Fundamentals of
Board Governance
Presented by: Todd Cain and Laura Edgar, IOG
© Institute On Governance
Objectives
• Understand the elements of a governance system
• Understanding governance challenges
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system
Elements
of a Governance System
foundation
policies
informal
1. Foundational / core documents
2. Governance policies and systems
3. Informal governance
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IOG’s Principles of Good Governance
• Legitimacy & voice
• Direction & purpose
• Effective performance
• Accountability & transparency
• Fairness & ethical behaviour
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Characteristics of High Performance Boards
1. They develop & maintain a longer term vision and clear
sense of direction [Direction]
– Mission & vision statements; longer term plan;
clear priorities; updating process
2. They ensure the prevalence of high ethical standards
[Fairness, Accountability, Performance, Legitimacy]
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Transparency & openness; respect for their legal
obligations; written code of conduct; role of
stakeholders; treatment of staff
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Characteristics of High Performance Boards
3. They ensure effective performance through sound
information [Performance]
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Focus on results or outcomes (as opposed to
activities); good sense of their information needs
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They recruit, set objectives, and review the
performance of the chief staff officer
[Performance]
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Characteristics of High Performance Boards
4. They ensure the financial & organizational health
[Performance, Direction]
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Focus on long-term sustainability (expenditures &
revenues; asset management)
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Macro level concern with quality of management;
staff morale
5. They ensure sound relationships with their key external
bodies and other stakeholders [Legitimacy,
Accountability, Performance]
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Characteristics of High Performance Boards
6. They ensure sound relationships with members, clients
[Legitimacy, Performance]
7. They manage risk effectively [Performance]
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Identifying, assessing, mitigating & monitoring
critical developments with uncertain outcomes
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Characteristics of High Performance Boards
8. They are accountable [Accountability]
•
Through publicly available information (financial,
results achieved etc..); audits & evaluations;
outreach activities; public engagement practices;
redress mechanisms; etc..
•
They ensure the soundness of the governance
system [Legitimacy, Accountability, Performance,
Fairness]
•
Having effective relationships with staff; monitor
contemporary developments; monitor collective and
individual board performance; manage by-laws and
policies; recruit and train board members
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Roles and Responsibilities
The role of the Board
1. Compliance, stewardship & oversight
2. Leadership
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Fiduciary obligation
• Acting in the best interests of the IOG
Fiduciary duties
• Duty of diligence
• Duty of loyalty
• Duty of obedience
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Board Roles and Responsibilities
Baseline Board Roles
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Fiduciary
•
Oversight
Possible Additional Board
Roles
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Fundraising / development
Profile raising / legitimizing
Expertise
Stakeholder voice
Sounding board / counselor
Hands-on resource (eg.
Treasurer)
Strategy
Program direction / advisory
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Continuum of Governance Models
Operational
Collective
Management
Traditional
Policy
governance
Organization context drives the governance model
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Strategy
Strategy
• Governance as leadership
- Empowers the board
- Engages the collective mind
- Exploits the board’s talents and passion
- Enriches the board’s work
- Enhances performance of the board and
organization
© 2010, Institute On Governance
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Governance Strategy
Baseline
• Clear mandates, periodic focus on strategy, ongoing focus on
compliance, risk and governance
Issues
• Board management relationship, governance philosophy
Emerging
• Beyond Carver - revisiting the role of the board
• Stakeholder relations
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Governance Strategy
Board/Management Relationship
Strategy
Dependent
Independent
Interdependent
Time &
Maturity
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Chair Responsibilities
• Leads overall Board in fulfilling its responsibilities
• Voice of Board with the President
• Sets meetings and agenda, approves materials
• Chairs meetings, managing discussion and decision
making
• Builds desired Board culture
• Advise and counsel directors
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Committee Roles
• Committees typically exist to do more detailed work on
behalf of the Board
• As a result, Boards control terms of reference/mandate,
who gets appointed and work plan
• Most committees have no decision power – must
recommend to the Board
• BUT Board should not re-do the work of committees
• While typically made up of Board members, outside
members can be brought in
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Managing roles, responsibilities and risks
• Provide orientation and development opportunities for
board
• Develop and implement sound policies and procedures
• Be prepared, read and discuss reports and documents
• Attend meetings and participate fully, ask questions,
listen critically, express views, share, think things
through
• Know or learn about the board’s legal obligations and
make sure they are upheld
• Ensure clear and sound relationships with stakeholders
