Good Governance for Small Organisations ( What is Governance? )

Welcome Communities rely on a myriad of small to medium sized not for profit organisations, to provide a focal point or ‘hub’ in response of their local communities needs. Community bodies like sporting clubs, residents groups, art and cultural groups, community development organisations, support groups, youth organisations, playgroups and occasional child care organisations, multicultural organisations, senior citizens groups, environmental organisations and heritage groups, are a few of the organisations that we see contributing daily to our society.

Most often these community-based organisations do their work unrewarded and unrecognised, but the people involved achieve an outcome for themselves. Perhaps it is the feeling of helping or assisting, perhaps it’s the enjoyment of responsibility, perhaps it’s a social opportunity for fun and to do something that they would not normally do. Whatever the case, the results bring benefits beyond themselves, to many others now and into the future.

Thus the intention in presenting these training materials, is to add to the ways in which community based organisations, managed by voluntary committees or boards, can carry out their role more effectively and with greater certainty. A number of practical suggestions, sample documents and references are provided throughout this course, for your use. This is one chapter of several which might help you further in the role that you seek to play in the furtherance of your community.

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What is governance? (Section 1) Our society is built around communities which exist within, and in turn generate democratic principles and processes. Multitudes of small organisations contribute to the functioning of our communities and in the majority of cases these organisations and clubs are run by committees. Governance is the system by which a committee ensures an organisation’s responsibilities are met. Governance is not a separate activity, but an overarching framework for running an organisation. It refers to the processes by which organisations are operated, guided and held to account. Governance involves authority, accountability, leadership, direction and control in an organisation. Governance keeps our organisations and communities functioning soundly and democratically. The two main components of governance PERFORMANCE Every organisation is formed for a purpose. The performance of an organisation determines whether it is meeting its purpose. Performance can be measured through planning, reporting and feedback.

COMPLIANCE Community organisations are set up to be accountable. They must fulfil (or comply with) the requirements of legislation, government contracts and community expectation. These obligations include matters such as taxation, workcover, insurance and the meeting of contractual and service obligations.

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Everyday governance In our everyday lives we function within a framework of governance. Part of this every day framework is set by external bodies. The expectation of paying taxes if we earn income is an example of external governance. Our holidays are focused around traditional celebrations and Public Holidays, and public safety is prioritised through the system of driving conventions (we drive on the left), together with speed laws and fines. Some aspects of daily governance are not enforced by an external body but by the need for sensible systems to manage aspects of our life. An example would be our use of doctors and dentists and an overall heath care system. Similarly we have organisations such as libraries and fire brigades to serve our needs. We are governed by the need to work to pay bills and use these services. What is “good” governance? Good governance is the effective and efficient use of policies and practices to guide the operation of an organisation. It is the fundamental means of caring for the organisation and the members.

Effective means doing the right things

Efficient means doing things the right way The complexity of governance procedures and practices will vary according to the size and function of the organisation, however the principles of good governance are essential for the long term viability of the organisation The role of Committees of Management in governance There are thousands of Australian non-profit organisations in the community. When a group becomes incorporated and takes on the legal responsibilities of an organisation, the law states that a group of people (Committee of Management) must be appointed to take care of the organisation. Committees of Management should:

act in the interests of the organisation, be honest and careful, be informed about what the organisation is doing, keep proper records of finance and other processes, ensure debts can be paid, declare any personal interests that might conflict with the interests of the organisation or duties as a

member of a committee, seek outside professional advice when there is insufficient information to make an informed decision.

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The following are components of good governance:

Coherent aims and goals (mission), A sound framework of policies and procedures, Roles and responsibilities, Strategic planning, Risk Management, Financial management, Committee processes, Legal and statutory responsibilities, External relationships, Review and monitoring of performance, Human resource management, Ethical standards and codes of conduct.

 Practices of Good Governance

Key Performance Criteria / benchmarks, Audits - financial and service, Effective delegation Key goals / objectives, Effective delegation,

Continual development, Compliance with legislative Long term (strategic) plan, requirements, Business Plan. Reporting,

Risk management accountability.

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Why do we need good governance? Our communities are better stronger places, with well functioning non profit organisations in place. Sound governance practices enable organisations to endure and serve the community. We also need good governance so we can abide by the requirements of the law, and so we can always act, and show we’ve acted, for the good of the organisation and the community it serves. Most clubs and associations are incorporated. The Model Rules for an Incorporated Association state:

‘The committee shall control and manage the business and affairs of the Association’. ‘The committee…has the power to perform all such acts and things as appear to the committee to be essential for the proper management of the business and affairs of the Association’.

Incorporation brings benefits to an organisation, however, it also brings the responsibility of managing its affairs carefully.

