Created: July 25, 2013 at 9:57 AM | Updated: November 30, 2018 | By Community Resource Kit
While the model of governance may vary for each group, there are common core roles and functions of governance that need to be considered by every group.
The role of a board has four main aspects:
(Source: Adapted from How boards work : Information for school boards of trustees)
The core roles of a governing body include:
The core functions of a governing body are:
A governing body's most important role is setting the long-term direction for the organisation, i.e. its mission and vision. The mission of the organisation relates to why it exists, while the vision relates to the long-term view of where the organisation sees itself in the future and what it wants to achieve.
Once the governing body has set the mission and vision for the organisation, it will work collaboratively with management and other stakeholders on planning the strategies that will take the organisation towards that vision. Strategic plans are long-range, at least five years, and cover things like financials, staffing, marketing, communications etc.
Tip: More complete information on strategic planning can be found in Strategic planning.
Stakeholders are people both inside and outside an organisation who have an interest in the organisation, e.g. customers, employees, board members, shareholders, the public. As part of good governance, all stakeholders should be consulted with so their expectations and requirements can be identified. Stakeholders shouldn't necessarily determine the group's overall strategy or drive the governing body's decision-making, but they should be should be involved when the group plans its direction and priorities.
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 its circumstances and strategic direction. For example, some people will be better at starting up a new organisation and others at working with one that wants to expand its services.
The keys to getting and retaining the right person as chief executive are:
The chief executive has a right to expect the board to provide regular performance feedback against agreed performance expectations. The governing body should adopt a fair and ethical process whereby all the members are involved in the chief executive's evaluation.
To ensure fairness and a process with integrity, good performance evaluation should:
The performance evaluation process also provides the board and chief executive with an opportunity to agree on future initiatives to help the organisation succeed.
Accountability means explaining to someone what you have done and are doing. Depending on an organisation's size and purpose, the governing body will be accountable to a number of stakeholders for a variety of items and actions, and will be held accountable via these main avenues:
Good governance includes identifying stakeholder interests. Important questions for the board to consider when identifying the most important shareholders are:
Communication with all stakeholders (e.g. members, iwi, local community, government regulators, etc) is 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. As a minimum, the governing body should allow time at the AGM to give all stakeholders the opportunity to ask questions. It may also be beneficial to develop communications plans to ensure ongoing communication with stakeholders (see Communications).
Risk management involves the governing body identifying any obstacles, events or changes that might prevent the organisation from reaching its goals and making sure strategies are in place that will minimise or eliminate any negative impacts. All risk management begins with three simple questions:
A governing body should begin developing its risk management strategies by answering these questions, building up a set of written policies that will help the organisation:
There is a wide range of risk management strategies that a governing body might need to consider, such as reports on incidents in the workplace, good practice rules, and ongoing staff and governing body training. A governing body should pay particular attention to risk management around financial matters and legal compliance.
Risk needs to be taken seriously even if the chances of something going wrong appear slim, so it's a good idea to appoint a member of the organisation as risk manager or set up a risk management committee. A board should also regularly review the main strategic and operational risks facing the organisation.
It is worth remembering that a risk encompasses not only threats of losses but also opportunities for gain. A risk-averse board can damage an organisation as easily as a board that is too reckless.
Policies are the guiding principles by which an organisation is run. They are the official statements that put into writing the way things are to be done within the group. It's the governing body's responsibility to develop their governance policies, to ensure they are being carried out, and to review them regularly so that they remain appropriate for the organisation.
The constitution or rules of an organisation is an important starting point for the development of policy. Your constitution needs to be interpreted and made operational.
There are a number of policies an organisation should consider having. Which of them you need will depend on your organisation's objectives, needs and resources, but generally, the policies fall under these main categories:
Tip: More complete information on the development of policies can be found in Introduction to policies.
Some of this material is adapted from the Sport New Zealand publication Nine Steps To Effective Governance - Building High-Performing Organisations. The Sport New Zealand website has other supporting material for helping non-profit organisations improve governance structures and processes.