• Keep the IOG’s mission/purpose in mind (big picture)
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Board-Staff relations
Who does what? Board-staff relationship
• Oversight
• Direction
• Implementation
Governance functions
Management tasks
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Where Boards Fall Short
• Board orientation on roles and responsibilities for board
members and executive officers
• The urge to micro-manage staff
• Policy compliance
• Neglecting performance management
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Where CEO Fall Short
• Doing the Board’s job
• Providing the Board with inappropriate information
• Insufficient knowledge of governance
• Fear of taking risks
© 2009, Institute On Governance
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Where Boards AND Staff Fall Short
• Defining and adhering to board/staff roles
• Communicating and listening
• Lack of trust
• Meeting preparation and facilitation
• Building strong and effective teams
© 2009, Institute On Governance
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Keys to Board-Staff Collaboration
• Governance decisions are NOT made outside the
Board room
• Board need to drive governance decisions
• Relationship perhaps best seen as a partnership
• Formal direction must go through the President
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Tools to Assist in Board – Staff Relations
• The use of policies and codes
• Structural and organizational approaches such as
dispute resolution mechanisms
• Nurturing the relationship through orientation, training
and retreats
• Well run Human Resources & Compensation Committee
with a clear mandate
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Emerging Governance Practices
• An organization design model provides a useful frame
for discussing the reinforcing elements of governance
Modified from Jay Galbraith
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Structure
Structure
Baseline
• Smaller boards, fewer standing committees, more task
forces, term limits
Issues
• Separating ‘representation’ from board nominations
Emerging
• Use of advisory committees, retained services
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Processes
Baseline
•
Processes
Documented, repeatable governance processes, regular
board self-evaluation, conflict of interest/recusal, CEO and
organization performance management
Issues
•
Board performance “plateau,” individual assessment of
volunteer directors, follow-through by staff
Emerging
•
Results-based governance assessments
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Processes
Board Performance Management
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Processes
Most private sector and many public/NFP
boards are doing formal performance
Processes
management
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A wide variety of approaches exist:
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Outside evaluation
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Self-assessment of board as a whole
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Self-assessment of individual directors
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Peer-assessment of individual directors
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Facilitated group discussion
In any scenario, need to set governance goals and objectives to measure
against, which requires governance planning
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Expectations/Motivation
Baseline
Expectations
/ Motivations
• Clear director role or job description, prescreen/expectation setting, orientation
Issues
• Integrating directors from different
constituencies/appointment processes
Emerging
• Direct focus on board culture
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People
People
Baseline
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Board profile/skills matrix,
orientation training
Issues
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Continued diversity, financial skills
challenges
13.04%
Emerging
•
Director professional
development programs,
recruitment branding
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IOG Governance
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Legal Framework
• Federally incorporated
• Bylaws last updated in 2010
• Charitable status
• Currently working toward continuance under the
new Canada Not for Profit Corporations Act
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Board Policies and TORs
• Draft Policies:
– Roles and Responsibilities of the Board of Director
– Board Profile Matrix
– Director Job Description
– Conflict of Interest / Code of Conduct
• Terms of Reference (approved in 2010):
– Audit & Finance Committee
– Governance Committee
– Performance Review Committee
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IOG Standing Committees
• Governance Committee
• Audit & Finance Committee
• Performance Review Committee
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IOG Advisory Committees
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Indigenous Circle
Toronto
PGEx
Not for Profit
Learning
Purpose: to provide subject matter expertise, advice and support to the
IOG on:
– Program / product design and content
– Current and new markets
– Outreach to emerging markets
Membership on Advisory Committees driven primarily by subject matter
and/or market expertise
To date, a few board members have been involved on advisory
committees
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Thank you
• Questions?
• Comments?
Good Governance is a journey…
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Key Questions for the Board
1. Given the mission and strategic goals of the IOG, what
does the Board see as its roles and responsibilities?
2. Based on the roles and responsibilities defined in question
1, what does the Board do well and what does it need to do
better?
3. What board size, composition and competencies are
required for the Board to fulfill its roles and responsibilities?
4. What standing and other board committees are required?
5. How often should the board meet?
6. How can the Board best communicate with and support the
IOG President and her team?
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