Ambiguity the culprit when things go awry – Part II

Continuing with our crusade towards clarity – and ever mindful that ‘as clear as mud’ creates chaos – let’s start by exploring Section Four and its subject matter of ‘The Board Role and Functions’, which traditionally contains general, overarching explanations about the primary roles and functions of the board.

It delves into matters such as accountability, strategy, risk, the performance of the CEO and all the other main high-level responsibilities.

In Section Five, we look at ‘Office Bearers’, those public officers such as the Company Secretary, and provides a concise position description for each.

The type and size of the organisation will, of course, determine the number of office bearers but even when small in number, it is important that this aspect of governance is given due attention.

The next logical focus, in Section Six, is board committees, usually captured in a section headed something like ‘Committees of the Board and Committee Charters’.

Here, we find a list of all the committees, those bodies boards delegate work to in order to more effectively deal with complex or specialist issues.  Think Risk Committee, Audit Committee and HR Committee, just to name a few.

The section will also carry a detailed description and definition of each, outlining its objective and providing a full list of all its responsibilities.

It will also note the composition of each committee – who chairs it and how many serve on the body – and how each member is appointed, what expertise and skills they have that are particularly relevant to the task at hand.

Other pertinent information covers off on how many meetings are expected to be held each year, what constitutes a quorum, the terms of the appointment of members, how often there’s a review of those who serve on a particular committee and how it’s conducted, who is responsible for the various activities – such as minute taking – and how this committee makes recommendations to the board.

Section Seven is what I like to call one of the ‘Big Daddies’ of a Board Charter – and that’s because it deals with ‘Matters Reserved for the Board’s Decision’.

Here, we spell out, in crystal clear fashion, the decision-making division between board and management.  The golden rule is that the board will delegate to management all decisions except those relating to…

Strategic and operational planning, financial matters, mergers and other ventures, other contracts, legal issues, the brand, the organisational structure, human resources and culture, and moving the principal location of operations.

In addition, there are those board-specific issues that obviously reside in the board’s domain, and I’m thinking here of actions such as disbanding committees and making changes to the board charter.

There are, however, some matters that neither the board nor management can decide – and in these cases, the board approves them for consideration by members or shareholders at general meetings such as the Annual General Meeting.

And it’s only when these members or shareholders have cast their vote that a decision – in line with the vote – is valid.

Until next time,

Kate.

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