Ambiguity the culprit when things go awry – Part IV

As mentioned earlier in this series of blogs, conducting the board skills and diversity exercise has both immediate and longer-term benefit, the latter dealing with succession planning.
That’s the focus of Section Sixteen, where we put in place measures to ensure that when members retire or resign, the composition of our board is handled in a proactive fashion, thus increasing the chances of achieving the diversity required to do the organisation justice.

In Section Seventeen, we turn the spotlight on ‘Board Performance Evaluation’, with the recommendation that the performance of the Board, chair, the members and the various board committees are evaluated each year – and according to an agreed process.

I’ll skim over what’s in the next three chapters – Eighteen, Nineteen and Twenty – as, while focused on the CEO, they essentially contain information that has more or less been covered under other headings.

Here, we’re looking at, in chronological order, ’CEO Position Description’, ‘CEO Performance Management’ and ‘CEO Succession Planning’.

A detailed position description helps with performance management – and you’ll find the very good boards will, in consultation with the CEO, sit down each year to agree on the performance objectives and measures and then revisit and review these 12 months later.

The very good boards will also adopt the ‘fall under a bus’ approach and make it an annual priority to consider succession planning not only of the CEO but those executives who are direct reports to the CEO.

Section Twenty-One is devoted to ‘Board Meetings’ and records how often they are held, how long they run for, the style they take and the like; with Section Twenty-Two looking at the ‘Board Calendar’.

The blunt message is: the more comprehensive the calendar the greater the chances of the board attaining best practice governance, so it’s worth devoting the required amount of time to this aspect of the Board Charter.

The good ones don’t just list the meetings and events for the year but provide specifics – such as documenting that, for example, the November meeting will attend to performance reviews.
Bringing the Charter to a close are sections on ‘Board Agenda’, ’Board and Committee Papers’ and ‘Risk Management’.

The first records how to go about setting the agenda and the sequence of matters for discussion, with the important items at the top and the papers for information towards the end. It also provides a standard template agenda, along with an explanation of why it’s constructed in this fashion.

The ‘Board and Committee Papers’ section conveys pertinent information on the style, format, quality and quantity of these papers, highlighting whether they’re reports for noting or papers with recommendations – and in the case of the latter, the format that should be followed.

The closing ‘Risk Management’ section should contain the organisation’s risk management policy and register which, as a dynamic document, will require the board to review and sign off on risk register elements on, say, a six-monthly basis.

“Whew,” I hear you say.

Whew indeed, but a few ‘whew’s’ now will save you monumental ‘whew’s’ down the road. For if you lack clarity on each and every one of these 25 sections, governance can get derailed – and very quickly. On the other hand, a thorough record, in concise English, will ensure that everyone knows how we do things around here.

It’s an exercise you can do yourselves; alternatively we have the full set and will be happy to assist.

Until next time,

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