting the Board’s values and perspectives about ends to be achieved and means to be avoided.

The Board will enforce on itself whatever discipline is necessary to govern with excellence.

The Board will monitor and discuss the Board’s progress and performance at each meeting.

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Board Governance Policies - ExamplesPolicy Type: Role of the ManagerGeneral Manager Constraint The Manager shall not cause or allow any practice, activity,

organisational circumstance or decision that is unlawful, imprudent or that contravenes any ethic specific to Yolla Producers or commonly held business or professional ethic.

Policy Type Relationship Between the Board and the ManagerUnity of Control Only decisions of the Board acting as a body are binding on the

Manager. Accordingly, Decisions or instructions of individual Board members, officers or

committees are not binding on the Manager unless the Board, under rare circumstances, has specifically delegated such authority

Whilst recognising the need for individual Board members to have access to information relevant to their governance responsibilities, the Manager can refuse such requests (or defer them to the Board), when, in the Manager’s opinion, a significant amount of staff time or funds are required, or is disruptive. The Manager will notify the Chairperson when a refusal/deferral occurs.

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Board Governance PoliciesRelationship Between the Board and the

ManagerAccountability of the Manager The Manager is the Board’s only link to the

operational achievement and conduct, so that all authority and accountability of staff, as far as the Board is concerned, is considered the authority and accountability of the Manager. Accordingly: Instructions to persons who report directly or

indirectly to the Manager will be conducted through the Manager

The evaluation or appraisal of staff, either formally or informally, other than the Manager, will only be carried out by the Manager

The Manager’s performance, in general terms, will be appraised against the achievement of organisational objectives subject to the limitations placed on the Manager by the Board through its policies

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Board Governance PoliciesPolicy Type Relationship Between the Board and the ManagerDelegation to the Manager

The Board delegates to the Manager responsibility for the implementation of its operational and strategic objectives whilst complying with its Manager Limitations policies

The board will develop operational and strategic objectives that make clear the results the Board expects the Manager to achieve

The Board will develop, monitor and modify Manager Limitations policies that limit the latitude the Manager may exercise in determining the means by which organisational and strategic objectives may be achieved

The level of detail prescribed in any Board policy will be determined by the degree of information required to ensure the interpretation of policies by the Manager is consistent with the interpretation intended by the Board

The level of detail in board policies may change therefore shifting the boundary between Manager operations and Board operations. But as long as any particular delegation is in place, the Board will respect and support the Manager’s choices of means of implementation

The Manager is encouraged to utilise the knowledge and experience of individual directors on the Board

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Board Governance PoliciesPolicy Type Relationship Between the Board and the Manager Monitoring Manager Performance The Manager’s performance will be continuously, rigorously and

systematically assessed by the Board against achievement of operational and strategic objectives and, compliance with Manager Limitations policies. The Board will provide regular feedback to the Manager.

Monitoring the Manager’s performance is to determine the degree to which Board policies are being met. Only data that is relevant to the Board’s policies will be included in the monitoring process

The Board will acquire monitoring data by one or more of three methods:

By the Manager reporting directly to the Board By an external, independent third party selected by the Board to provide data

regarding compliance with Board policies By direct Board inspection, in which a designated member or members of the

board gather relevant data to assist the Board determine the degree of compliance with Board policies by the Manager

In each case, the standard for compliance shall be any reasonable interpretation of the policy being monitored, by the Manager. That is the Manager’s interpretation consistent with the spirit and intent of the policy by the Board

All policies that instruct the Manager will be monitored at a frequency and by a method chosen by the Board. The Board can monitor any policy at any time and by any method, but will usually depend on a routine schedule

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Getting Started Draft Workshop Agenda Questions The Role of the Board

What is the purpose of the Board? Who is the Board accountable to? How is the Board’s performance monitored and appraised? What is the role of the Chairperson? What is the code of conduct expected of Board members? How can the cost of governance be minimised?

The Relationship between the Board and the Manager What is the role of the Manager? What decisions are binding on the Manager? What is the Manager accountable for and authorised to do? How will the Board instruct the Manager? How will the Board monitor and appraise the Manager’s performance?

Limitations Placed on the Manager by the Board What requirements does the Board have relating to the way activities are

carried out? How are customers/clients treated? How are staff treated? How are finances planned and budgeted for? How is the financial status managed? How is Manager succession managed? How are assets managed and protected? How are internal/external parties (employees, contractors, consultants,

volunteers) compensated? How the Board is kept informed and supported by the Manager? What is the focus of Manager activities?

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Other Legislation

Industrial awards OH&S Workers Compensation Disability Discrimination Privacy Contracts Leases Taxation Superannuation Defamation

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The Board and The Organisation Outward vision rather than internal

pre-occupation Encouragement of diversity of

view-points Strategic leadership more than

administrative detail Clear distinction between Board

and Manager roles Collective rather than individual

decision-making Pro-activity rather than reactivity

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Board Meetings

Reports and reporting Financial Activity Action Plan Strategic direction Committees Decision making Agenda