Passion and Prudence:Signs of Good Governance

Passion and Prudence:Signs of Good Governance

ILM 2010 Bangkok, ThailandMurray Bairdmbaird@mooreslegal.com.au

ILM 2010 Bangkok, ThailandMurray Bairdmbaird@mooreslegal.com.au

Welcome…Our time today will be

Welcome…Our time today will be

informalnon prescriptiveaware of diversity of approacheslearning togetherA mix of basics and stretches

informalnon prescriptiveaware of diversity of approacheslearning togetherA mix of basics and stretches

RoadmapRoadmap

What is governance?Biblical approaches to

governanceWhat does a board do?What makes a good board?Some tips on good governance

What is governance?Biblical approaches to

governanceWhat does a board do?What makes a good board?Some tips on good governance

Governance …Governance …

What is it? Some definitions Two sides of governance Management vs. governance? Biblical reflections on governance

Accountability and communication

What is it? Some definitions Two sides of governance Management vs. governance? Biblical reflections on governance

Accountability and communication

1

Latin: To pilot or steer the ship

Greek – kubernetes – helmsman of a ship (direction giving)

American - Cybernetics - the study of organization, communication and control in complex systems – connectedness

Cyberspace – the place of connectedness

Latin: To pilot or steer the ship

Greek – kubernetes – helmsman of a ship (direction giving)

American - Cybernetics - the study of organization, communication and control in complex systems – connectedness

Cyberspace – the place of connectedness

What is Corporate Governance?

What is Corporate Governance?

“The System by which Entities are directed and controlled” Australian Institute of Company Directors/Cadbury Report 1992

“The System by which Companies are directed and managed” Australian Stock Exchange 2003

“The way in which an organisation is steered and stewarded” Institute of Chartered Secretaries and Administrators

“The System by which Entities are directed and controlled” Australian Institute of Company Directors/Cadbury Report 1992

“The System by which Companies are directed and managed” Australian Stock Exchange 2003

“The way in which an organisation is steered and stewarded” Institute of Chartered Secretaries and Administrators

Some definitionsSome definitions

“Corporate Governance concerns the Directing of the Company as distinct from the Managing of the Company” Directors Manual CCH

Directors set the direction; Managers implement the strategies.

Directors are the Mind; Managers are the Hands

“Corporate Governance concerns the Directing of the Company as distinct from the Managing of the Company” Directors Manual CCH

Directors set the direction; Managers implement the strategies.

Directors are the Mind; Managers are the Hands

Governance v. Management?Governance v. Management?

Two sides of the Governance coinTwo sides of the Governance coin

steward and steer managed and

mentored accountable and

creative protect and direct manage and

direct accountable and

entrepreneurial prudence and

passion

steward and steer managed and

mentored accountable and

creative protect and direct manage and

direct accountable and

entrepreneurial prudence and

passion

The Directors’ DilemmaThe Directors’ Dilemma

“The essential board tasks are simultaneously to drive the enterprise forward whilst keeping it under prudent control”

Professor Bob Garratt Cass Business

School , London.

“The essential board tasks are simultaneously to drive the enterprise forward whilst keeping it under prudent control”

Professor Bob Garratt Cass Business

School , London.

Biblical approaches to decision making

Biblical approaches to decision making

A sampling … The Direct Presence of God (Exodus 13:21 – Pillars of

cloud and fire)

Decision by Lot (Exodus 28:15-30 – Urim & Thummin, Acts 1:26 – The lot fell to Matthias)

A Council of Leaders (Acts 15:28 “It seemed good to the Holy Spirit and to us …”)

Dreams & Visions (Acts 16:9 – Paul had a vision)

Leadership Succession (Titus 1:5 Appoint elders as I directed you)

The Spiritual Gift of Leadership – Rom. 12:6-8 “If a man’s gift is … leadership, let him lead diligently.”

A sampling … The Direct Presence of God (Exodus 13:21 – Pillars of

cloud and fire)

Decision by Lot (Exodus 28:15-30 – Urim & Thummin, Acts 1:26 – The lot fell to Matthias)

A Council of Leaders (Acts 15:28 “It seemed good to the Holy Spirit and to us …”)

Dreams & Visions (Acts 16:9 – Paul had a vision)

Leadership Succession (Titus 1:5 Appoint elders as I directed you)

The Spiritual Gift of Leadership – Rom. 12:6-8 “If a man’s gift is … leadership, let him lead diligently.”

