10 Board Policies Your Board Can't Live Without

10Board Policiesyour board can’t live without

Page 2© 2014 Integrated Governance | 1300 76 22 38 | www.integratedgovernance.com.au

01Code of Conduct

Directors are required to comply with various federal and state laws including:

• Act in good faith and for a proper purpose• Exercise due care and diligence• Not gain an advantage or improperly use informa on • Disclose any confl icts of interest• Ensure the organisa on does not con nue to trade

whilst insolvent• Follow the Business Judgement Rule• Not ask for or accept gi s or benefi ts which might

compromise or infl uence them• Behave responsibly par cularly regarding confi den al

informa on• Engage in mandatory training.

Directors are also expected to:

• Review board papers before board mee ngs • Acquaint themselves with the strategic issues

confron ng the organisa on • Contribute to strategic planning• Make decisions in accordance with board Policy• Monitoring the CEO’s performance regularly • Ac vely par cipate in con nuous professional

development and training• Contribute to a safe, healthy and discrimina on-free

environment.

Professional Conduct

Directors are expected to act with integrity to ensure that the reputa on of our organisa on is managed, protected and enhanced including:

• Uphold a posi on of trust to support our reputa on • Recognise that the posi on of director has no power

or authority when ac ng alone unless specifi cally delegated

• Recognise that no person employed by the organisa on in any capacity can be instructed by any individual director

• Ensure that the organisa on is opera ng effi ciently, eff ec vely and legally

• Undertake diligent analysis of all proposals • Strive to obtain value for organisa onal money spent,

avoid waste and to use organisa onal resources in a proper manner

• Promote and encourage equity and inclusiveness throughout the organisa on and consider age, gender, cultural background and people with a disability in decision making

• Act honestly and in the best interests of the members as a whole and not to represent individual cons tuents

• Contribute to a posi ve board behaviour and culture by showing respect for other directors’ opinions and allowing each director a fair and equal opportunity to contribute to discussion and decision making.

Personal Conduct

02

Governing, not ManagingThe board governs while the CEO manages.

We recognise that boards who a empt to manage opera ons from the boardroom table means that the CEO is dis-empowered and may not be responsible for the outcomes.

We recognise that possessing skills and exper se will assist directors to contribute to discussions regarding appropriate policies and strategies.

Principal TasksWe recognise that the board’s primary role is one of trusteeship on behalf of its stakeholders. As a board, we ensure that our organisa on remains viable and eff ec ve today as well as for the future. This is achieved through the principal tasks of the board described below.

1. StrategyStrategy provides underpinning guidance for the board in fulfi lling its mission with maximum effi ciency, impact and with regards to available funds, personnel and other resources. The strategic process includes research, se ng vision, values and objec ves, strategies to achieve those objec ves and determining repor ng standards to ensure the CEO is implemen ng the strategy.

2. ControlControl of the organisa on is achieved through board policy and the recruitment of the CEO. Policies control the governing of the organisa on, the realisa on of the organisa onal objec ves and place limita ons on

Our board agrees that the authority of the board resides in the body of the board, not in its individual members. For example, on a seven-person board, an individual director does not have one-seventh of the power. An individual director has no individual authority.

We recognise that the only me a director has individual power is when they vote. Directors use their judgement when making decisions and must ensure decisions comply with the law, the Cons tu on and board policy.

Role of the Board

Authority of the Board and the ‘One Voice’ Principle

and provide guidelines for decision making. The CEO is expected to perform and is fi scally rewarded in the key responsibili es of strategic implementa on, personal a ributes, compliance and representa on.

3. Monitoring and Evalua ngQuality repor ng provided by the CEO at board mee ngs allows the board to ensure the eff ec veness of strategy and monitor the CEO’s performance. This is achieved through judging actual results and discussing and making decisions regarding our strategy moving forward. Evalua ng board and CEO performance is via an annual review conducted internally or via an external third party.

4. LeadershipEthical behaviour that contributes to a high standard of leadership. This includes adherence to the Code of Conduct and appropriate legisla ve, cons tu onal and administra ve requirements as well as doing the right thing at the right me.

Our fi nal decision/s are in the form of a Resolu on of the Board at a board mee ng. Whether present when the decision was made or not, we recognise that all members of the board share accountability in the decision.

