The Complementary Model of

Board Governance

Based on material developed byAssociation Management Consultants Inc.

Goals of Workshop

Increase your knowledge of the general duties and responsibilities of a Board of Directors

Show how these duties and responsibilities can be carried out within the context of the Complementary Model of Board Governance

Review where your organization is with the adoption of the Complementary model and reaffirm its usefulness for the organization

Thank you.

Those who can, do. Those who can do more, volunteer.

–Author Unknown

It's easy to make a buck. It's a lot tougher to make a difference.

–Tom Brokaw

Board director responsibilities

Directors shall at all times use their best efforts to provide progressive, collective leadership and direction to the Society in support of its vision, mission, and mandate… From a Director’s Code of Conduct

What does this mean in legal terms?

How directors are liable:• Fiduciary duty• Standard of Care• Statutory liabilitySee A-2 in manual for more info

What does this mean in legal terms?

Fiduciary dutyThis is a legal obligation to act in the best interest of another party. This can apply to looking after funds and property, managing confidential information, obedience in following valid decisions of the board, etc.

What does this mean in legal terms?

Standard of careThis requires directors to apply a level of skill and judgment that may be reasonably expected of a person with his/her experience. This can include ensuring an organization is not negligent about unsafe working conditions, and that directors make reasonable decisions, including not entering into a contract without proper authorization.

What does this mean in legal terms?

Statutory LiabilityDirectors can be potentially liable for breaches relating to an organization’s failure to make tax and payroll remittances.

How directors can protect themselves

Purchasing Directors Liability Insurance

Good governance – showing a due diligence in your duties is a director’s defence against any liability charges.

Why the Complementary Model ofBoard Governance?

The Complementary Model allows governors to participate in the operation of their NPO without becoming "managers". It allows volunteers to reconnect with their organization and still remain "governors". In other words, it allows them to participate as well as govern.  –Tom Abbott, creator of the model

The Complementary Model ofBoard Governance

Nonprofits waste uncounted hours debating who is superior and who is subordinate - the Board or the Executive Director. The answer is they must be colleagues. Each has a different part, but together they share the play. Their tasks are complementary. The two have to work as one team.

 Peter Drucker, Managing For The Future

The model provides info on:

• The contemporary role of volunteers and staff in policy development and managing the association

• The role of the volunteer Treasurer, the Secretary and the Executive Committee

• What financial information board directors should receive

• The roles of committees

• Who directs the staff in the organization

• Board director and executive director codes of conduct, conflict of interest Guidelines, and board appraisals

There Are 10

Complementary Model Principles

1. The Board is responsible for both the governance and management of the Society.

2. The Executive Director is designated the Chief Executive Officer (CEO)* and is responsible to the Board for the management of the Society.

Principles

Principles

The Dictionary of Business Terms reads:

The Chief Executive Officer (CEO) is the officer who has ultimate management responsibility for an organization. The CEO reports directly to the Board of Directors [and] appoints other managers ... to assist in carrying out the responsibilities of the organization.

3. The Chair of the Board is the senior volunteer position in the organization.

4. The Board is responsible for determining all non-administrative policies of the Society; the ED is responsible for determining all administrative policies of the Society.

5. The Board defines and approves a Code of Conduct for the Directors and a separate Code of Conduct for the ED.

6. There are three types of committees or task forces.

Principles

7. There are four monitoring options for the Board.

8. The Board does an annual written appraisal of the ED.

9. The Governance Committee coordinates written appraisals of the Directors.

10. Board training is a priority, budgeted item.

Principles

Board – Executive Director

The Board focuses on policy development and oversees the management of the Society

The Executive Director is designated the Chief Executive Officer (CEO)

There are 10

Complementary ModelOperating Features

Operating Features

1. The Board establishes non-administrative policies; the ED implements policies; both monitor organizational effectiveness.

