Here are a number of frequently asked questions from chief executives regarding governance. If you can't find the answer to your question below, if you are an ACEVO member you can call our governance advice line. If you are not an ACEVO member or want more in depth advice on governance, our consultancy service will be able to help.
The advice below is taken from Your Chair and Board - a survival guide and toolkit for CEOs published by ACEVO.
Q: How important is my relationship with my chair?
A: The quality of relationship between the chair and CEO reflects the quality of governance within an organisation. It is a fundamental building block on which the organisation's governance structures and practices rest. The relationship is particularly crucial for every organisation because the chair and CEO of an organisation occupy important leadership roles.
- The chair is responsible for leading board members in fulfilling their governance role.
- The CEO leads the staff and volunteers, with particular emphasis on the senior management team, if one exists.
- The chair and CEO work as a team to provide leadership for the organisation as a whole, with respect to both internal and external affairs.
- Board members may feel they have to 'tiptoe' around a poor relationshop between the chair and CEO, limiting their ability to contribute fully to board decision-making, and compromising the quality of board scrutiny with respect to the organisation's work.
- Where disagreements between chair and CEO persist, board member may feel forced to, or appear to, take sides, leading to the breakdown of other relationships between board members and the CEO.
- With no peers internal to the organisation, the CEO both act as ambassadors for the organisation, meaning that the quality of their relationship may be obvious to the organisation's key stakeholders, damaging its reputation.
Q: How can the board challenge the chair?
A: The board should contain individuals with the understanding and confidence to talk openly to the chair about his or her own performance. The commercial sector has formalised this requirement by recommending the identification of a 'senior non-executive director'. These nominees are available to shareholders if they have concerns that contact thorugh the normal channels has been unable to resolve.
Q: Is the governance of the board the responsibility of the chair?
A: Both CEO and chair roles combine leadership and management responsibilities. The chair leads the board and manages its business, while providing an element of leadership for the organisation as a whole. The CEO provides assistance for the chair in relation to the board, while focusing primarily on the leadership and management of the organisation as a whole.
Effective governance is a concern of the CEO as well as the chair, to the extent that it will have an impact on the effectiveness of the organisation as a whole. This provides the rationale for a CEO in helping a chair to drive and support effective governance, while recognising that the board remains primarily the domain of the chair.
- Mission: chair and CEO need to develop and communicate a shared understanding of the organisation's purpose and strategic priorities
- Roles: these should be defined and respected, with the emphasis on preventing gaps, overlaps, and any territorial disputes
- Results: the relationship should have a positive impact on the organisation, rather than being positive and enjoyable for the individuals
- Mature communication: dispassionate and high quality communication are essential. Emotions should be firmly in check: passionately expressed views can be damaging in some contexts
- Public unity: chair and CEO should aim to present a solid and united public front on issues of fundamental importance
- Mutual support: the chair and CEO should ensure each other is aware of any important and relevant information, and be willing to act as confidential 'sounding boards'.
Q: Should there be an understanding of how I communicate with the chair?
A: The effectiveness of any relationship depends on the quality of communication between the individuals involved. The relationship requires:
- Regular and scheduled face-to-face meetings, with a clear understanding of any preparation to be taken
- That you are available for each other – generally all the time – but with an understanding between you about when you are not to be contacted
- An expressed understanding that you can be confidential sounding boards for each other and within that confidentiality can deal with (and forgive) the mistakes that you both will inevitably make
- An expressed understanding that you can challenge each other within safe boundaries
- A clear understanding of each other's preferences regarding communication style and format
- As a way of establishing and refining these principles, the chair and CEO should develop shared communications plans for major events or issues, such as the organistion's AGM, or the launch of a major publication
- Not all communication between chair and CEO should be formal and focused on the governance of the organisation. Both individuals should take the time and make the effort to learn about the other, including their personalities and motivations
- However, the ideal relationship between chair and CEO is not one of cosy friendship. The two should be able to challenge each other constructively, and should not appear to make important decisions without input from the board.
