Governance, Management and Christian Ministry

At church tonight I had a fascinating conversation with a mate about ‘best practice corporate governance’, a conversational first for me in church circles. It’s something I think a lot about in the few roles I have at work and in Christian service.

Governance, the work of the Board, is important in the corporate and non-for-profit world because as soon as we create organisations we take on responsibilities. In return for what our volunteers and staff give us, the Board (the owners of an organisation) bear the responsibility to govern (or Direct) properly and diligently. Even more then, should good practice in corporate governance be of importance to Christian ministries, whose organisations are related to the work of Christ. It is the name of Christ that is at stake in our governance as Christian organisations.

My conversation related to the role of the Board and the role of the CEO, and the relationship between the two. But before I flesh out my understanding of this question, I’d like to recommend a resource. CMA (Christian Management Australia) has published Essential Standards of Ministry Governance. The publication is free at www.governance.org.au and I estimate should be extremely helpful both for churches, ministries and Christian non-for-profit organisations. Here is a summary of the contents to get you started:

Essential standards and principles of governance

• Ultimate responsibility – there exists governing structures for the organization, and the delegations, accountabilities and responsibilities of the various components are unambiguous and are recorded in writing; all executive staff and members of the board know where responsibilities lie for the governance of the organization.
• Written rules – the board creates rules or policies recorded in writing, compiled in a policy manual and disseminated
• Legal compliance – the board comprehends, and is diligent in complying with, all legal obligations external to the organization (for example, privacy legislation, industrial relations legislation, taxation legislation).
• Director responsibility – the board comprehends and is diligent in complying with the obligations imposed upon them by the organisation
• Financial sustainability – the board assists in strengthening the financial position of the organization responsibly and proactively
• Governance diligence – processes exist to ensure that all matters that require the attention of the Board are given it
• Risk management – the board identifies risks and develops plans to manage and mitigate all significant risks
• Guiding purpose – the board determines and articulates the expressed purpose or the organization
• Program alignment – the board ensures all new programs and initiatives do align with the organisation’s purpose
• Resource stewardship – the board installs mechanisms to protect the organisation’s resources from unacceptable levels of wastage, deterioration or loss
• Strategic intent – the board outlines the strategic direction of the organization, develops and reviews that plan
• Executive engagement – the board implements written employment agreements to manage the duties, responsibilities and accountabilities of executive positions
• Role clarity – the board focuses on the governance of the organization and delegates management to the CEO
• Board development – the board continually develops and improves upon its own skills in competent governance
• Proactive integrity – the board implements mechanisms to ensure all communication, statistics and appeals coming from the organization is truthful

So to return to original question: What is the role of the Board and the role of the CEO, and what is the relationship between the two?

The role of the Board

(And its relationship to the CEO)

The Board sets the broad organisational direction and priorities, and develops good governance policies. The Board appoints the Chief Executive Officer (CEO) and delegates all management of the organisation to the CEO.

The CEO is accountable to the Board, supports the Board in its governance role and provides leadership to the organisation. The Board states explicitly how the CEO's performance will be measured.

The CEO is the primary link between the Board and staff of the organisation. The CEO communicates Board policies and priorities to staff and presents organisational reports, submissions and budgets to the Board. The CEO reports to, and is accountable to, the Board as a whole but not to individual members.

The role of the CEO

The Chief Executive Officer of the Organisation should:

• Manage the effective and efficient day-to-day operations of the organisation in accordance with the strategy, business plans and policies of the Board
• Translates the strategic plans of the Board into action
• Ensure the business’ organisational functions are effective. These include financial management, human resource management, information systems management, risk management, communications, marketing, fund raising, asset management and reporting
• Keep Board members informed about existing and amended directions, legislation, and other such critical information relating to the Board's functions and powers
• Ensure compliance and alignment with the relevant legislation and policies affecting the organisation
• Maintain effective communication and co-operation with stakeholders in collaboration with the Board
• Oversee the employment and management of staff
• Implement Board decisions
• Provide advice and information to the Board on any issue concerning strategy, finance, reporting obligations, any other matters that arise and any matters that may later require the action of the Board
• Prepare annual strategic plans including organisational performance targets for Board approval
• Prepare the business’ annual report
• Liaise with and, where appropriate, report to key stakeholders of the organisation

Separation of Governance and Management

The job of governance can be hard work, as it can be slow, frustrating and painful work. That’s partly because most things of real significance and great importance are generally difficult. It takes a lot of work to do governance well. But our responsibilities as Board Directors require it of us. And as well as a duty, good governance is a privilege. It is about serving the originations, serving the people who do the work of the organisation. As with all service, it is a blessing to give in this way.

But the Board does not manage. In fact, it entrusts all management of the organisation to the CEO. Although the Board sets the key priorities of the CEO, it must allow the CEO to get on and do it without stepping in to get involved with management. The Board measures the performance of the CEO in his/her role as Manager of the organisation, and must remove the CEO if they categorically fail in their role. But on a practical level, the success or failure of the inward workings of an organisation sit firmly on the shoulders of the CEO. And that’s why it’s the Board’s responsibility to appoint a good CEO who will manage the organisation and take if forward for them.