Once a decision is made our board agrees to act as ‘one voice’. We agree that the opinion of an individual director must not have the weight of authority or infl uence over the board’s decision and no individual director may undermine the board’s decision.


Role of the director

03Role of the Director

A director is a person who is elected or appointed to the posi on. Directors must carry out their du es in compliance with all applicable State and Federal law, our Cons tu on, board policy and other requirements deemed appropriate by the board.

This requires our directors to commit the me necessary to understand and contribute to strategy, the forma on of policy, and monitoring of results as well as engagement in ongoing skill development. Directors must abide by the Code of Conduct.

Characteristics of a director

Board MeetingsOur directors are required to prepare for board mee ngs. Board papers are provided to each director at least 48 hours before each mee ng. Prepara on may include: • Reading material circulated • Reading the minutes of the previous mee ng • Considera on of ma ers to be discussed.

Other Mee ngsOur directors are required to a end the annual general mee ng, special general mee ngs, extra mee ngs to discuss strategy, sub-commi ee mee ngs or to receive specialist training.

Decision MakingOur directors are required to make complex decisions. We defi ne ‘good decision making’ as decisions that are made in the best interests of our organisa on and its people.

Our directors make decisions at the governance level, not at the management level of business.

ConfidentialityOur directors recognise it is essen al that informa on rela ng to any business and opera onal aspects of our organisa on is treated confi den ally. Directors must not;

• Disclose or off er to supply confi den al or private records or informa on, except when authorised

• Access or use informa on, including informa on on electronic systems and hard copy fi les, other than for an authorised purpose

• Keep minutes or other confi den al informa on rela ng to board mee ngs on unsecured portable electronic devices and removable storage media

• Destroy or authorise the destruc on of organisa onal records other than in accordance with policy and relevant legisla on.


04Role of the Chairperson

Characteristics of a Competent Chairperson

• Upholds the vision and values of the organisa on• Listens and communicates well, encourages all

directors to par cipate• Impar al and fl exible• Achieves the aims of mee ngs

Boardroom Leadership

• Summarises fairly and succinctly• Exerts authority and posi ve leadership when

necessary• Gains consensus and avoids undue confl ict• Ensures follow-through on ac ons iden fi ed.

Our board recognises that a chairperson strongly infl uences the behaviour of directors and boardroom culture. Our chairperson leads by example and ensures our boardroom culture is respec ul and inclusive, and they ensure construc ve rela ons between the board and the CEO.

Our board mee ngs are managed by our chairperson in a manner designed to encourage diversity of opinion, ensuring that all directors are given an opportunity to contribute to discussion and decision making.

Our chairperson is bound by our board’s policies and decisions and thus has no authority to alter, amend or ignore these. Except where stated in the Cons tu on, our board has not delegated to the chairperson the right to independent decision taking.

Our chairperson’s role and responsibili es include:

• Represen ng the board• Abiding by our Code of Conduct and ensuring other

directors do the same• Se ng the agenda and ensuring board members

receive mely and clear informa on• Managing board mee ngs• Liaising with the CEO and managing an eff ec ve

working rela onship• Support of the strategic planning process• Board member development and encouragement • Induc on and training for newly-elected directors• Performance assessment and evalua on• Increasing the awareness of the benefi ts of diversity

on boards.

Role and Responsibilities

05Role of the CEO

The board may delegate authority and/or place limita ons on the following:

• Financial ma ers, including budge ng, asset protec on, investment management and pricing

• Expenditure• Debt, accounts payable and accounts receivable• Risk, including risk appe te and monitoring• Procurement, tenders and contract management• Compliance• Grants and sponsorships• Governance, including altering the organisa on’s

legal structure and name• Repor ng requirements• Staff management and recruitment• Organisa onal design• Membership and subscrip ons• Obtaining legal advice.

DelegationsAs the professional manager of our organisa on and within the board’s guidelines and limita ons, our CEO is responsible for leading the development and execu on of our strategy with a view to crea ng stakeholder value. Our CEO is ul mately responsible for all day-to-day management decisions and for implemen ng our long and short term plans.

The cons tu on may delegate the role of company secretary to the CEO. Our CEO acts as a direct liaison between the board and management of the organisa on and communicates to the board on behalf of management. The CEO also communicates on behalf of the board to employees, government authori es, other stakeholders and the public.

