Thursday, October 9, 2008

The practice of Governance

The Carter model of governance sets out the roles and responsibilities for members of the governance group. The roles are clear; the board sets out strategy and the executive implements that strategy, and takes whatever actions are called for, within operating guidelines.

In practice the two groups meet at regularly scheduled meetings where issues of policy and practice are discussed and decisions made that enable the organisation to operate smoothly.

In practice it is not quiet as smooth as that, as I am reminded from time to time, when clients contact me to discuss the issues they are experiencing. A couple from the past twelve months or so come to mind.

In the first instance the CEO made a decision to expand a nfp organisation beyond existing geographical borders. There was a precedent for doing so, the organisation had done just that a year or so earlier. In a sense the CEO was simply continuing a process that had begun earlier. The issue here was the CEO assumed the board wished to continue that process and forgot one important consideration. The CEO serves at the behest of the board. It is correct the CEO runs the business; rather than the Board. At the same time the CEO is a servant of the board and should choose to seek guidance, or ask, rather than assume and tell.

In the second instance, the CEO of another non-profit made a decision to purchase another business. This intention had been flagged during earlier discussions but no information had been provided to the board. When the opportunity came to make the purchase, which was in line with the strategic direction of the organisation, the CEO provided the board with a one paragraph email and a rudimentary set of figures. The issue for some board members was the inadequate level of information and insufficient time for informed debate. The decision was eventually discussed and endorsed by the required minimum votes. The outcome was a division of board members and the eventual resignation of some. Boards are there to hold the CEO accountable. CEO's need to consider that if they expect volunteer board members to put their name to the activities of an organisation then those board members deserve to be provided with an adequate level of information and sufficient time for debate.