Principles from ScripturePrinciples from Scripture

Reliance upon the Holy Spirit An atmosphere of trust and unityClearly defined lines of

accountability and authorityOpen and continuous two-way

communication

Reliance upon the Holy Spirit An atmosphere of trust and unityClearly defined lines of

accountability and authorityOpen and continuous two-way

communication

Relationships in good governance

Relationships in good governance

Owners

Board

STAFF

Customers

CEO

Aut

horit

y

Acc

ount

abili

ty

Com

mun

icat

ion

Owners – the stakeholders/

initiators

Field board

Field Leader

Key workers

Ministry recipients / our

world The Imperfect Board Member, Jossey-Bass, 2006

What does a board do? What does a board do?

Models and Lists A simple model List of 12 things for a board to do

Models and Lists A simple model List of 12 things for a board to do

2

A model of what a board does

A model of what a board does

Policy making

Strategy formulation

Future Oriented

Provide accountability

Monitoring & Supervising

Achieve Mission working through CEO

Achieve Mission working through CEO

External Role

Internal Role

Past & PresentOrientation

Compliance roles Performance roles

Source: Tricker, 1994:149

What Boards Do #1What Boards Do #1

Determine Mission and Purpose of Organisation

Select, Support and Review the CEO

Approve and Monitor Programs and Services

Ensure Adequate ResourcesEffective Fiscal Management

and Legal Compliance

Determine Mission and Purpose of Organisation

Select, Support and Review the CEO

Approve and Monitor Programs and Services

Ensure Adequate ResourcesEffective Fiscal Management

and Legal Compliance

What Boards Do #2What Boards Do #2

Engage in Strategic PlanningSelect and Orient Board MembersUnderstand Relationship Between

Board and StaffEnhance and Protect ReputationOrganise so Board operates efficientlyRisk Management

Engage in Strategic PlanningSelect and Orient Board MembersUnderstand Relationship Between

Board and StaffEnhance and Protect ReputationOrganise so Board operates efficientlyRisk Management

What makes a good board?

What makes a good board?

5 essential qualities of a board member

Structuring a board

5 essential qualities of a board member

Structuring a board

3

Essential qualities of Board members

Essential qualities of Board members

Teamwork

Time

Teamwork

Time

Heart

Vision

Fiscal

Heart

Vision

Fiscal

Source: The Imperfect Board Member, Jossey-Bass, 2006

Structuring the boardStructuring the board

Composition: Right mix of: skills, experience, personality, understanding of the organisation, context and constituencies (stakeholder groups)

Be intentional about what you needSuccession planning

Use a nomination or succession committee Chair takes the lead

Rotation PolicyCo-option powers

Composition: Right mix of: skills, experience, personality, understanding of the organisation, context and constituencies (stakeholder groups)

Be intentional about what you needSuccession planning

Use a nomination or succession committee Chair takes the lead

Rotation PolicyCo-option powers

Some tips on good governance

Some tips on good governance

Assessing the board Good directors The Chair What works

Assessing the board Good directors The Chair What works

4

Assessing the BoardAssessing the Board

Define your Functions Rate how you are doing Ask for improvement

suggestions Collate and identify areas for

improvement Discuss priorities Plan and Act

Define your Functions Rate how you are doing Ask for improvement

suggestions Collate and identify areas for

improvement Discuss priorities Plan and Act

www.boardsource.org

www.federationpress.com.au

www.boardsource.org

www.federationpress.com.au

Signs of good DirectorsSigns of good Directors

Guide and monitor ManagementUnderstand the field’ and the economic

contextSeek specialist knowledge or expert

advice when requiredBring an informed, independent

judgementActive participation without dominatingEnquire into untoward circumstancesTeam Player

Guide and monitor ManagementUnderstand the field’ and the economic

contextSeek specialist knowledge or expert

advice when requiredBring an informed, independent

judgementActive participation without dominatingEnquire into untoward circumstancesTeam Player

The ChairThe Chair

Role of Chair:Set it out in a charter or role

descriptionGatekeeper of information flow to the

board- must not prevent key information flowing

Candour and confidentiality without compromise

Foster constructive collegialitySet the standardsWork with senior management

Role of Chair:Set it out in a charter or role

descriptionGatekeeper of information flow to the

board- must not prevent key information flowing

Candour and confidentiality without compromise

Foster constructive collegialitySet the standardsWork with senior management

What Works Best?What Works Best?

Small is Good - 8-12Take responsibility for succession

and balanceService your Board and

Communicate between MeetingsRefresh and renewChair is CriticalHave an Annual Agenda CycleGet good advice

Small is Good - 8-12Take responsibility for succession

and balanceService your Board and

Communicate between MeetingsRefresh and renewChair is CriticalHave an Annual Agenda CycleGet good advice