XC1 the Executive Director Defines the Role of the Governing Body (Cfa 515)

XC1 The Executive Director defines the role of the Governing Body (CfA 515)

Unit Summary

The Executive Director will bring personal experience, internal knowledge and relevant expertise to the decision making process to assist the Governing Body when it defines its responsibilities, powers and tasks

Personal attributes

The Executive Director will apply the following personal attributes:

• Showing vision
• Showing imagination
• Taking a strategic perspective
• Communicatingengagingly
• Influencing others
• Being motivated

Performance indicators

Define the responsibilities of the Governing Body

The Executive Director will bring personal experience, internal knowledge and relevant expertise to inform contributions to the decision making process to assist the Governing Body to:

1.Make decisions that are in the best interests of the organisation to ensure its success and on going viability for the benefit of its key stakeholders

2.Take actions based only upon the principles of transparency, accountability and responsibility

3.Put systems in place to be certain that the organisation is directed and managed with probity and integrity

4.Establish the standards of behaviour and values of the Governing Body, directors, managers and other workers

Knowledge and understanding

The Executive Director will know:

General knowledge and understanding

• The nature and importance of the leadership of the organisation by the chair, the chief executive and the directors
• Current theories and techniques of leadership
• The duty of the directors to promote the success of the organisation for the benefit of its key stakeholders
• The requirement on the directors to act in good faith

Sources of context specific knowledge and understanding

For Boards of Companies listed on the London Stock Exchange

• The Combined Code (2003) A1 The Board

For Boards of Private Sector Companies

• The Institute of Directors’ Standards for the Board (2001) Part 2 Section 2 Clarifying governing body and management responsibilities
• OECD Principles of Corporate Governance (2004) Chapter 6 The Responsibilities of the Board
• Proposed legislative duties of directors in the Companies Bill (2005)

For Boards of Banking Organisations

• The Basel Committee on Banking Supervision’s Enhancing corporate governance for banking organisations (2006) Principle 3 The Governing body of Directors should set and enforce clear lines of responsibility and accountability throughout the organisation

For Governing Bodies within the Public Sector

• The Independent Commission on Good Governance in Public Services’ The Good Governance Standard for Public Services (2004) 2.1 Being clear about the functions of the governing body
• The OECD Guidelines for State Owned Enterprises (2005) Chapter 6 The responsibilities of the Boards of State Owned Enterprises

For Governing Bodies within the Voluntary and Community Sector

• National Occupational Standards for Trustees and Management Committee Members (2006) Unit 1
• Good Governance: A Code for the Voluntary and Community Sector (2005) Principle B

For Governing Bodies of registered charities

• Operational Guidance by the Charity Commission

Performance indicators

Define the powers of the Governing Body

The Executive Director will bring personal experience, internal knowledge and relevant expertise to the decision making process to assist the Governing Body to:

5.Maintain a formal schedule of matters specifically reserved for Governing Body decision

6.Delegate responsibility to Governing Body committees and authority to managers for the development and implementation of selected strategies and plans

7.Identify the clear division at the head of the organisation between the responsibility of the chair of the Governing Body to manage Governing Body meetings and the responsibility of the chief executive to manage the organisation’s activities

8.Determine and review regularly the powers of each individual director, including the chair, and the interrelationships between the directors

Knowledge and understanding

The Executive Director will know:

General knowledge and understanding

• The legal, regulatory or code of practice requirement to maintain a formal schedule of matters specifically reserved for its decision
• The legal, regulatory or code of practice requirement to delegate authority to Governing Body committees
• The legal, regulatory or code of practice requirement to separate the responsibilities of the chair of the Governing Body for directorial leadership and the responsibilities of the chief executive for the management of the organisation’s activities
• The range of common and specific duties of directors
• The scope of different duties undertaken by directors in particular roles
• ICSA Code of Good Boardroom Practice
• ICSA Guidance Notes 2003
• Matters reserved for the Governing body
• Due diligence for directors

Sources of context specific knowledge and understanding

For Boards of Companies listed on the London Stock Exchange

• The Combined Code (2003); A1 The Board

For Boards of Private Sector Companies

• The Institute of Directors’ Standards for the Board (2001); Section 2 Clarifying governing body and management responsibilities
• Proposed legislative duties of directors in the Companies Bill (2005)

For Boards of Banking Organisations

• The Basel Committee on Banking Supervision’s Enhancing corporate governance for banking organisations (2006) Principle 3 The Governing body of Directors should set and enforce clear lines of responsibility and accountability throughout the organisation

For Governing Bodies within the Public Sector

• The Independent Commission on Good Governance in Public Services’ The Good Governance Standard for Public Services (2004) 2.1 Being clear about the functions of the governing body

For Governing Bodies within the Voluntary and Community Sector

• National Occupational Standards for Trustees and Management Committee Members (2006) Unit 1
• Good Governance: A Code for the Voluntary and Community Sector (2005) Principle B

For Governing Bodies of registered charities

• Operational Guidance by the Charity Commission

Performance indicators

Define the tasks of the Governing Body

The Executive Director will bring personal experience, internal knowledge and relevant expertise to the decision making process to assist the Governing Body to:

9.Agree the organisation’s purpose, vision, values, strategy and structure

10.Engage actively with the managers in the formulation and implementation of strategy

11.Determine and allocate the financial and human resources necessary for the managers to meet their agreed objectives

12.Agree and review regularly the organisation's governing documents and compliance policies within the terms specified in relevant legislation, regulation and codes of practice

13.Prescribe and oversee the dissemination of the organisation’s values and standards

14.Specify any obligations to the organisation’s key stakeholders and ensure that these obligations are met

15.Establish remuneration policies and practices for directors and managers that are consistent with the organisation’s principles, values, culture, long-term objectives and strategy

16.Make arrangements to monitor and review regularly the performance of all delegated authorities

17. Lead the production of an annual report for the organisation that includes a statement of how the Governing Body performs its governance role and the relevant key performance indicators (KPIs)

Knowledge and understanding

The Executive Director will know:

General knowledge and understanding

• Therelevant legislation, regulation and codes of practice specifying the governing documents the Governing Body has to produce
• Therelevant legislation, regulation and codes of practice specifying the annual report the Governing Body has to produce
• The interests of key stakeholders in setting out the organisation’s values and standards
• The interests of key stakeholders in setting out the organisation’s purpose
• The organisation’s obligations to and the interests of the key stakeholders
• The methodology of strategy formulation and leadership of strategic change
• The requirement that the managers are properly equipped to meet their objectives
• The methodologies and metrics available to monitor and measure performance
• ICSA Code of Good Boardroom Practice

Sources of context specific knowledge and understanding

For Boards of Companies listed on the London Stock Exchange

• The Combined Code (2003); A1 The Board

For Boards of Private Sector Companies

• The Institute of Directors’ Standards for the Board (2001); Part 3 Tasks of the Board
• Proposed legislative duties of directors in the Companies Bill (2005)

For Boards of Banking Organisations

• The Basel Committee on Banking Supervision’s Enhancing corporate governance for banking organisations (2006); Principle 3 The Governing body of Directors should set and enforce clear lines of responsibility and accountability throughout the organisation

For Governing Bodies within the Public Sector

• The Independent Commission on Good Governance in Public Services’ The Good Governance Standard for Public Services (2004); 2.1 Being clear about the functions of the governing body

For Governing Bodies within the Voluntary and Community Sector

• Good Governance: A Code for the Voluntary and Community Sector (2005) Principle B

For Governing Bodies of registered charities

• Operational Guidance by the Charity Commission