Our CEO a racts, mo vates and retains a suitably qualifi ed team of managers and staff . Our CEO may also represent the organisa on.

Role of the CEO

The CEO manages to avoid fi nancial jeopardy. Financial jeopardy is defi ned as: • Allowing trading whilst the organisa on is insolvent • Allowing fi nancial management that facilitates

insolvency• Financial management that results in fi nancial

viability but not eff ec veness; that is, fi nancial decisions made without regard to the organisa onal objec ves

• Financial management that is conducted in a manner that threatens fi nancial viability even if organisa onal objec ves are being accomplished.

Financial Jeopardy


About This Book10 Board Policies Your Board Can’t Live Without provides a glimpse into how clear and well-wri en policy can improve your organisa on’s governance, and therefore your organisa on’s ability to thrive.

These 10 policies are summaries of our more signifi cant policy book, 40 Board Policies to Help your Organisa on Thrive.

Contact Shayne Leslie or Nick Che le from Integrated Governance on 1300 76 22 38 to order your copy. Generic and tailored versions available.

06Strategy

Our strategic plan provides the underpinning guidance for the board in fulfi lling our mission with maximum effi ciency, impact and with regards to available funds, personnel and other resources. Our strategy is researched, documented, monitored and evaluated. When developing strategy, the board strikes a balance between opera ng for today’s market and ensuring the organisa on is op mally prepared for the future.

We recognise that input by the CEO and, where appropriate, external third-par es is cri cal in designing a strategy that will be successful opera onally, balances our community’s wants and needs, is free of any confl icts of interest and encourages ac on towards our vision.

Strategic Planning

As part of the annual strategic review, our research is conducted in four areas:• People | Internal to the organisa on• People | External to the organisa on• Environment | Internal business and process• Environment | External trends and changes

Research

Vision and Values Our organisa on’s vision clearly and crisply illuminates our direc on. We state where the organisa on is heading phrased as being there today. Our values form the founda on of the board’s governing style and the CEO’s management style. Our values describe the key behaviours to achieve the vision. Our vision and values are unique to us.

The line that separates governing from managingOnce our strategies are set, the board delegates the crea on of business plans, marke ng strategy, organisa onal structure and staff policy to the CEO. These areas are directly related to the strategic plan and within the limita ons of board policy.

Integrated Governance FrameworkThe strategic plan is the central component in the Integrated Governance framework. The strategic plan has a direct link to board policy, which controls its implementa on and monitoring, and becomes a key responsibility in the CEO’s posi on descrip on.

The strategic plan determines the business plan; how the CEO plans to implement the strategic plan ‘on the ground’. As a board, directors should easily recognise elements of the strategy in the business plan and in the CEO’s repor ng.

The strategic plan with the board policy determines the staff policy and determines the organisa onal structure; how the CEO manages and plans human resources.

Objectives and StrategiesOur objec ves describe the broad steps to realise our vision. We create our objec ves using the headings given to us by Integrated Governance. These are Governance, Community Rela ons, Revenue Genera on, Marke ng, Workforce, Safety and Security, Master-planning, and

U li es and Natural Resources.

Our strategies provide specifi c instruc ons to the CEO on how the board wishes objec ves to be realised. Our strategies provide clarity, ensuring that the board can govern and priori se complex tasks. This includes monitoring and evalua ng our collec ve success as a board and the CEO’s performance.

07Decision Making

Decision Making ProcessOur board recognises that decision making is a complex process. We use the fundamental steps to making a good decision to guide our decision making process.

1. Clarify |the issue2. Research |facts and causes3. Op ons |brainstorm, discuss, research4. Discuss |pros, cons, budgets, indicators5. Select |one clear ra onal op on6. Implement |resources, accountability7. Evaluate |success or barriers to success

Annual Decision MakingUsing the Annual Board Calendar as a guide, our board plans our annual mee ng schedule in advance. We recognise that this assists individual directors to ensure that our governance ma ers are addressed in a mely and logical manner. We recognise that funding for third-party assistance can be budgeted under our Cost of Governance policy and appropriate training can be planned for unskilled directors.

Annual mee ngs take into account:• AGM organisa on and costs• Yearly governance professional development• Policy review• Organisa onal, CEO and board evalua ons• Master planning• Strategic planning• Financial planning• Board succession planning.

