Step 1 – Define and agree the board’s role

Nine Steps to Effective Governance

The governance process

Governance is the process by which the board:听

sets strategic direction and priorities听
sets policies and management performance expectations听
characterises and manages risk听
monitors and evaluates organisational achievements.

At the heart of a board鈥檚 challenge is the same basic requirement: to act on behalf of 鈥榦wners鈥� to translate their wishes into organisational performance.听

Boards in all sectors 鈥� private, public and non-profit 鈥� develop and use a board charter as the basis for defining their governance principles and practices.听
The board is a layer of ownership down not a layer of management up.听
The board is focused on creating the future not minding the shop.听

Other aspects of governance听

Governance is:听

servant leadership 鈥� described as 鈥溾€n insistent motivating force鈥hat obliges the institution to move toward distinction as a servant鈥� 鈥� Robert Greenleaf听
not management 鈥� to see the organisation is well managed without doing the managing itself听
accountability to the organisation 鈥� not to individual stakeholders.听

The board鈥檚 job is to govern 鈥� providing direction and control. The chief executive鈥檚 job is to manage operations.听

The key tasks of the board are to:听

define the organisation鈥檚 purpose, direction and priorities (Step 1)听
develop a governance policy 鈥榰mbrella鈥� (Step 1)听
specify key outcomes and approve the availability of resources (Step 4)听
appoint, support, evaluate and reward the chief executive (Step 5)听
establish a framework for assessing and mitigating risk (Step 6)听
regularly scan the environment beyond the organisation (Step 6)听
gain owners鈥� and other stakeholders鈥� input into determining direction and goals, and maintain communication with them (Step 6)听
ensure the board complies with statutory and contractual requirements and with the board鈥檚 policies (Step 6)听
set standards for and evaluate the board鈥檚 performance (Step 7)听
ensure there is appropriate succession planning (Step 8).

Governing structures and the legal and accountability framework

A variety of structures can provide good governance but they all have the same key principles:听

Clear accountability 鈥� the responsibilities of different roles in the organisation are defined with clear lines of accountability. This is especially important if directors also act in other capacities听
Clarity in staff accountability to the board听
Collective and individual responsibilities for board members.听

The role of the chair

The chair is not 鈥榯he boss鈥�.

The chair鈥檚 primary role is to provide assurance of the board鈥檚 governance integrity via the effective management of governance processes. In particular, the chair鈥檚 role is to:听

ensure consistency with internal and external rules and applicable law听
chair meetings with the commonly accepted power of the position听
ensure meeting discussion focuses on the issues that clearly belong to the board听
ensure board discussions are timely, fair, orderly, thorough, efficient and focused听
encourage full participation of directors听
observe a recognised 鈥榬ules of order鈥� process for board discussion听
take steps to resolve unproductive conflict听
ensure the board charter is maintained and up to date听
act consistently with agreed governance policies and processes听
avoid making independent operational decisions which are the prerogative of the chief executive听
not directly supervise or direct the chief executive other than to provide support.

The chair should know exactly what issues are to be discussed at the meeting, in what order, and what outcomes are sought from each item.

Policy leadership

Many organisations rely on their constitutions for guidance on governance. This is a starting point but a constitution is not governance policy.

A policy is an agreed basis for action, made ahead of time

It is generally accepted that the role of any governing board is to determine and monitor policy. It is the job of management to implement that policy.

It is not the board鈥檚 responsibility to adopt or approve operational policies.听

The four areas of policy based on the work of governance theorist John Carver

Governance Process policies 鈥� define the scope of the board鈥檚 job and design its operating processes听

Board-Chief Executive Linkage policies 鈥� the board鈥檚 delegation to the chief executive and the methods to be applied in determining their effectiveness

Executive Limitation policies 鈥� the limits the board places on the chief executive (and by implication other staff and volunteers)

Ends policies/Results to be achieved 鈥� the organisation鈥檚 fundamental reason for being and the outcomes to be achieved.