Fundamentals ofBoard 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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systemsystemElements

of a Governance System

1. Foundational / core documents

2. Governance policies and systems

3. Informal governance

foundation

policies

informal

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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]

- 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]

- Focus on results or outcomes (as opposed to activities); good sense of their information needs

- 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]

- Focus on long-term sustainability (expenditures & revenues; asset management)

- 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]

- 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

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 ResponsibilitiesBaseline Board Roles

• Fiduciary

• Oversight

Possible Additional Board Roles

• 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 TraditionalPolicy

governance

Organization context drives the governance model

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

Strategy

15© 2010, Institute On Governance

Governance StrategyBaseline

• 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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Strategy

Time & Maturity

Governance Strategy

Board/Management Relationship

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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)20

Board-Staff relations

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• Oversight

• Direction

• Implementation

Who does what? Board-staff relationship

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

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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

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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

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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StructureBaseline

• 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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Structure

ProcessesBaseline

• 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

ProcessesProcesses

Board Performance Management

• Most private sector and many public/NFP

boards are doing formal performance

management

• A wide variety of approaches exist:

- Outside evaluation

- Self-assessment of board as a whole

- Self-assessment of individual directors

- Peer-assessment of individual directors

- Facilitated group discussion

• In any scenario, need to set governance goals and objectives to measure against, which requires governance planning

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Processes

Expectations/MotivationBaseline

• Clear director role or job description, pre-screen/expectation setting, orientation

Issues

• Integrating directors from different constituencies/appointment processes

Emerging

• Direct focus on board culture

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Expectations / Motivations

PeopleBaseline

• Board profile/skills matrix, orientation training

Issues

• Continued diversity, financial skills challenges

13.04%

Emerging

• Director professional development programs, recruitment branding

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People

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• 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 Board1. 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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