Monthly Decision MakingReports are presented by the CEO at least once a month at the board mee ng. We recognise that the quality of management reports and other informa on we receive directly aff ects the quality of our decision making. To monitor, evaluate and make good decisions, our board are informed through the following reports wri en to appropriate professional standards:

1. Strategic Evalua on report2. Financial report 3. For Decision papers4. For Discussion papers5. For Informa on papers.

Our board recognises that making good decisions is directly linked to the quality of the:

• Strategic plan• Board’s collec ve skills and cohesiveness• Directors’ individual governance and leadership skills • Directors’ individual contribu on to discussion• Repor ng standards we determine for the CEO• Risk frameworks• Using the decision making process.

Third-party InputWhere it is iden fi ed that the board does not have the requisite degree of knowledge or experience to make good decisions, the chairperson or CEO is delegated to obtain appropriate third party input.

08Recruitment of the CEO

Strategic Purpose of the PositionOur board recognises that we must recruit a CEO that has the management skills and leadership quali es to manage our organisa on according to our vision, values and objec ves.

To recruit a CEO, we priori se our strategic elements to determine the leader we need. In recogni on of this important governance task, we prepare quality documenta on to which applicants can respond rather than a generic list of opera onal tasks.

Our board or our delegated sub-commi ee forms the interview panel. The interview tests the candidates for leadership style and skills applica on.

We endeavour to reference check the candidate’s subordinates, peers, same-level colleagues as well as previous employers.

Key Responsibilities The CEO is expected to perform and is fi scally rewarded in four areas; Strategic Objec ves, Personal A ributes, Compliance and Representa on.

Selection CriteriaThe board’s selec on criteria includes:

• Strategic thinking and planning skills • Visionary leader in a complex environment• Strong work ethic • Collabora vely work with diverse groups• Leadership style that develops, coaches and

empowers Results focused approach • Driving accountability and eff ec ve performance • Sound fi nancial understanding • Ability to interpret fi nancial and sta s cal data.

Independent RecruitmentOur board recognises that employing the wrong CEO can have a signifi cant detrimental eff ect on achieving our organisa on’s vision, values and objec ves. We recognise that employing the wrong CEO for our organisa on is a costly exercise.

Where it is iden fi ed that the board do not have the requisite degree of knowledge or experience to eff ec vely recruit the ideal CEO for our organisa on, we will outsource the process to an independent third-party, such as Integrated Governance.


09Board Succession

Board Composition and Diversity

To recruit the best possible decision makers and encourage greater board diversity, we ensure the following strategies are in place.

1. Board Evalua on and Skills Audit An annual board evalua on and skills audit is undertaken to iden fy skill and diversity gaps and assist with the recruitment of board members with appropriate a ributes, knowledge, skills and qualifi ca ons.

2. Role Descrip on The director’s role descrip on clearly outlines the responsibili es and expecta ons so that poten al candidates are fully informed about the skills and commitment required.

3. Communica on with Members An elec on kit containing the director’s role descrip on and elec on process is distributed to poten al candidates. Those vo ng are informed of the a ributes and skills that the board is seeking so that vo ng can be based on merit rather than popularity.

4. Encouragement for Women to Apply We recognise that, generally, females are more likely to apply for board posi ons when encouraged and supported in the process. If our board has historically been male dominated, then we will ac vely seek appropriate women to apply for directorships.

5. Board Profi les We will include profi les of exis ng directors on our website so that poten al candidates can consider where their a ributes and skills would “fi t” into the exis ng mix and to highlight exis ng role models for other women if our board already has female directors.

6. Review of Cons tu onOur board annually reviews the cons tu on to ensure that it is not discriminatory, encourages diversity and a range of skills, and to allow the board to fi ll gaps if required.

7. Recruitment MethodsOur board will consider a range of recruitment methods to a ract a wide range of candidates, including adver sing. This includes, where our organisa on’s governing documents permit, candidates to be interviewed formally, and nominated and encouraged based on merit.

Our board recognises that the more diverse in gender and background we are, the be er posi oned we are to think diff erently and represent broader interests of our community. We ensure that our board is both representa ve of our community and appropriately skilled through our proac ve approach to succession strategies.

We also recognise that long-standing board members need to ensure that their contribu on is dynamic through their engagement in con nual professional development. All directors must apply high-quality governance skills and leadership, and possess a contemporary understanding of our complex environment to govern eff ec vely.