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What are my Legal Responsibilities? An organisation which does not use sound governance processes will ultimately face problems. Probably the most significant benefit of Incorporation is that it addresses the problem of legal exposure. Incorporation provides protection for members and office bearers against: personal liability for financial obligations of the organisation, and liabilities arising from defamation (but not the individual who actually makes the defamatory statement.) It is worth noting that an organisation is a separate legal entity, which in its own right can sue and be sued, and incur debts, and continue indefinitely. (Reference: Active Australia- Business Improvement brochure). However, Incorporation has specific compliance requirements which must be met. Organisations which do not fulfil these requirements will not receive the benefits of limited liability, should the matter arise. Nor will Incorporation protect an organisation in every situation. No legislation is intended to protect individuals in cases of negligent, ill formed or fraudulent decision making. The Corporate Law Economic Reform Program (CLERP Act 1998) came into effect in March 2000. The Act makes major changes to Australian Corporations law in a number of areas, including governance and committee member/directors duties, fund raising, takeovers and accounting standards. The corporate governance reforms introduced by the act affect the duties, powers and accountability of Committee of Management members, including their duty of care and diligence. This increased focus on accountability of Committee of Management members covers all organisations, whether they are big corporations or small community groups. Committees of Management need to understand their risks and liabilities, and need to exercise care, skill and diligence. Committees of Management must ensure quality policies, procedures and risk management strategies are in place and that these procedures are documented at all stages. These practices will minimise any potential for negligence or dubiously risky actions. Some not for profit organisations have been established or moved to become a Company Limited by Guarantee (Ltd). In this entity type, members give a guarantee in the event of liquidation, specifying a maximum financial amount each member would contribute towards any financial shortfall. Each member’s personal liability is restricted, typically being between $50 - $200. Company’s Limited by Guarantee are required to have a minimum of 5 members and 3 directors and report annually to the Australian Securities and Investment Commission (ASIC). This style of entity is often preferred when an organisation has a multiple trading income and expenditure environment with larger incomes.

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What are the benefits of good governance?

good governance = sustainable performance The major benefit of good governance is the organisation remains viable. It can carry out the purpose for which it was designed. The sporting clubs can organise seasons of quality sporting activities, the training organisations and neighbourhood houses can continue to deliver the education and leisure courses the public desire, and service organisations can continue to serve the community. Secondly, good governance will allow organisations to thrive. They may grow in size and capacity, or they may deliver superior products or services, through sound management, direction and leadership. Thirdly, good governance does offer security to the people in organisations, thus allowing them to become involved and serve their community in a positive, caring and constructive manner. The process of Incorporation itself, which requires good governance, brings advantages to organisations, such as allowing them to independently and legally receive donations, buy and sell property, and continue on regardless of changes to their membership. Probably the most significant benefit of Incorporation is that it addresses the problem of legal exposure. However as stated, Incorporation has specific compliance requirements which must be met. Organisations which do not fulfil these requirements, will not receive the benefits of limited liability should the matter arise. How can my committee use good governance? The Committee of Management is a major contributor to the governance of an organisation, and acts as the highest authority of that organisation. It is accountable to:

the members, the community and public, the organisationʹs clients, legal bodies.

It is responsible for:

following and complying with the organisation’s constitution and by laws, setting the organisationʹs policies. These are numerous and need to be considered

for effectiveness and appropriateness at regular intervals, monitoring the good order of the organisationʹs finances, vouching for the legality of the organisationʹs operations, overseeing the effectiveness of the organisationʹs procedures, providing leadership and direction.

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Pre-requisites for Committee of Management members To perform their duties Committee of Management members need to:

• know about Committee of Management roles and responsibilities, • be committed to the organisation, • be able to read and understand financial and other reports they receive, • know what laws, legislations affect the organisation. These may be considerable and technical for

some organisations. They should seek the assistance of appropriate professionals, or seek training, if the expertise of the committee is not sufficient to understand the issues and processes involved,

• be aware of contracts the organisations signs, • know and understand the constitution of the organisation, • ensure the Committee of Management acts honestly and ethically.

Incorporated organisations Incorporated organisations must operate their committee in accordance with the principles set by the rules of Incorporation. These rules cover general rules and procedures for most matters of organisational governance. Office bearers should:

• Be clear about their roles, • Be prepared to carry the responsibility, • Have the skills needed.

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The following table (or with your own modifications) may assist Committees of Management to review their skill base and to decide if the areas of organisational expertise and knowledge are adequate.

Self Member 1 Member 2 Member 3 Member 4 SKILLS Weighting TOTAL Thinking strategically Problem solving skills Financial Understanding Communication skills ATTRIBUTES Ethical, honest, trustworthy Independence Team contributor Commits time to role Community Leadership EXPERIENCE Governance knowledge and application

Demonstrates organisational knowledge

Local or other business experience

MEETING PERFORMANCE Participation and contribution Increases Committee discussion levels

Well prepared for meetings Remains focused TOTAL

Scoring – 4 = strong performance, 3 = good performance, 2 = adequate performance, 1 = needs improvement

