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Governance FAQs

Here are our frequently asked governance questions from chief executives.

 If you can’t find the answer to your question and you are an ACEVO member you can access our governance advice line.

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 relationship 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.

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 through the normal
channels has been unable to resolve.

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.

The following priority areas should be addressed by every chair and CEO in building an
effective working relationship:

  • 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’.

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.

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.

This relates to the structure of organisational boards. Board structures fall into four
categories:
1. 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.
2. 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.
3. 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.
4. 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 will 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.

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:
1. To give the board member a more detailed knowledge of the organisation
2. 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.

 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

Performance management:

  • 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

Interested in more governance resources?

If you have any queries please email info@acevo.org.uk
or call 020 7014 4600.