Good Governance in Credit
Unions
Governance Matters
Kate Costello
Effective Governance
• understand the role of the Board
• get the right skills and encourage
the right behaviour
• introduce effective processes
Understand the Role of the Board
Governance is what the Board does or
should do to be a “value-adder” to the
organisation rather than just a “costcentre”.
It is different from what management does
or should do.
What is Governance
“The Board’s role is to create
the future of the organisation,
not just mind the shop”.
John Carver
The Role of the Board
Outward
Looking
Compliance
Roles
Inward
Looking
Strategy
Formulation
Accountability
Appoint CEO
Monitoring and
Supervision
Past & Present
Performance
Roles
Policy Making
Future
*adapted from Tricker, RI: International Corporate Governance (1994) p149
Accountability
Those you can’t say no to!
•
•
•
•
the law and regulation
constituent document or
empowering legislation
creditors (eg. bank; suppliers)
other contractors (eg government
funding; sponsors)
Accountability
Those you need to listen to!
•
owners (shareholders; members;
government)
• customers
• staff
• the community
Good Governance in
Accountability
• “listening” to stakeholders
• risk management
• organisational culture
What is Strategy
• what is “Strategy”? –
Michael Porter
• the gut, the head, the heart
• answer the hard questions
Good Governance in Strategy
• longer term strategic plan (with
measures)
• aligned operational/business/annual
plan (with measures)
• aligned budgets
Good Governance in
Strategy
• dedicate some board meetings
to strategic matters
• spend the first hour on a
strategic issue
• reorganise the agenda (decision;
discussion; noting)
Policy
“I define policy as the value or perspective that
underlies action. Of course that means everyone in
the organisation makes policy including staff
members, but boards must make the broadest and
most inclusive policies in order to control the
organisation. The trick is for the board to make
distinctions between the types and sizes of policy,
so that what is delegated is clear”.
Carver J: Reinventing Your Board, P41
Good Governance in
Policy
Carver argues that the board only has one employee, the CEO.
“The board will:
•
instruct only the CEO
•
view all organisational performance as that of the CEO
•
view any organisational failure to comply with board policy as the
failure of the CEO
•
require that the CEO keep the organisational performance within
policy criteria and restore it to this state should there be policy
violations
•
never in its official capacity, help the CEO manage”
John Carver
Good Governance in
Policy
•
•
•
Matters reserved for the
board
Policy separated from
minutes
Board Manual
Monitoring and
Supervision
•
•
•
•
By strategic KPIs
By annual KPIs
By compliance with board policy
By agreeing what information will
come to the board, in what format
CEO and Succession
•
•
•
•
“hire and fire” the CEO
remunerate and reward
assess performance
plan for succession
Get the Right Skills
• size of the board
• board skill set
• committees
 the right ones?
 clear terms of
reference?
 reviewed, or task
forces?
• amend constituent document
Board Member Knowledge
•
•
induction
management update
sessions
• expert reports
• expert development sessions
• Board and director
performance evaluation
Encourage the Right
Behaviour
Board Effectiveness Research
Shey Newitt
Compliant but not contributing: why Australian boards are being underutilised
Working Relationships
•
•
•
Chair – CEO relationship critical
behaviour and teamwork
a “living” Code of Conduct
Introduce Effective
Processes
•
•
•
•
•
calendar
papers before meeting
clear, concise, precise papers
duration of meetings
calibre of minutes plus action
list
• receipt of minutes after
meeting
Effective Governance
• understand the role of the Board
• get the right skills and encourage
the right behaviour
• introduce effective processes
Good Governance in
Credit Unions
Structure and Skills
• size of board
• “fit”: skill set; appointed and/or
elected directors; terms for board
renewal
• “proper”: not too bureaucratic
Structure and Skills
• Nomination and Remuneration
Committee with independents
• the right committee
Accountability
• communication from, and to, members
• the AGM
• relationship with APRA
Accountability
• reports on governance
• “capture” corporate social responsibility
Strategy
•
•
•
•
a true differentiation?
mergers
enough time on strategy
longer term plan
Policy
• matters reserved
• centralise all board-endorsed policies
• HR and remuneration/reward policies
align with strategy
Policy
• outsourced service providers
• user-friendly style
• risk management
Monitoring and
Supervision
• by KPIs – strategic and annual
• by the information the board receives
• by policy compliance reports
CEO and Succession
• CEO or Managing Director?
• performance management
• annual succession planning including
for CEO direct reports
Leadership and
Teamwork
• the right chair
• succession planning for the chair
• performance evaluation
Meetings
•
•
•
•
duration and timing
format for submissions
annual calendar
meeting without management
In Summary
• The right directors and chair
• A strategic view
• The right processes
Your checklist
Understanding Good
Governance in Credit
Unions
Governance Matters
governancematters.com.au