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Good governance – the responsibilities Accountability Accountability ensures responsibility is taken for the organisation’s decisions and actions. This can be achieved by having clearly defined roles, responsibilities and defined processes for all members of the organisation to follow. Not all accountability has to do with compliance to external laws or requirements. It includes the internal reporting and evaluation systems which organisations need, to make sure tasks are undertaken and completed as effectively as possible. (a) Legal accountability / compliance The Committee of Management is responsible for ensuring the organisation meets legal requirements and remains accountable to its members, funding bodies, clients and the community. These requirements include those of an incorporated organisation, tax, WorkCover and superannuation legislation. There are also Acts of Parliament concerning issues such: Occupational Health and Safety, Equal Opportunity, Incorporation, Public Liability insurance, and many others (b) Financial Accountability One key task for the Committee of Management is to ensure the organisation is financially viable – that it is solvent. Processes that assist financial accountability are:

The Budget – A financial plan for the next twelve months based on the organisation’s goals and strategies. Committee of Management members need to develop a broad understanding of the organisationʹs programs and priorities as an essential component of their duty of care. This knowledge provides a sound basis for financial decision making. Reviews - Accurate and clear reporting is critical for Committee of Management members to effectively review the performance of programs and budgets. This allows Committee of Management members to be proactive in future budgeting, enabling them to make decisions about new priority areas and moving away from less successful projects. Using techniques like a 13-month Cash Flow Report of budget and actual, will give Committee of Management members not only a yearly review of information but a comparison against the same month period, 13 months before.

Net Cash Flow January - December 2004

-100,000200,000300,000400,000500,000

Dec-03

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec-04

Actual 2004 Budget 2004

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Having a reserve cash level possibly determined as a percentage of annual income of a period of organisational annual income or period of survival without income is advantageous. Organisations heavily reliant on government funds may benefit for this approach, thus ensuring their capacity to pay wages and debts, even in the advent of funding grants being late or delayed. Auditing - While most organisations appoint an external auditor, Committee of Management members need to understand the auditing process and the financial statements the audit produces. An auditor only works with the information they are given, and examines the soundness of financial processes within the organisation. The auditor does not give financial advice. It can be wise to invite the auditor to address a full meeting of Committee of Management members, so that there is an equal and shared understanding of the annual financial situation.

(c) Other audits Audits other than financial, such as environmental and quality audits, may be accountable to external or internal bodies. Organisations need to ask for clarification and assistance, if they are unsure of which bodies or quality systems they need to comply with.

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Strategic Vision and Objectives / Aims Strategic planning determines the direction an organisation will take over the next three to five years, and sets out how it is going to achieve future goals. It is a long term view which enables a committee and staff to understand and work toward the same goals. In the Strategic Planning process of a not-for-profit organisation, the Committee of Managementʹs role is to:

define the community the organisation will service and the geographic area it will cover, describe its mission, set its values and ethical guidelines, determine long-term goals.

Risk Management Risk management is the series of checks and investigations an organisation uses to avoid, reduce or control risks, while continuing to operate and take advantage of opportunities which may arise. An integrated risk management system provides reasonable assurance that the organisation will achieve its objectives with an acceptable degree of risk. Characteristics of Good Governance Transparency Transparency means that the decision making process is open and documents are available to be read by those interested. Transparency ensures everyone can have confidence in the decision making process of the organisation. Timely and effective actions need to be taken by the organisation and these actions should be able to stand up to scrutiny. Decision making must be open, include meaningful consultation with others involved, and be based on full, accurate and clear information. Integrity & ethics Integrity is based on honesty and objectivity, with high standards of correctness when dealing with public funds. Integrity is ultimately determined by an individual’s personal standards and professionalism. All individuals have the potential to act dishonourably and this can have devastating results. All actions, financial or otherwise need to be fair, principled and as accurate as possible with a consistency of approach and purpose. Even the perception that an organisation lacks integrity, such as a perceived conflict of interest, can erode public confidence in an organisation. Ultimately this will impact on demand for services.

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Code of Conduct To assist members in their roles on a Committee of Management, a code of conduct should be established to set out the roles and responsibilities of Committee of Management members. This code can include:

o duties of Committee Members, o obtaining adequate information, o confidentiality, o use of information or positions, o conflict of interest, o maintenance of public confidence.

Stewardship: Committee of Management members need to exercise their power on behalf of the organisation, to ensure financial viability, efficient and effective management of resources and the maintenance of the organisation’s reputation. Efficiency: Available resources used effectively and competently will further the aims of the organisation. Efficiency requires objectivity and timeliness, with all decisions based on merit, while considering the best interests of the organisation. It may be surprising to consider the small time fraction a Committee of Management actually spends on the leadership of an organisation, by comparision to the organisational staff. If a typical Committee of Management holds 12 meetings a year, for 2 hours, and serves that amount of time again on sub-committees or in support to the organisation, it equates to 12 months x 4 hours = 48hrs/year. A fulltime staff member working 38 hours for 48 weeks, equals 1824 hrs/year. Thus the Committee by comparison to staff, contributes between 2-3% of the organisational leadership which means the method by which Committee Members contribute and utilise their expertise, must be efficiently planned to gain maximum organisational advantage. Decision Making The reason committees are seen as an effective way to manage organisations is because the wisdom of a group, is considered generally superior, to the wisdom of an individual. Hopefully, the sharing of responsibility, the consideration of issues from many points of view and the sharing of control, will result in fewer negative outcomes for the organisations. The decision making process has the following stages:

Analyse the situation, issue or opportunity, Define and agree upon the situation, issue or opportunity, Examine the alternatives, Explore implications, including financial implications, if appropriate. Select the best alternative, Implement the selected alternative, Review and evaluate the process and the decision.