2. The Board approves the strategic plan of the organization.

3. The Board approves the annual financial budget of the organization.

Operating Features

4. The Executive Committee's mandate is explicit and limited.

5. The number of Board Committees is reduced; Board meetings become shorter.

6. The ED establishes administrative policies for the organization.

7. There are two Society policy manuals.

Operating Features

8. The Chair is responsible for the meeting agenda.

9. The Secretary is not responsible for recording lengthy minutes. (see A6 and A7 for sample agenda and minutes)

Operating Features

10. The Treasurer is not responsible for the preparation of the financial reports in the traditional sense – but most ensure the board understands the organization’s financial position (see page 16 of manual)

The division of duties

Responsibilities:

Planning and Policy Setting:

Board

Implementing:

Staff

Monitoring :

Board and Staff

Time Demands

Planning and Policy Setting

15%

Implementing

75%

Monitoring

10%

Planning and Policy Setting

Function ofBoard or Staff

Gather information X Prepare options X Develop recommendations XDiscuss options X XVote on policy/plans X

Implementing

Function ofBoard or Staff

Developing implementation plan X Implementing plan X

-Hiring staff X-Staff assignments X-Staff evaluations X-Staff salaries X-Staff terminations X-Staff grievances X

Day-to-day administration X

Monitoring

Function ofBoard or Staff

Monitoring X X

Three Types of Committees

Policy Task Forces

Board Statutory Committees

ED Working Committees (see sample terms of reference on pages 12-14 of manual)

Policy Task Forces

These are committees established by and reporting to the Board. They examine and develop recommendations on Board policy matters. (Eg., a committee to decide on whether or not a shelter should expand.)

Policy task forces have a limited time horizon, a defined sunset clause in their mandate and provide reports for each Board meeting.

Board Statutory Committees

These are committees established by and reporting to the Board. They deal with responsibilities outlined in the bylaws or enabling legislation. Examples include:

– Governance committee: Board training, nominations and elections

– Audit committee: Selection of auditor and resolution of audit recommendations

The committees are ongoing and depending upon activity, may or may not provide reports for each Board meeting. These committees report to the Board.

ED Working Committees

These are committees established by and reporting to the ED. They deal with operational or management matters (not Board policy matters). Examples include a social committee, training committee, etc.

There may be directors serving on these ED Working Committees but in this role, the directors report to the ED. Reports on ED Working Committees may, at the discretion of the ED be included in the ED Report.

There are 4

Monitoring Options for the Board

ED Report

This is a written report provided to each Board meeting. It is not read by the ED, but she does respond to questions about content. The ED must report any breaches of the Code of Conduct and report upon the activities of the Working Committees.

(see page 23 of manual)

Statutory Committee/Policy Task Force Reports

Written reports provided to each Board meeting.

These are not read by the Committee/Task Force Chairs but they do respond to questions about content.

External Report

The Board may at any time engage an independent third party to review any management or policy area of the Society.

The independent third party will report upon the ED's adherence to approved policies or compliance with generally accepted management practices.

Financial Report

The Board will review periodic financial reports that highlight divergences from the approved priorities and approved budget.(See A-8 for a list of questions that should be asked and answered about an organization’s finances)

There are two Society Policy Manuals.

Board Governance Manual:

This is manual designed for use by the volunteer Board to help Directors meet their policy and management responsibilities. It includes policies related to how the Board operates.

Staff Policy and Procedures Manual:

This is a manual designed for use by the Society's staff. The Board does not approve this material. The manual will vary considerably* from one Society to another but generally contains operational instructions needed by the staff in order for them to meet their staff responsibilities.

* But should include a policy on how staff grievances are to be settled if the shelter is not unionized!

Ten Part Board Policy Manual

1. History of the society 2. Mission statement, current issues, and

the strategic plan 3. Statement of governance and

management philosophy 4. Board policies, including conflict of

interest guidelines, codes of conduct, performance evaluation

5. Committee operations including conflict of interest guidelines

Ten Part Board Policy Manual (cont’d)

6. Legal documents (including bylaws) 7. Volunteer organization chart and contact list 8. Staff organization chart and ED contact info 9. Terms of reference of board committees and

task forces

10. Board minutes

Board Policies should:

Create a framework for stable operation and provide direction to the Board and Staff of the organization

Reflect the basic philosophy and values of the organization

Constitute guidelines for decision making and action by those with decision making responsibility

Possible polices to consider

Grace Sparks House– Governance and Administration– Board of Directors– Remuneration– Filling Board vacancies– Board of director duties

Possible polices to consider

Grace Sparks House con’t– Executive of the Board Duties– Sub-Committees– Board of Director Code of Ethics (see page 22

of manual)– Board members confidentiality agreement– Attendance– Communication

Looking closer at Board/Organizational Policies

Conflict of InterestDirector’s Code of ConductED’s Code of Conduct

Conflict of Interest Guidelines

Conflict of interest guidelines for Board members can be a bylaw or a policy. keep in mind that a board member’s fiduciary responsibilities also include conflict of interest disclosure.

