The term corporate governance and board governance means that a board of directors has published guidlines so individuals can understand and accomplish their roles effectively. In addition, board governance is associated with the board, not as management, but as leadership.

A governing board delegates its traditional management roles –operations– to its executive. A governing board focuses on providing a vision to inspire and guide management’s operational decision making, and remains vigilant in its oversight of operations.

Board Governance Policies Provide Important Guidelines

Board Governance consists of written policies disclosing the balance of power and the relationship of a board with its executive. Good board governance results in an effective and knowledgeable board, a fully utilized executive, and success for the organization. Board governance policies are guidelines for a long journey. Having guidelines to clarify and separate duties and help people make decisions and fosters teamwork ─ boards and their executives are a special form of partnership. Credit unions and other organizations need flexibility to be effective today, and poor policies can mean trouble. You need board governance and governance policies that make sense for your organization.

How We Became to be so Closely Associated with Governance

During the years Dan Clark worked as an examiner and regulator, he noted that a frequent topic on conference agendas was Board Duties and Responsibilities. In the 1980s duties shifted to the concept of governance.

In the early eighties, Dan developed a package of governance policies for the Federal credit union where he served as a director and Chair of the Board. At the same time, Dan created a manual of board policies for a state chartered client.

Speaking about those experiences at conferences around the country, he found participants hungry for a model as a starting point. He wrote a model manual. Changing and updating the manual over the years (more than 14 times)  that model has helped hundreds of credit unions of all sizes across the US.

A unique approach started by Dan was to separate typical policies into two sets. The Board’s Governance Policies need to be separate from Operating Policies. Credit unions have used the Board Governance Policy Manual to develop governance policies where none existed. They also use it as a foundation for a complete revision, or as a reference guide.

The Clark Governance Model

For most credit unions and other nonprofits, board governance means that the board clarifies the roles for itself and for management and shares authority, obtains the best use of hired expertise, and focuses most its efforts on mission and vision while maintaining oversight of management.

Key points in model:

• The board is about ends/outcomes and direction: mission, vision, and enterprise strategy.
• Board activities are leadership oriented, doing the right things; executives manage–getting things right.
• In partnership with the board, management is about means: how to make the journey toward achieving the mission and the vision.
• The directors input wisdom as managers input expertise.
• The mission of the board, as Peter Drucker put it, is “to help management substitute foresight for hindsight.”
• The board delegates to the executive’s competence and develops processes to oversee the executive’s operations.
• Arrange the board/executive partnership to take full advantage of all the strengths.

To put this governance model into effect, the board adopts Governance policies in two parts. Part one outlines board process — how the board and its volunteers intend to be effective. In part two, the board outlines the authority it delegates to its executive, framed by express philosophies, ends to achieve, and executive limitations.

Acknowledging that the a board does not have an exclusive right to create policies, a board delegates operating policies to the executive. Examples of operating policies includes personnel or H.R. policies, programs, products and services, and disaster recovery.

Ways to serve you

Click HERE to learn the programs we have established to assist you in policy development.

In addition to policies, there are other ways for me to assist you. One has to do with the board’s “knowledge management.” In an effort to satisfy a board’s accountabilities to society and its regulators, boards received increased volumes of data. Often the volume does not lead to more knowledge but just the opposite. In the duty of care, volumes of data do not replace the need for knowledge for the oversight role.

A board should direct management to provide the information the it needs. The primary requirement is related to fiduciary duties. The board needs information to monitor the condition and performance of the organization. Invite us to work with the board and management to design the right information flows.

Additionally, most boards insist on receiving materials for forthcoming board meetings in advance of the meeting. All too often there are things transmitted with the agenda that are not related to scheduled discussions, debates or decisions. That extra stuff leads to time-wasting discussions and meetings that run too long. Invite us to work with the board and management to design an agenda packet that’s right for your organization.