1. Understanding Good Governance
Governance Matters
Kate Costello

2. Effective Governance understand the role of the Board
get the right skills and encourage the right behaviour
introduce effective processes

3. Understand the Role of the Board
Governance is what the Board does or should do to be a “value-adder” to the organisation rather than just a “cost-centre”.
It is different from what management does or should do.

4. What is Governance
“The Board’s role is to create the future of the organisation, not just mind the shop”.
John Carver

5. Monitoring and Supervision
The Role of the Board
Strategy Formulation
Outward Looking
Accountability
Compliance
Roles
Appoint CEO
Performance Roles
Inward Looking
Monitoring and Supervision
Policy Making
Past & Present
Future
*adapted from Tricker, RI: International Corporate Governance (1994) p149

6. Those you can’t say no to!
Accountability
Those you can’t say no to!
the law and regulation
constituent document or
empowering legislation
creditors (eg. bank; suppliers)
other contractors (eg government
funding; sponsors)

7. Those you need to listen to!
Accountability
Those you need to listen to!
owners (shareholders; members; government)
customers
staff
the community

8. Good Governance in Accountability
“listening” to stakeholders
risk management
organisational culture

9. What is Strategy what is “Strategy”? – Michael Porter
the gut, the head, the heart
answer the hard questions

10. Good Governance in Strategy
longer term strategic plan (with measures)
aligned operational/business/annual plan (with measures)
aligned budgets

11. Good Governance in Strategy
dedicate some board meetings to strategic matters
spend the first hour on a strategic issue
reorganise the agenda (decision; discussion; noting)

12. Policy
“I define policy as the value or perspective that underlies action. Of course that means everyone in the organisation makes policy including staff members, but boards must make the broadest and most inclusive policies in order to control the organisation. The trick is for the board to make distinctions between the types and sizes of policy, so that what is delegated is clear”.
Carver J: Reinventing Your Board, P41

13. Good Governance in Policy
Carver argues that the board only has one employee, the CEO.
“The board will:
instruct only the CEO
view all organisational performance as that of the CEO
view any organisational failure to comply with board policy as the failure of the CEO
require that the CEO keep the organisational performance within policy criteria and restore it to this state should there be policy violations
never in its official capacity, help the CEO manage”
John Carver

14. Monitoring and Supervision
By strategic KPIs
By annual KPIs
By compliance with board policy
By agreeing what information will
come to the board, in what format

15. CEO and Succession “hire and fire” the CEO remunerate and reward
assess performance
plan for succession

16. Get the Right Skills size of the board board skill set committees
the right ones?
clear terms of reference?
reviewed, or task forces?
amend constituent document to
make right

17. Board Member Knowledge
induction
management update sessions
expert reports
expert development sessions
Board and director
performance evaluation

18. Encourage the Right Behaviour Board Effectiveness Research
Shey Newitt
Compliant but not contributing: why Australian boards are being under-utilised

19. Working Relationships
Chair – CEO relationship critical
behaviour and teamwork
a “living” Code of Conduct

20. Introduce Effective Processes
calendar
papers before meeting
clear, concise, precise papers
duration of meetings
calibre of minutes plus action list
receipt of minutes after meeting

21. Effective Governance understand the role of the Board
get the right skills and encourage the right behaviour
introduce effective processes

22. Understanding Good Governance
Governance Matters
governancematters.com.au