August 14, 2018

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Rose Mercier

Remedy for a Governance Failure: Part 2: A Board is Ultimately Accountable for Everything

For those who haven’t yet read Part 1 of this blog, here is a short recap: the blog was motivated by a newspaper article about a board of a social housing organization that was removed by the body that gave it the authority to govern. I pondered on the types of governance failure that would prompt such a seemingly drastic action.

The article revealed that the event triggering the firing of the board and the executive director was a lack of response to identified breaches of the legislation governing the social housing organization, including fire code regulations. This followed on an operational review conducted by the responsible municipal department that had also revealed several irregularities in financial management, investment of assets, operational deficits, conflict of interest guidelines and governance. In their defense, board members indicated that they knew about the operational review and were contributing to its “governance side” and beyond that, were relying on the executive director to make sure they had the necessary financial documents. And besides, noted one board member, her specific priority had been ensuring a particular site became a reality.

In Part 1, I wrote about how a board can contribute to governance failure by not writing policies that clearly specify the benefits that the organization is to produce for the community, or not writing policies that identify the means that would be unacceptable to use in achieving those results. Even if it has such policies, a board can contribute to governance failure if it doesn’t have a systematic way of reliably assuring itself of policy compliance.

How else might the board in the story, or any board, reduce the likelihood of governance failure?

In addition to having and monitoring policies through which it directs its executive director (CEO), the board needs written expectations for its own behaviour.

What might a board like this expect of itself?

  • That it avoid actions or decisions that compromise the use of its authority as whole. For example, it should expect that board officers, e.g., the board chair, and board committees act in service of the board and do not exercise any authority other than that which the board has delegated. It should also expect that the specifically assigned contributions of board officers and committees support the board’s work and don’t make decisions that the board as a whole should make.
  • That a code of conduct addresses what constitutes a conflict of interest and what happens if a board member has such a conflict. It should also have a code of conduct that obliges individual board members to demonstrate loyalty to those on whose behalf they are governing over any loyalty they might have to staff, specific constituencies, or another organization. The board’s code of conduct needs to address other expectations of individual board members that the board values, for example, preparation for meetings, absences, confidentiality of material or discussions, need for familiarity with bylaws, legislation and regulations, etc.
  • That policies set out unambiguous delegation of authority to its chief executive officer (in this case, executive director). This includes the board avoiding delegating to a committee the same authority it has already delegated to the executive director, and not delegating to staff other than the executive director.
  • That it evaluates executive director/organization performance on the basis of the pre-determined criteria it states in the policies.
  • That it has an annual agenda plan and process for setting its agenda, that it doesn’t abdicate these jobs to the executive director, and that the annual plan includes board education and board development.
  • That it has a plan for engaging with the community, including residents, to understand their values, perspectives, and needs, and uses the insights gained to inform their policies.

While the above list is not exhaustive, our board needs to further demonstrate its accountability for excellence in governing by looking in the mirror – regularly and honestly. It needs to ask of itself: Are we exercising self-discipline and doing what we committed to do? Is there evidence in our minutes, our actions inside and outside of meetings, our relations with housing authorities and municipal government that confirms that we are acting in accordance with our policies? What do we need to do better? How can we improve?

The harsh reality is that because a board is accountable for everything, it is equally accountable for governance excellence and governance failure. The lesson here is that any board that is committed to governance excellence, regardless of where it is starting from, can move towards excellence. It is a journey. It starts with the decision to move forward.



			

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