XC3 the Executive Director Ensures Effective Governing Body Decision Making and Delegation

XC3 The Executive Director ensures effective Governing Bodydecision making and delegation (CfA 517)

Unit Summary

The Executive Director will bring personal experience, internal knowledge and relevant expertise to the decision making process to ensure the meetings of the Governing Body and its committees are effectively planned and managed, the decisions are based on full relevant information, and it delegates relevant functions to its committees

Personal attributes

The Executive Director will apply the following personal attributes:

• Analysing critically
• Making sound judgements
• Managing resources
• Communicating engagingly
• Empowering others
• Developing others
• Being self-aware
• Influencing others
• Being motivated

Performance indicators

Maintain sound management of Governing Body and committee meetings

The Executive Director will bring personal experience, internal knowledge and relevant expertise to the decision making process to assist the Governing Body to:

1.Maintain a proper focus on the Governing Body’s key role and tasks

2.Determine the role, responsibilities, tasks and objectives of directors in particular roles, including the chair, the chairs of the committees, the chief executive, the finance director, executive directors, non-executive directors and the secretary, and agree the working relationships between them

3.Determine a policy for the annual cycle, frequency, purpose, conduct and duration of Governing Body and committee meetings and for the setting of the agendas and the recording of the minutes

4.Arrange that directors and members of Governing Body committees are supplied with the relevant and timely information needed for the effective fulfilment of their responsibilities

Knowledge and understanding

The Executive Director will know:

General knowledge and understanding

• The Governing Body’s key roles and tasks
• The tasks and objectives of the chair, the chairs of the committees, the chief executive, the finance director and the secretary
• The working relationships needed among directors
• Procedures for governing bodies and their committees
• The Governing Body decision cycle and methods of managing meetings and recording minutes
• Methods of information management appropriate to meet the needs of the Governing Body
• ICSA Code of Good Boardroom Practice
• ICSA Guidance Notes 2003
  Matters reserved for the Governing body
  Terms of reference – Audit Committee
• CACG ; Framework for Governing body and individual director performance evaluation

Sources of context specific knowledge and understanding

For Boards of Companies listed on the London Stock Exchange

• The Combined Code (2003)
• A1 The Governing body
• A3 Governing body balance and independence
• A4 Appointments to the Board
• A6 Performance evaluation
• A7 Re-election
• C3 Audit committee and auditors
• Higgs Report Guidance 2003
• Principal duties of the Nominations Committee
• Guidance on Performance Evaluation
• Principal duties of the Remuneration Committee
• Smith Report Guidance 2003
• Guidance on audit committees

For Boards of Private Sector Companies

• The Institute of Directors’ Standards for the Board (2001); Part 2 Section 3 Planning and managing governing body and governing body committee meetings
• Proposed legislative duties of directors in the Companies Bill (2005)

For Governing Bodies within the Public Sector

• The Independent Commission on Good Governance in Public Services’ The Good Governance Standard for Public Services (2004); 4. Good governance means taking informed, transparent decisions and managing risk

For Governing Bodies within the Voluntary and Community Sector

• National Occupational Standards for Trustees and Management Committee Members (2006) Unit 4
• Good Governance: A Code for the Voluntary and Community Sector (2005) Principle F

For Governing Bodies of registered charities

• Operational Guidance by the Charity Commission

Performance indicators

Establish a system of access to information for Governing Body members

The Executive Director will bring personal experience, internal knowledge and relevant expertise to the decision making process to assist the Governing Body to:

5.Ensure effective information flows within the Governing Body and its committees and with the managers

6.Arrange that directors receive high quality, accurate, appropriate, clear and timely information to enable them to discharge their duties

7.Arrange that directors have access to the advice and services of the organisation secretary and independent professional advisors at the organisation’s expense where they judge it necessary to discharge their responsibilities

8.Arrange that directors inform when appropriate, and are informed by the views of, relevant stakeholders

9.Establish a public interest disclosure policy and procedures to allow confidential reporting of wrongdoing