Document all decisions, the process undertaken and reasons for decisions.

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Meetings Effective Committee of Management meetings monitor progress, identify strategic issues, make decisions and act on them. A simple approach should be the PAL system.

Purpose – have good reasons for meeting. Agenda – ensure there is an agenda clearly indicating which parts of the meeting are: For Decision – related to the Committees job,

For Discussion – seeking Committee input for further investigation, leading to a future decision, For Information – serving to make the Committee connected to the organisation.

Limit (time) - Setting different time fractions on parts of the meeting to focus Committee involvement in the important items.

Some guiding principles for Committee of Management meetings can be:

Have a clear agenda. Insist on background or meeting papers when issues are complex or unfamiliar,

Ensure the priority of meetings is to fulfil governance responsibilities, Limit the timing of meetings to a maximum of 2 hours, Where there is heated or excessive discussion, adopt formal meeting procedure, If no decision can be made, the issue must be deferred to the next meeting, Any decisions must be clearly documented. There should be no room for incorrect interpretations, Record any disagreement e.g. 5 for, 2 against.

It is also good practice for Committee Members to record their own individual notes on Committee process, decisions, and deliberations. A good method is to use an individual diary, which can be easily reviewed where there are matters that may need you to recall in greater depth. The Chairperson balances a fine line between allowing the issue to be explored sufficiently and preventing microscopic investigation of minor details. A meeting needs to be brisk, and move through the agenda so all items are covered with sufficient time being given to significant matters. To facilitate this, a Chairperson should allow those wishing to speak to do so, but not repeatedly or in a dominating manner. Although meetings do not always need to follow formal meeting procedure, it is wise for Chairpersons to be familiar with it, as it may be a necessary backup if matters become complex or there is considerable conflict or diversity in opinion on an issue. Organisations such as International Training and Communication (ITC), Toastmaster and others, can provide excellent training in this area. Many Shires, Organisations and clubs also produce their own meeting guidelines. What should a meeting feel like? While the procedures and the people involved in decision meeting are vital, the environment in which they do so also plays an important role. The purpose of the meeting will dictate its flavour, however some thought should be given to variety and comfort. It can however be beneficial to undertake different roles and activities at Committee Meetings to develop team unity or spirit. Examples like using whiteboards and having open discussions on topics like funding sources, an organisational survival plan, factors impacting strategically on the organisation, local environment, membership expectations etc., can widen committee discussion which will assist the organisation through its manager to use that wisdom for better operational outcomes.

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Annual General Meetings The Annual General Meeting (AGM) is an important event for every organisation. All incorporated organisations are required by their constitution to conduct Annual General Meetings. These are usually held at a specific time after the end of the organisation’s financial year. The AGM gives its members, the community and the Committee of Management, a broad overview of the organisation. It indicates the organisation’s direction over the preceding twelve months, its financial situation and confirms its purpose. The AGM should be a positive experience for those attending, as it will attract commitment to the organisation. The AGM will assist the organisation to:

comply with government regulations, conduct elections for Committee of Management, present accounts, be transparent, communicate with members, raise awareness.

Preparation for an AGM Time needs to be devoted to preparing an AGM and it is possible to involve a number of people in the process. Some of the items that need attention are:

o Date, o Advertising to advise Members of AGM, o Office bearers and committee / nominations, o Financial audit, o Publicity, o Meeting papers / Annual Report, o Agenda, o Guest speaker if appropriate, o Other entertainment if appropriate.

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Changing your constitution One of the important features of an AGM is that it can give organisations a chance to renew the rules by which their Association operates. It is good practice to review the rules that govern the organisation every 3-5 years, ensuring that they are current and reflect the organisations practices which will change over time. Many committees feel that changing a constitution is difficult but by being open with the Association Membership and having purposeful and logical reasons to change a constitution, members will often be highly supportive and feel more involved in the future of the organisation. Dot points on changing your constitution.

Check existing constitution for directions on making changes, as sometimes this is described.

Read your constitution and as a committee, discuss any need for changes.

Write up the recommended changes.

Get committee agreement for these changes i.e. ensure there is a minuted statement made, indicating the agreed changes.

If necessary seek a legal opinion, which does not mean you need to accept this advice, but are

aware of any aspects beyond the normal experience of committee members. If any changes then occur, minute again the committee’s agreement of the new changes.

Publicly advise the membership of the committees about the recommended changes, the reasoning

behind the changes and a formal motion (moved and seconded) to be put before members to endorse the changes. Then you can make one change at a time if necessary, or alternatively, have the motion to move all the changes at once.

As per the constitution, membership notice periods must be followed, calling of a meeting, etc.