Succession Strategies


10Board Evaluation

Our board recognises the link between a high performing board and the successful performance of our organisa on. We recognise a well func oning board will have a posi ve infl uence on day-to-day opera ons as well as the performances of individual directors, CEO, staff , stakeholders and volunteers.

Our board processes are evaluated annually to obtain feedback on the collec ve performance of the board as well as the performance of individual directors to determine ongoing development, improvement and recruitment needs. To avoid group-think and internal bias, we ensure an external and independent evalua on is conducted at least biennially.

Evaluation and Success Evaluation ProcedureThe external evalua on procedure designed by Integrated Governance consists of the following steps.

1. AnalysisThe external facilitator conducts a high-level documenta on analysis to evaluate standards in repor ng and decision making, group skills and the impact of governance on fi nancial and membership results.

2. Self-Assessment ReviewBoard opera ons and leadership style are the two assessments completed by individual directors. The external facilitator analyses the responses with reference to the documenta on analysis.

3. Observa onThe external facilitator observes a board mee ng.

4. DiscussionThe facilitator conducts private discussions with individual directors and the CEO to discuss major themes, ensure validity and accuracy and listen to other ma ers that may not be evident from the analysis.

5. Ac ons ArisingA fi nal report is submi ed and an ac on plan is presented during a board mee ng to promote discussion and commitment. The ac on plan will allow the board to agree on and approve ac ons to address areas of improvement and budget appropriately.

Objectives of the EvaluationGenerally, the objec ves of our evalua ons are to ensure:• Development of a high-quality strategy• Eff ec ve monitoring of the CEO• Directors understand their ethical, legal and fi nancial

responsibili es• An eff ec ve induc on program is in place• An established Code of Conduct is in place• Values and posi ve behaviours are defi ned• Mee ng procedures encourage strategic discussions• Appropriate decision making models are in place• Appropriate policies are in place.

INTEGRATED GOVERNANCEGosford, NSW, 2250

1300 76 22 [email protected]

www.integratedgovernance.com.au

Shayne LesliePrincipal Consultant

B.Mus, B. Busi Mgt/Psy, Grad-Dip VET, M.Mus, CIVGov, CIVTAE

0412 241 [email protected]

Nick Che leDirector of Commercial Rela onships

B.Sci, Adv.Dip Project Mgt

0403 868 [email protected]

As part of our advice and support for registered clubs, spor ng groups, associa ons and other membership-based organisa ons, we have been building up a wealth of research, data and analysis on why some organisa ons are performing be er than others and how organisa ons can maximise their poten al.

We have found that success o en comes down to the quality of governance. The quality of governance is largely dependent on the board and CEO’s willingness and capability to adapt to a complex and changing legal, poli cal, economic and social environment.

Shayne Leslie, Principal Consultant, has been researching and developing Integrated Governance’s successful governance method since 2007. Your organisa on can benefi t from our assistance in improving your board’s governance and strategic thinking that is specifi c to your unique goals and place in the community.

If you would like to discuss any of the issues raised in this paper or would like to know more about how your organisa on can benefi t, please contact either Shayne Leslie or Nick Che le.

How can Integrated Governance help?

This publica on has been prepared for general guidance on ma ers of interest only, and does not cons tute professional advice. You should not act upon the informa on contained in this publica on without obtaining specifi c professional advice. No representa on or warranty (express or implied) is given as to the accuracy or completeness of the informa on contained in this publica on, and, to the extent permi ed by law, Integrated Governance does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else ac ng, or refraining to act, in reliance on the informa on contained in this publica on or for any decision based on it.

Our Services

Understand• Accredited governance training• Mandatory director training• Board evalua on• CEO evalua on• DiSC Leadership workshops

Strategy• Research• Vision and values• Objec ves and strategies• Repor ng frameworks• Board succession planning• Pre-selec on director training

Control• Board policy• Policy training and frameworks• Decision making and risk training• CEO recruitment• CEO posi on descrip on

Manage• Business planning• Marke ng strategy• Organisa onal design• Staff Policy• Senior management recruitment

Other services• Presenta ons at conferences,

mee ngs and events• Specialist research projects• Qualifi ed educator• Market research• Social media

Documents

10 Board Policies Your Board Can't Live Without