Recent public commentary by the Government has highlighted the need for clarity on the governance structures of organisations funded by the taxpayer and in particular who’s in charge.
If one decides to go on a board, then having clarity on the governance structures is critical to the effective functioning of a board and the role that one can play. The board members that I have come across join boards for differing reasons. They are dedicated and committed people, keen to do the best possible job, eager to serve on an effective, successful and respected board. But many join boards without knowing and having the appropriate clarity about their roles and the other various roles on a board. This can be detrimental to its functioning.
Like any organisation there should be a rule book that sets out precisely how the board should function.
It can be called a Governance Manual, Governance Handbook, a Board Charter or Board Manual, or anything else that does what it says on the tin. This rule book must exist regardless of the legal status of the organisation. Without some form of rulebook, board dysfunctionality will quickly arrive at the door.
If this dysfunctionality is played out in the media, it will impact the integrity, brand and reputation of the organisation and that of the individual board members.
A well written rule book guarantees nothing. It needs to be backed up by the right behaviors and values, but that’s a discussion for another day.
The objective of the rule book to provide clarity on the roles and responsibilities around the table and how the board should work.
The Governance Handbook – typical high-level contents include:
- Governance structure
- Board role and functions
- Board committees and their charters
- Matters reserved for the board’s decision
- Chairperson’s, Non-Executive Directors and Executive Directors roles
- CEO’s role
- Board code of conduct
- Conflict of interest and disclosure policy
- Other key board level policies – e.g. Risk Management, Financial Management, Reserves, Crisis Management, etc.
- Board member induction and ongoing development
- Board renewal and rotation policy
- Attendance Policy
- How the board works
- Strategy & Risk
A good rule book assists good governance housekeeping and helps to avoid ambiguity. It’s not rocket science!
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David W Duffy FCA is the Founder and CEO of the Governance Company and the author of “A Practical Guide to Corporate Governance” published by Chartered Accountants Ireland.