At the meeting there can be discussion of the changes as needed, but as the motion is already made (moved and seconded), the motion must be put. If the meeting suggests further changes, it is advisable to start the process again, as it is unlikely all members will be present and that there will be formal notification periods, before any vote can be taken.

Your constitution should be very specific about the level of vote needed to make the changes, e.g.

75% of membership, majority, etc.

When approved by the membership, the changes, the motion and the membership meeting minutes reflecting the agreed motion, is sent off to Consumer Affairs, Department of Fair Trading or ASIC, (which ever is the appropriate body).

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Recruitment The appropriate size for a Committee of Management will vary within organisations and the role of the Committee of Management. It is generally a balancing act between being fully representative of the community and having a broad range of skills, with being a smaller active committee, able to be decisive. Need for recruitment The recruitment of new members for the Committee of Management is vital for the ongoing success of any organisation. As the highest authority of the organisation, the Committee of Management needs to recruit members with a broad range of skills and knowledge relevant to that organisation. Most organisations have limited terms of office for Committees of Management, to allow ongoing change of members. New members bring new skills, knowledge, management styles and networks of contacts. Organisations should plan for succession, to ensure the regeneration of the Committee of Management does not result in a loss of momentum, focus, or performance. Managing the transition of new members to the Committee of Management is vital to the ongoing success of the organisation. How do you plan for succession? Planning for succession is an ongoing responsibility. Recruiting members to the committee at the last minute or from the floor at the AGM, may result in the committee lacking the necessary skills, motivation and knowledge, to effectively lead the organisation. The committee should have a plan in place so if a committee member leaves, replacements can be easily found. To assist with recruitment and succession planning, the committee should:

• ensure there is an orientation and screening process in place for new members, • prepare a committee member information pack containing details of the organisation, • make new members or prospective candidates aware of the requirements of the Committee of

Management, • identify potential new committee members and invite them to sit in on a meeting, • conduct a skills analysis of the current committee to identify the skills lacking, • implement a mentoring program and succession plan for leaders of the Committee of Management, • evaluate the performance of the Committee of Management members to ensure they have fulfilled

their responsibilities. A sample letter that might help in approaching new committee members follows. It gives a basic format of things that are typically important to people when considering their acceptance of such an offer.

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Dear On behalf of Committee Members, I would like to invite you to join the Committee of the ABC Inc. Our Committee believes that you would make a significant contribution, supporting the future directions of our organisation and that you would enjoy the role, which achieves a variety of community based outcomes. In considering this invitation, the following information is provided, to give you the sense of direction and involvement that Committee Members of our organisation have. ABC Inc has a proud history of community partnerships and achievements. It has grown from being an idea of several proactive and passionate people, to a $1M per annum business, with over 2500 participants each year. We believe that our achievements have occurred by:

Add dot points

The complexities of operating a community not-for-profit organisation as a modern corporate business, relies heavily on the connectedness that the organisation can achieve with its local community, sector peak bodies and government funding agencies. In a frequently changing environment, ABC Inc seeks to remain flexible, responsive and engaged. We aim to support community needs, take opportunities when presented, and are prepared to modify our structures and delivery methods, within a changing environment. We have a Strategic Plan that sets the directions and ensure the achievement of our dreams and aspirations. It is expected that during the next 3 years, our organisation will ……. What makes ABC Inc?

o Add dot points highlights

The Committee Members of ABC Inc have the role of providing strong and dynamic leadership through a diversity of interests/experiences. They are elected annually by the Association Membership, and are representative of our wider community. Committee Members by being local, are ‘sentinels’ who act as a conduit of wider community feeling. They are able to inform the Association on areas of concern or opportunity. While this community liaison is not specifically directed, it is acknowledged that it occurs, bringing benefit to the development and responsiveness of the organisation. Committee Members meet monthly (usually the last Thursday from 4.30pm – 6.00pm, at ….) and are pivotal to the development of organisational strategic directions. The Committee is small in number, with a maximum limit of 9 Committee Members. The current Committee Members are: Name: Age: Committee Member: (since …) Background: The Committee Members and senior managers ABC Inc would welcome your considered response to this invitation, and through the Manager would be happy to provide you with any further details that may assist in your deliberation. An invitation is extended to attend a Committee Members meeting as a visitor, before you make any final decision. I will be in contact with you shortly to see if you would like to accept our invitation. Yours sincerely Chairperson ABC Inc

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Sharing the Knowledge and Responsibilities One of the dangers or threats to a community organisation is where much of the knowledge and expertise is held with one individual. When that individual leaves the Committee of Management, much of the organisational and operational knowledge is lost and this can have an adverse effect on the organisation. To overcome this situation where the knowledge is concentrated in one, or a small number of people, it is important to consider the following:

• Document all information about the organisation to ensure the organisation has a long-term history. • Ensure procedures manuals or operating manuals are created and available to all members. • Promote open discussions between Committee of Management members to ensure a sharing of

information on the organisation. • Schedule regular Committee of Management meetings with reports from Committee of Management

sub-committees on projects or events. • Conduct self evaluation to identify any shortcomings in the operation of the Committee of

Management. Sub-Committees: To ensure meetings are not too long and all members are actively involved in decision making, it is often useful to appoint sub-committees. These sub-committees can exist for a short period for a specific purpose, or be ongoing, such as a finance sub-committee. The role of a committee of management sub-committee is to recommend policy for approval by the entire committee of management. In creating sub-committees, the committee of management should be clear as to the role, responsibilities and authority it empowers the sub-committee with. Some points to consider when establishing sub-committees:

• The full Committee of Management is responsible for the decisions that are made. Sub-Committee members formulate recommendations for the full committee to consider.

