Roles and Functions of a Governing Body
Topics in this section include:
- core roles and
- core functions.
Although there are many models of governance, there are some core roles and functions of governance that are common across all of these.
The core roles of a governing body include:
- values guardian — which may mean articulating or spelling out organisational values, mission and priorities to protect against undermining
- facilitator — which may mean arguing in support of grants or fostering relationships with key stakeholders
- political advocate — which may mean having contact with MPs as well as general political support or pressure from the board or committee
- buffer — which may mean monitoring potential divergence e.g. between Government and organisational interests.
The core functions of a governing body include:
- setting and monitoring the organisation's mission, purpose, direction, priorities and strategies within the boundaries of the organisation's constitution and legal obligations
- actively involving key stakeholders in setting and monitoring the organisation's mission etc (see previous bullet point) and maintaining positive relationships with them
- specifying key outcomes and ensuring there are adequate resources (people and finances) to achieve these
- appointing and supporting the chief executive, evaluating his/her performance and rewarding or replacing him/her as necessary
- being accountable to the organisation's owners for the stewardship of their assets
- risk management
- developing policies that allow the organisation to best serve its stakeholders. Remember it's management's job to implement those policies
- ensuring the governing body complies with statutory and contractual requirements and with the governing body's own policies
- monitoring the organisation's programmes and services
- regularly scanning the environment in which the organisation operates to ensure that what it's attempting to achieve remains relevant and achievable
- influencing decisions and finances
- reporting, at least annually, to stakeholders
- setting standards for and evaluating its own governance performance
- maintaining a governing body succession plan.
Some (not all) of these core functions will be dealt with in more detail next. For further details on all of them, refer also to Getting on Board available free online from www.creativenz.govt.nz and Nine Steps to Effective Governance available free online from www.sparc.org.nz.
Setting strategic direction and strategies
Setting the long term direction for the organisation is the governing body's most important role.
The purpose of the organisation relates to the reason for the organisation existing or, in other words, what it's trying to achieve. The vision relates to the long term view of where the organisation sees itself in the future. For example, the purpose of the ABC Trust is to teach all people within the region how to grow their own vegetables. The vision is that all people in the region do not need to buy vegetables.
Once the governing body has set the purpose and vision for the future of the organisation, it will work together with management and other stakeholders through a process to plan the strategies that will take the organisation towards that purpose and vision. This is called strategic planning.
Strategic plans are long-range (3 to 5 years) and cover things like financials, staffing, marketing, communications etc.
Stakeholders are people (from both inside and outside an organisation) who have an interest in that organisation e.g. customers, employees, board members, shareholders, public.
Good governance demands that stakeholder interests are identified and appropriate relationships established and maintained. This means involving stakeholders when planning direction and priorities. It does not mean that stakeholders should neither determine its overall strategy nor drive the governing body's decision-making. The governing body has a moral responsibility to consult with stakeholders about their expectations and requirements.
Recruiting and evaluating the chief executive
The governing body is responsible for appointing the chief executive and monitoring his/her performance against agreed targets and indicators. The qualities and skills the governing body should look for will vary from group to group depending on the strategic direction e.g. some people are good to have on board for starting up a new organisation.
The keys to getting and retaining the right person as chief executive are:
- defining the attributes you want for the position
- considering a range of people
- carefully reference checking the preferred candidates
- getting the full governing body to meet the leading candidates and make the final decision
- providing the successful person with a clear job description and proper formal induction process.
The governing body should adopt a process whereby it determines who on the Board will be involved in the chief executive's evaluation. The chief executive may help trigger the the process by preparing a self-assessment.
A good performance evaluation should:
- involve evaluation only against objective and previously agreed performance criteria and in respect of those matters for which the chief executive has been delegated full operational authority
- be continuous — rushed annual reviews should be avoided. Continuous informal feedback is best and should be positive as well as identifying concerns. The regular reports to the board also provide an opportunity for performance evaluation
- involve additional more formal "wrap ups" every 3 to 4 months. This also provides a chance to reset expectations if necessary
- include feedback from staff.
For further information on recruiting and evaluating the chief executive's performance, see Creative New Zealand's Getting on Board available free online from www.creativenz.govt.nz.
Being accountable to stakeholders
Accountability means explaining to someone what you're doing. The governing body is responsible for and accountable to the organisation's owners for the stewardship of their assets. The governing body is also accountable to a variety of other stakeholders for a variety of other actions. The main avenues via which the governing body can be held accountable to stakeholders are:
- the annual general meeting (AGM)
- the annual report
- regular reports to funders that any money provided was used as agreed and that any expenditure was appropriate and monitored
- other open meetings or consultations.
Communications with all stakeholders in addition to owners (e.g. government regulators, iwi, local community etc) are also important. They need a clear and accurate view of where your organisation is going, how it's performing and reassurance that the governing body is operating in the best interest of the organisation and meeting their legal obligations.
The governing body is expected to identify and manage any obstacles that might prevent the organisation from reaching its goals. This means being involved in risk management, particularly around financial matters and legal compliance.
Risk management involves the governing body foreseeing what could affect the organisation and making sure plans are in place that will minimise or eliminate the impact of events or changes that will have a negative effect.
Some examples of risk management strategies include:
- reports to the governing body on e.g. incidents in the workplace
- staff and governing body training on e.g. interpreting financial information
- good practice rules such as making sure cheques are signed by two authorised governing body members at the time of issue
Policies are guiding principles by which an organisation is run. There are a number of policies your organisation should consider having. It's the governing body's responsibility to develop their governance policies and to make sure that other policies (developed by the management team) are in place and being carried out.
These policies, which will vary from organisation to organisation, generally come under the following main categories:
- governance and management — e.g. governing body/chief executive relationship, financial management, risk management and planning policies
- advocacy and representation — e.g. communications, relationships and Treaty of Waitangi policies
- human resources — e.g. volunteer, EEO, recruitment/induction and OSH policies
- operations and administration — e.g. information management, record keeping, grants and sponsorship, Internet usage and vehicle policies.