Knowledge and understanding

The Executive Director will know:

General knowledge and understanding

• The responsibilities of the chair and secretary to ensure effective information flows within the Governing Body and its committees and with managers
• The nature and timing of information required by directors to enable them to discharge their duties within the decision cycle
• The organisation’s legal obligations regarding “whistle blowing”
• The legal, regulatory and codes of practice on directors’ rights to access to the secretary and independent professional advisors appropriate to the organisation sector
• The requirements for two-way communication with key stakeholders
• ICSA Code of Good Boardroom Practice
• ICSA Guidance Note 2003; Terms of reference – Audit Committee
• Leadership and Management Standards: Managing information for competitive advantage (2005)

Sources of context specific knowledge and understanding

For Boards of Companies listed on the London Stock Exchange

• The Combined Code (2003); A5 Information and Professional development
• Higgs Report 2003
• Guidance on Performance Evaluation
• Principal duties of the Remuneration Committee

For Boards of Private Sector Companies

• The Institute of Directors’ Standards for the Board (2001); Part 2 Section 3 Planning and managing governing body and governing body committee meetings
• Proposed legislative duties of directors in the Companies Bill (2005)

For Governing Bodies within the Public Sector

• The Independent Commission on Good Governance in Public Services’ The Good Governance Standard for Public Services (2004); 4. Good governance means taking informed, transparent decisions and managing risk

For Governing Bodies within the Voluntary and Community Sector

• National Occupational Standards for Trustees and Management Committee Members (2006) Unit 4
• Good Governance: A Code for the Voluntary and Community Sector (2005) Principle F

For Governing Bodies of registered charities

• Operational Guidance by the Charity Commission

Performance indicators

Make informed decisions

The Executive Director will bring personal experience, internal knowledge and relevant expertise to the decision making process to assist the Governing Body to:

10.Take into account all relevant and material information in its decision making processes

11.Make informed and transparent decisions that conform with legal, regulatory, organisational and ethical and social responsibilities

12.Provide for the directors and members of Governing Body committees to receive induction on joining and to update and refresh their capability and knowledge regularly

13.Be able to state clear criteria and rationale for its decisions

Knowledge and understanding

The Executive Director will know:

General knowledge and understanding

• The importance of making decisions based on the relevant information
• The requirement to make transparent decisions that conform with legal, regulatory, organisational and ethical and social responsibilities
• Induction systems appropriate to the directors
• The value of statements of the objectives, rationale and criteria for Governing Body decisions
• ICSA Code of Good Boardroom Practice
• Leadership and Management Standards: Managing information for competitive advantage (2005)

Sources of context specific knowledge and understanding

For Boards of Companies listed on the London Stock Exchange

• The Combined Code (2003)
• A5 Information and Professional development
• Higgs Report 2003
• Guidance on Performance Evaluation

For Boards of Private Sector Companies

• OECD Principles of Corporate Governance (2004); Chapter 5 Disclosure and Transparency
• Proposed legislative duties of directors in the Companies Bill (2005)

For Governing Bodies within the Public Sector

• The Independent Commission on Good Governance in Public Services’ The Good Governance Standard for Public Services (2004); 4. Good governance means taking informed, transparent decisions and managing risk
• The OECD Guidelines for State Owned Enterprises (2005); Chapter 5 Transparency and disclosure

For Governing Bodies within the Voluntary and Community Sector

• National Occupational Standards for Trustees and Management Committee Members (2006) Unit 4
• Good Governance: A Code for the Voluntary and Community Sector (2005) Principle B

For Governing Bodies of registered charities

• Operational Guidance by the Charity Commission

Performance indicators

Delegate relevant functions to specialist Governing Body committees

The Executive Director will bring personal experience, internal knowledge and relevant expertise to the decision making process to assist the Governing Body to:

14.Establish committees in accordance with relevant regulation or guidance to undertake Governing Body functions in specialist areas: standing committees for matters such as audit and risk, remuneration, nomination, and governance; and ad hoc committees for short-term assistance to the Governing Body’s work