Conflict of Interest guidelines for employees should be included in the organization’s personnel manual.

Materials on Conflict of interest have been taken in part from: enVision.ca

Conflict of Interest Policy:

A Conflict of Interest policy will clearly state not only what constitutes a conflict of interest, but also how to best disclose the situation to avoid or reduce potential conflict.

Most people think of a conflict of interest policy as something relative to board members only, however, a conflict of interest policy can also be developed and applied to employees and direct service volunteers.

What is a conflict of interest?

A “conflict of interest” is any situation where(a) your personal interests, or

(b)those of a close friend, family member, business associate, corporation or partnership in which you hold a significant interest, or a person to whom you owe an obligation could influence your decisions and impair your ability to(i) act in the society's best interests, or

(ii) represent the society fairly, impartially and without bias.

It is important to note that a “conflict of interest” exists if the decision could be influenced – it is not necessary that influence takes place.

Is this a Conflict of Interest?

A Board member’s relative is a building contractor that regularly provides services to the organization. The organization always uses this contractor and rarely gets quotes from other companies since the contractor provides good service and has reasonable rates.

Answer…..

Even though it was an innocent decision on the part of a board director or the executive director, there is definitely a conflict of interest here. Imagine that you are an outside party observing the situation. How can either the Board member or the executive director prove that they did not favour the company for personal reasons?

What to do…….

It is important to note that this does not mean a board member (or the ED) or his or her family members can never provide services to the organization – that would make it very difficult to recruit new board members! If a potential conflict of interest occurs, the board member/ED must first disclose this conflict and second, abstain from voting or decision-making on the issue.

Evaluation

ED evaluation (see A-9 for one possible way to do this)

ED Evaluation

From: http://corestrategiesonnonprofits.blogspot.com/2009/12/how-can-i-get-my-board-to-evaluate-me.html

How Can I Get My Board to Evaluate Me?Q: … I am the executive director. While the board says it appreciates the work I

have accomplished, I can’t seem to get anyone to formalize this feedback or talk about the raise I was promised as inducement for my accepting the position originally… I find myself, seven months later, still waiting for my first evaluation…

A: I can feel your frustration. It’s hard putting your heart and soul into a job, not knowing whether your bosses think you are on the right track, let alone whether or when you’ll get that promised raise. All of us deserve an evaluation. It’s the opportunity to get some pats on the back and learn where we need to grow.However, I’m not surprised that your board keeps putting off your evaluation… most people are very uncomfortable judging others.

ED Evaluation

From: http://corestrategiesonnonprofits.blogspot.com/2009/12/how-can-i-get-my-board-to-evaluate-me.html

“The only way to avoid this in the future is to sit down together with your board and create a list of specific goals that are tied directly to the organization’s vision and for which you will be responsible. Each goal should be measurable and have a deadline for achievement. Each should specify whether the accomplishment is expected or whether it would be seen as exceeding expectations …I would also suggest that you put dates on the calendar right now for a quarterly or six-month review. The dates are more likely to be honored if they are already scheduled. If you wait until the evaluations are due it is too easy to let day to day crises prevent you from making the necessary time.”

Evaluation

Board director evaluation

(see page 24 and 25 of manual)

Implementation Plan

Board education and training

Board commitment and formal approval to accept the model

Pick implementation date

Implementation Plan (cont’d)

Then: • Separate Board/non-Board Policies - Two Manuals • Develop Terms of Reference for all committees

• Review and as necessary create new Board Policies• Prepare the Codes of Conduct • Prepare the Statement of Governance and

Management Philosophy • Training on Agenda/Meeting Management for Chair

Implementation Plan (cont’d)

Undertake a complete by-law review

Approximate time to implement :

6-12 months

Leadership….

The leaders who work most effectively, it seems to me, never say "I." And that's not because they have trained themselves not to say "I." They don't think "I." They think "we"; they think "team." They understand their job to be to make the team function. They accept responsibility and don't sidestep it, but "we" gets the credit…. This is what creates trust, what enables you to get the task done.

- Peter Drucker

Workshop Conclusion:

•Evaluation

•Thank you