MaRS Library Separating governance from management
Boards govern while management manages. Board members are stewards. Good boards work on the premise that while accountability can be delegated, responsibility cannot. Thus, if the governance group governs and management manages, the CEO or executive director should not be a voting board member, nor should anyone reporting to this individual have voting privileges as a board member. The CEO, president, executive director, or general manager should report to the board as an ex-officio member. Family-controlled organizations may not choose to follow this advice because of their outright control of ownership. As reported in The Globe and Mail (July 29, 2009), when Ted Rogers was chairman of Rogers Communications Inc., his board voted 15 to 1 against getting into the wireless business. The opposing vote was Ted’s. The rest is history!
While not a practice found with NPO boards, many businesses create their first boards with members of the management team, supported by independent or “outsider” members. While this is practical (and low-cost), these insiders need to be cautioned to step outside of their day-to-day responsibilities and rise to their role of governance. If the board is mixed in this way, it requires the appointment of at least an audit committee and a personnel committee made up from the independent directors. Where management sits on the board, it might be wise to appoint a “lead director,” an independent, to act as chairperson. This helps greatly with establishing the board as not a super-management committee but an oversight committee, as it should be.
Many firms, especially family firms, create their first board of directors and combine the positions of CEO or president with the position of chairman of the board. This is often a result of the founder not wanting to relinquish total authority and control. The trend at the governance level among public corporations is to separate these two positions. The reasons go back to the old adage:“governance governs; management manages.”
Carver’s Policy Governance® Model
The Carver Policy Governance® Model is the best-known model of governance worldwide. It applies to all types of boards. Unlike the usual governance/management relationship of typical boards, policy governance demands that board’s primary relationships be outside the organization—that is, with the owners. The board speaks with one voice or not at all. The chair and the CEO or executive director positions keep separate. The top venture leader attends board meetings but is not a member. The model provides another key mandate: boards must set a single point of delegation and hold this position accountable for meeting all of the board’s expectations for performance.
The key to policy governance is the insistence that a CEO, president, general manager or executive director be appointed and held responsible for all management activities. The model holds that if there are committees, they report to the board, not to management. Frequently, NPO boards include management members at the board level and board members acting like managers as they assist the venture with its day-to-day goals. For these reasons, many organizations will not adhere to the Carver model nor consider its benefits. Policy governance requires the discipline of separating governance from management.
Brunt, S. (2009, July 29). Whole new ball game for Blue Jays owners. The Globe and Mail (Toronto), p. S1.
Carver, J. and Carver, M. (2001). Carver’s Policy Governance® Model in Nonprofit Organizations. Retrieved September 21, 2009, from http://www.policygovernance.com/pg-np.htm