• Both the Committee of Management and the sub-committee members should be aware of exactly what authority and responsibilities are being delegated to the sub-committee.

• There should be at least two Committee of Management members on each committee, preferably three. The Chair does not need to be active on all sub-committees, in fact, it is desirable for the workload to be shared between members. However the Chairperson is, by definition, ex-officio on all sub-committees.

• Minutes/ Recommendations of all sub-committees should be recorded and included in Committee of Management papers.

Governance or Executive Committee A Governance or Executive sub-committee will ensure effective and efficient Committee of Management processes. While the specific tasks of this sub-committee can vary, the following responsibilities can be undertaken:

o Set priorities for Committee of Management, o Recruit new Committee of Management members, o Induct new Committee of Management members, o Plan and implement Committee of Management training and professional development, o Establish appropriate committee of management evaluation processes.

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Clarifying roles What the Committee of Management does is known as governance; what the staff does is management. The functions are separate and different but they should operate as a partnership. If there is confusion in an organisation about roles and responsibilities, it can lead very quickly to conflict, inefficiency, low morale, and irritation. The Committee of Management & Manager or Chief Executive Officer. Large community groups and organisations have a Manager or Chief Executive Officer, delegated with the responsibility of management of staff. The Committee of Management has a chairperson or president. The chairperson or president is responsible for co-ordinating the activities of the Committee of Management. The Manager reports to the Committee of Management, and in this case, the Committee of Management should not be involved in the management of staff. The Committee of Management has ultimate power and legal responsibility for the organisation’s actions. The Manager’s power is more immediate, and has more day-to-day influence on organisational affairs. In practice both the Manager and the Committee of Management have a role in organisational leadership. The Committee of Management is accountable for what the Managers job is, and that the Manager does it competently, but the Manager is not accountable for what the Committee of Management does. Unfortunately, in many organisations the Committee of Management expects the Manager to direct them, whereas the Committee of Management should set its own directions. The Committee of Management works closely with the Manager to further the organisation’s goals and to broaden its financial and membership support base. They regularly review the organisation’s overall mission and program goals, and jointly decide on a regular evaluation process for all programs in order to monitor program effectiveness. The Committee of Management has a role to play in the well being of the Manager who undertakes the chief management role. Senior Managers often find themselves isolated from the staff and the Committee of Management. It is important to resource and support these people to the extent of making professional supports available to them, as well as understanding the difficult position they can be placed in. Managers and the Committees of Management must both be prepared to face probing questions in the quest for the most appropriate decisions and actions.

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Conflict Conflict has various levels of seriousness within an organisation. Defined as differences in thought and action, a clash, or opposition, it can occur between the Committee of Management and the Manager and if not dealt with, can harm the organisation. There can also be conflict between committee members and within staff ranks. Some disagreement is healthy, providing it is ultimately resolved and does not hinder the organisation working to achieve its goals. However, serious conflict can disrupt the efficiency and functioning of an organisation. It is important to have procedures (and conventions) in place, to manage conflict as it arises. Conflict is not uncommon in organisations and clubs. It can occur between members and between committees and members. Conflict resolution protocol is stated in the Model Rules for Incorporated Associations. Section 8 (Model Rules) deals with Disputes and mediation, while section 7 (Model Rules) sets out procedures for Discipline, suspension and expulsion of members and associations. This procedure may not be appropriate for all organisations, but it does give a sound starting point for organisations which have no policies and procedures in place.

What sort of process deals with conflict when it arises? A flexible one!

Often conflict needs the assistance of a third person or party to even recognise the problem.

1. Recognition of a problem, 2. Identify the conflict, 3. Seek information from parties involved and a third party if necessary, 4. Analyse it, 5. Work toward a solution.

Substantive conflict: This means it is a conflict about decisions, ideas, directions and actions. Personalised conflict: Basically these people don’t like each other much and it impacts on their work. Try to move from personalised matters toward the substantive issues. Find areas of common agreement. Take it step by step. Solutions can be simple or elusive.

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Job and task descriptions The roles and responsibilities of Committee of Management executive members should be documented and available to Committee of Management members. Those requiring a role description include: Chairperson, Secretary / Manager, Treasurer. Chairperson The Chairperson ensures:

meetings are properly convened, a quorum is present at each meeting, all statutory regulations and the organisation’s roles, policies and procedures are observed, the agenda is prepared and circulated.

The Chairperson should: act impartially, rule on points of procedure, put the question to a vote, accept or reject proxies / representation, rule on voting, remove disorderly persons, adjourn the meeting.