Q: How should I present information to the board? Is this carried out by me or the chair?
A: It is the responsibility of the chief executive to ensure that board members receive sufficient background information to develop a thorough understanding of the work of the organisation.
- Boards should always be told the purpose of the information being given to them, whether it is the basis for a major decision, for comment, or purely for information
- Being swamped with mountains of unnecessary paperwork can be as unsatisfactory as receiving too little information. Getting the balance right is not easy.
- Individual board members may require more detailed information on some things (for example, financial information), but board members should avoid asking for unnecessary background information which requires significant staff time to produce
- When information is essential to their decision-making or monitoring role, board members must insist on obtaining clear, accurate and timely material.
- The wholly executive board: found most often in small commercial companies. For obvious reasons, such boards usually struggle to offer any independent scrutiny of executive decisions. Such boards are rarely found in the non-profit sector, and it is unlikely that the Charity Commission would permit such a structure for registered charities.
- The two-tier board: found in parts of Europe, comprises a 'supervisory board' to represent stakeholder interests, and an 'operational board' to drive the organisation's performance. Some charity boards may in practice resemble this structure, delegating operational decisions to a 'senior management team'. However, a genuine operational board, unlike a senior management team, has a legally recognised governance role.
- The unitary board: classic model for business in the UK and Commonwealth countries, includes both executive and non-executive directors, with equal status. Despite the ambiguity concerning executive directors' role, this model is recommended by many experts on corporate governance. The structure embodies the tension between conformance and performance. If working properly, it can combine executives' detailed knowledge of the business with the more detached scrutiny of non-executives.
- The wholly non-executive board: found commonly in commercial companies based in the USA as well as in the British third sector. Third sector board member are usually, but not always, unpaid.
Recognising that no one model wil be perfect for every organisation, ACEVO recommends that its members conduct an audit of their governance arrangements, which should include an examination of governance structures as well as good practice.
Q: How should I induct the trustees?
A: Boards should pay particular attention to the process of induction for new board members. Boards will only become cohesive teams if new members are made to feel welcomed, valued, and included. Board performance demands that new members become useful and integrated in the shortest possible time.
An induction should have two objectives:
- To give the board member a more detailed knowledge of the organisation
- To ensure that the board member fully understands their governance role
The key elements of an induction programme include:
- Holding (separate) meetings with the chair, the other board members, the CEO, and other key members of staff
- Visiting the organisation's head office and other key sites
- Participating in conferences or fundraising events organised by the organisation
- Reading specified documents on governance
- Reading the organisation's governing document, strategic plan, policies, and other key documents
- Undertaking training to being the process of continuing professional development.
Q: Do I need to be appraised? Why is this important?
A: It is particularly important to have a system of appraisal for the chief executive because the complexity of the relationship between governance, leadership and management in the third sector places upon him or her many expectations and responsibilities. These need to be made explicit to the post holder on his or her appointment. They also need to be agreed and supported by the board members on a collective basis, and reviewed regularly.
Why appraise the CEO?
CEO support and development:
- Identify areas for the chief executive's training, support and development
- Adjust the shape of the chief executive's role
- Review the support by the chair of the chief executive
- Review the support by the board as a whole of the chief executive
- Build good working relationships and trust between the chair, the chief executive and the board
- Review the chief executive's achievements and weaknesses against agreed objectives, competences or performance benchmarks
- Review the chief executive's achievements as role model for the organisation's values
- To make the CEO aware of any concerns about his or her performance
- To improve the performance of the organisation as a whole by establishing a culture of appraisal and development
Strategy and objectives:
- Set short, medium and long term objectives for the chief executive and indirectly for the top team
- Identify barriers to success of the organisation in the past and avenues for action in the future
- Communicate common ground or differences in vision, attitudes and objectives for the future
Compliance and accountability:
- Demonstrate compliance with the sector's Code of Governance
- Reassure funders and regulators that the organisation takes performance management seriously
- Ensure the board members are meeting their duty to deliver effective leadership and management for the organisation