15.Determine the composition, terms of reference, name of the secretary or clerk, and method of selection of the chair for each of its committees

16.Have arrangements in place to review annually the delegation of functions to committees and to receive reports reviewing their effectiveness

Knowledge and understanding

The Executive Director will know:

General knowledge and understanding

• The relevant regulation or guidance in the sector for Governing Body committees
• The relevant regulation or guidance on the composition, terms of reference and method of selection of the chair for each of its committees
• Performance evaluation methods
• Performance indicators for committees
• ICSA Code of Good Boardroom Practice
• ICSA Guidance Notes 2003
  Matters reserved for the Governing body
  Terms of reference – Audit Committee
• CACG; Framework for Governing body and individual director performance evaluation

Sources of context specific knowledge and understanding

For Boards of Companies listed on the London Stock Exchange

• The Combined Code (2003);
• A4 Appointments to the Board
• C3 Audit committee and auditors
• Higgs Report Guidance 2003;
• Principal duties of the Nominations Committee
• Principal duties of the Remuneration Committee
• Smith Report Guidance 2003; Guidance on audit committees
• Association of British Insurers (2003); Principles and guidelines on executive remuneration
• Association of British Insurers and the National Association of Pension Funds (2003); Joint statement on best practice on executive contracts and severance

For Boards of Private Sector Companies

• The Institute of Directors’ Standards for the Board (2001); Part 2 Section 3 Planning and managing governing body and governing body committee meetings
• Proposed legislative duties of directors in the Companies Bill (2005)

For Boards of Banking Organisations

• The Basel Committee on Banking Supervision’s Enhancing corporate governance for banking organisations (2006); Principle 6 The bo9ard should ensure that compensation policies and practices are consistent with the banks corporate culture, long term objectives and strategy and control environment

For Governing Bodies within the Voluntary and Community Sector

• National Occupational Standards for Trustees and Management Committee Members (2006) Unit 4
• Good Governance: A Code for the Voluntary and Community Sector (2005) Principle F

For Governing Bodies of registered charities

• Operational Guidance by the Charity Commission

Performance indicators

Delegate relevant functions to managers

The Executive Director will bring personal experience, internal knowledge and relevant expertise to the decision making process to assist the Governing Body to:

17.Delegate authority to managers to implement the organisation’s selected strategies and plans

18.Establish effective channels through which the Governing Body and directors communicate regularly with the managers

19.Determine the criteria to be used by the Governing Body to monitor and evaluate the implementation of the organisation’s selected strategies and plans

Knowledge and understanding

The Executive Director will know:

General knowledge and understanding

• The separation of direction and management within a system of delegation of authority
• Effective communication channels appropriate to the organisation
• Performance evaluation methods
• ICSA Code of Good Boardroom Practice
• ICSA Guidance Notes 2003; Matters reserved for the Board

Sources of context specific knowledge and understanding

For Boards of Companies listed on the London Stock Exchange

• The Combined Code (2003); A2 Chairman and Chief Executive

For Boards of Private Sector Companies

• The Institute of Directors’ Standards for the Board (2001); Part 3 Section C Delegate to management
• OECD Principles of Corporate Governance (2004); The rights of shareholders and key ownership functions
• Proposed legislative duties of directors in the Companies Bill (2005)

For Governing Bodies within the Public Sector

• The Independent Commission on Good Governance in Public Services’ The Good Governance Standard for Public Services (2004); 2.2 Being clear about the responsibilities of non executives and the executive and making sure that those responsibilities are carried out
• The OECD Guidelines for State Owned Enterprises (2005); Chapter 2 The state acting as owner

For Governing Bodies within the Voluntary and Community Sector

• National Occupational Standards for Trustees and Management Committee Members (2006) Unit 4
• Good Governance: A Code for the Voluntary and Community Sector (2005) Principle F

For Governing Bodies of registered charities

• Operational Guidance by the Charity Commission

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National Occupational Standards for the Governance of Public Sector Services / Final version August 2007