Secretary / Manager The Secretary or Manager ensures:

• the agenda is prepared with the chairperson and circulated prior to the meeting, • minutes are clear, concise, correct and a legible record of all motions or decisions considered, • official minutes are retained, • minutes are distributed to all members following the meeting, • copies of the constitution, by-laws, standing orders and the official minutes are available at each

meeting, • a list of correspondence is presented at the meeting, a filing system is retained for correspondence, • Committee of Management correspondence is replied to, or processed, in accordance with the

Committee of Managements decisions. Treasurer In some organisations, the following tasks may be carried out by the Manager or a senior administrator.

• monies received into the organisation are recorded, receipted and banked, • monies paid out by the organisation are recorded, approved by committee for payment and paid, • an accurate and up-to-date monthly statement of the organisation’s financial position is presented, • moves adoption of the financial statement by the meeting, • supply of detailed information and gives advice on all financial aspects of the organisation’s decisions

and activities, • prepared to submit books for audit, • investments on behalf of the Committee of Management are managed as directed by the Committee

of Management, • the organisations financial records and documentation are processed and maintained and presents

records on all financial negotiations on behalf of the Committee of Management.

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Conclusion In summary a Committee of Management’s role is to: LEAD: Providing leadership, forward planning, and guidance to the organisation, particularly in

terms of developing a strategic culture for the organisation. CARE: Provide stewardship of the organisation in order to protect it for the members and the

community, and to ensure it pursues its stated purposes whilst remaining viable. CONTROL: Provide monitoring and oversight of the management to maintain authority and

accountability, ensuring good management practices.

Thank You Thank you for taking the time to read, review and reflect on these materials. Hopefully, they have given you a better understanding of the roles and tasks that communities play, through the formation and success of small organisations. Without your involvement and of those others who serve with you on committees, clubs, associations or companies, our society would be poorer. While it is rare that people seek acknowledgement or reward for their participation in these organisations, it remains important that you should be acknowledged for your commitment, effort and goodwill, in seeking to better govern your services and programs delivered. Thank you and good luck.

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Literature Search

TITLE: Community Management Centre WEB SITE: www.ourcommunity.com.au

TYPE OF RESOURCE: Website DESCRIPTION: Gateway for practical resources, support and linkages between community

networks and the general public, business and government. Includes a directory of organisations, newsletters, available grants and

scholarships, community insurance, on-line donation service and extensive fact sheets covering the many aspects of governance and management, including volunteering and fund raising.

SUITABILITY: Highly recommended cost effective resource with easy to identify ‘fact sheets’ containing useful, relevant and clear information. PUBLICATION DATE: Up-dated regularly

COST: $45 p.a.

TITLE: MSO – Management Support On-line WEB SITE: www.managementsupportonline.com.au

TYPE OF RESOURCE: Website DESCRIPTION: An Australian-based subscriber service providing an integrated set of

services and resources designed to assist community sector, not-for-profit organisations to manage and operate confidently.

Interactive website with animated training modules, structured guides, information sheets, relevant contacts, tools and resources, support services, message board and recommended checklists.

Well laid out and easy to use. SUITABILITY: Highly recommended as a quality relevant resource.

The overall value of the services, resources and information deems it worth budgeting for. PUBLICATION DATE: Up-dated regularly

COST: Scaled subscription depending on annual income. Varies from $330 - $715 (inc. GST)

24

TITLE: Good Governance Practice for Voluntary Committees of Management

by Bradford Nyland Group for Department of Human Services. WEB SITE: www.dhs.vic.gov.au/pdpd/pdfs/iyvgoodgovernance.pdf

TYPE OF RESOURCE: Manual available from website DESCRIPTION: Well laid out material incorporating clear definitions, step activities, links,

information sheets, elements and indicators, and structured benchmark principals of good governance practice. Divided into 2 units: Resources and materials, and the Research report.

SUITABILITY: Highly relevant material in an easy-to-read and usable format. PUBLICATION DATE: Feb 2002

COST: No Cost – down load from internet-site

TITLE: On-board: Guide to Better Practice for Public Sector Governing and Advisory Boards.

WEB SITE: www.audit.nsw.gov.au TYPE OF RESOURCE: Website, Manuals

DESCRIPTION: 65 Page Manual available on-line at no cost. First half of the document details Governance, and the second half includes checklist questions for improved practice.

SUITABILITY: The Checklists may be useful in further evaluation of current procedures and

implementing change. PUBLICATION DATE: April 1998

TITLE: The Audit Office Public Sector Corporate Governance Ready Reckoner WEB SITE: www.audit.nsw.gov.au

TYPE OF RESOURCE: Website DESCRIPTION: Two-page tabled point-form overview of the key elements of Good

Governance. SUITABILITY: Useful ‘Ready Reckoner’ checklist.

PUBLICATION DATE: 4 Sept 03

COST: None

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TITLE: Business Access

WEB SITE: www.businessaccess.vic.gov.au TYPE OF RESOURCE: Website

DESCRIPTION: Provides information and referral services to existing and potential small business operators. It works closely with other Government agencies and private sector small business service providers.

Incorporates information about services, free info fact sheets, FAQ’s, features on topical business issues, electronic commerce and hundreds of links.

SUITABILITY: Provides comprehensive information and links for existing or potential small businesses.

PUBLICATION DATE: Regularly up-dated

COST: No cost for fact sheets

TITLE: Enterprise Care Consulting Group ‘Inspired Outcomes’ WEB SITE: www.enterprisecare.com.au

TYPE OF RESOURCE: Website, publications DESCRIPTION: Incorporates effective board and committee meetings/workshop

schedule, reports and articles, newsletters, and resource centre providing a list of resources available including manuals and CD ROMs.

SUITABILITY: The Resource Centre lists and details numerous publications that would be a worth-while and helpful reading material. PUBLICATION DATE: Varied

COST: Varied pricing on resources ranging from $27 - $300+

TITLE: ‘Boards That Make a Difference’ by John Carver WEB SITE:

TYPE OF RESOURCE: Book DESCRIPTION: John Carver has written extensively in the field of Leadership. This book

focuses on Policy Governance. Also includes an extensive reference list.

SUITABILITY: If you are up to some ‘board’ reading before bed, there are helpful insights to be gained. Not helpful as a quick resource, as key information can be lost in the

detail. PUBLICATION DATE: 1997

COST: ?

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TITLE: Boundary Management WEB SITE: www.boundarymanagement.com

TYPE OF RESOURCE: Website

DESCRIPTION: Extensive resource for Policy Governance based on John Carvers work. Includes fee-based on-line consultation, free board guide sheets, board assessment resources, credit union resources and more.

SUITABILITY: Useful particularly if the organisation elects to incorporate the Policy Governance model.

PUBLICATION DATE: Up-dated COST: $35 per consulting question. $35 for the Assessment Manual

TITLE: ‘The Craft of Managing’ A Training Manual for Voluntary Committees of Management by Jean Roberts.

WEB SITE: TYPE OF RESOURCE: Manual

DESCRIPTION: Aspects of managing separated in 6 modules, incorporating units of study focus and group activities.

Modules include: Trainer notes, Why do Voluntary Committees of Management exist? What are the Functions of a Voluntary Committee of Management, Organisational Structure and Process, Policy and Planning, Financial Management, Human Resource Management ?

Publisher: CIDA: 03 9894 4799 SUITABILITY: Primarily directed at Management Tasks though incorporating elements of

Governance. Useful activities and definitions. PUBLICATION DATE: 1996

COST: ?

TITLE: Corporate Governance Handbook for the Board WEB SITE:

TYPE OF RESOURCE: Handbook DESCRIPTION: Well laid out handbook incorporating concepts, features, roles and

responsibilities of Governance. Numerous guides and checklists built in with room for assessment Prepared for Commonwealth Department of Family and Community

Services by Walter & Turnbull, Chartered Accountants and Management Consultants. Tel: 02 6247 6200 email: walterturnbull@walturn.com.au

SUITABILITY: Excellent model Handbook containing easy to identify and utilise relevant information.

PUBLICATION DATE: October 2001 COST:

27

TITLE: Pro Forma Business Plan 2002 - 2003

Community Broadcasting Association of Australia WEB SITE:

TYPE OF RESOURCE: Business Plan DESCRIPTION: Pro Forma of Business Plan incorporating; Purpose, philosophy, Vision,

Mission STEEP and SWOT analysis, Community evaluation, Programming Development, Resource and Financial Management and Action Plan.

SUITABILITY: Useful as a sample guide.

PUBLICATION DATE: Dec 2002 COST: none

TITLE: Non Profit Governance and Management Centre WEB SITE: www.governance.com.au

TYPE OF RESOURCE: Website DESCRIPTION: Designed to provide support and resources to the Boards and Executive

managers in non-profit organisations. Incorporates excellent bookstore with variety of relevant titles, produces newsletters ‘Board Matters’, assists with designing and conducting workshops and retreats. Also offers membership which entitles the member to receive copies of ‘Board Matters’, issues of executive fact sheets and 10% off all publications.

SUITABILITY: Highly relevant and useful website with useful resource list and thorough fact sheets. PUBLICATION DATE: Regularly up-dated

COST: Previous ‘Board Matters’ articles at no cost. Membership $230

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Bibliography & References Roberts, Jean: The Craft of Managing a training manual for voluntary committees of management Running the Risk Risk management tool for Volunteer Involving Organisations Published by Volunteering Australia, 2003

Voluntary Treasurer's Handbook Ch 18. Ch 1. Ch 2.

Volunteer Management - An Essential Guide. Joy Noble & Louise Rogers, 1998 Published By volunteering Australia

Volunteering as Part of Australians Working Together- Information for Community Organisations, Commonwealth of Australia, 2002

Acknowledgements The New South Wales Government, through the Board of Adult and Community Education.

The Victorian Government, through the Community Support Fund.

The ACFE Board and all those who participated from the ACE sector and government departments Community Hub Project of 2003/04.

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