Good Governance #1: Board Structure and Purpose

Board Office Bearer Policy and Position Statements (The Institute of Community Directors)Board Office Bearer Policy and Position Statements (The Institute of Community Directors)Good governance research undertaken by Vicsport (2013) indicates that board structure and clarity of purpose can directly influence board functionality and the board’s ability to attract and retain suitably qualified board members.

Typically, the governance structure of SSAs comprises of the board and sub-committees with a clear separation of roles between the board, the Chief Executive Officer (CEO) and staff. Whilst governance models and board structure vary between organisations, most commonly SSA boards are independent with the majority of board members elected and some provision for appointed positions.

By nature, governance structures can raise several issues. Hoye, Smith, Westerbeek, Stewart and Nicholson (2006, p169) note that:

“the typical governance structure adopted by non-profit sport organisations has been criticised for being unwieldy and cumbersome, slow to react to changes in market conditions, subject to potentially damaging politics or power plays between delegates and imposing significant constraints on organisations wishing to change.”

This section of the Good Governance Toolkit aims to assist sporting organisations to overcome some of the common challenges around board structure and purpose, thereby assisting boards to put in place practices and systems for better governance.

1.1. Governance Models and Board Structure

Different sporting organisations operate under different governance structures. While not requiring the adoption of any single model, the Australian Sports Commission (ASC) does advocate that each structure should be clearly documented with a clear delineation of the roles, responsibilities and powers of the board, management and each body involved.

Further, there should be no overlap in the powers of any two bodies or individuals in a governance structure. The organisation’s framework of governance should:

• Enable strategic guidance of the entity,
• Ensure the effective monitoring of management by the board,
• Clarify the respective roles, responsibilities and powers of the board and management,
• Define the board’s accountability to the entity, and
• Ensure a balance of authority so that no single individual has unfettered powers.

In addition, Principle 1.8 of the ASC Sports Governance Principles (2012) states that each board should be structured to reflect the complex operating environment facing the modern sporting organisation. Normally it is envisaged that a board will:

• Comprise between five and nine individuals,
• Have a sufficient blend of expertise, skills and diversity necessary to effectively carry out its role,
• Have all board members being independent, regardless of whether they are elected or appointed,
• Have the ability to make a limited number of external appointments to the board in order to fill skill gaps,
• Institute a staggered rotation system for board members with a maximum term in office to encourage board renewal while retaining corporate memory, and
• Be broadly reflective of the organisation’s key stakeholders, but not at the expense of the board’s skills mix and the organisation’s objectives.

1.2. Incorporated Associations (Associations Incorporation Reform Act, 2012)

Not-for-profit (NFP) SSAs or Sporting Clubs operating as an incorporated association are legal entities that stay the same even if the members change. An incorporated association can enter into contracts in its own name (i.e. to borrow money or buy equipment) protecting the individual members of the association from legal liabilities.

On 26 November 2012, the Associations Incorporation Reform Act 2012 (and its associated regulations) replaced the Associations Incorporation Act 1981 within Victoria. Information about adapting to the 2012 incorporated associations laws can be found at the link below.

Victorian incorporated associations are registered with Consumer Affairs Victoria (CAV) under the Associations Incorporation Reform Act 2012.

Adapting to the Associations Incorporation Reform Act 2012 Fact Sheets (Consumer Affairs Victoria)

1.3. Model Rules for an Incorporated Association

Every incorporated association must have rules. The rules:

• Are a written document,
• Guide how your association operates,
• Are a contract between the association and its members,
• Set out your association's purposes, and
• List the rights and responsibilities of members and office holders.

An association may use the model rules or create its own rules. Either way the rules must comply with the Associations Incorporation Reform Act 2012.

For more information about incorporated associations or to download a copy of the model rules for an incorporated association follow the link below.

Running an Incorporated Association (Consumer Affairs Victoria)

1.4. Constitution

As outlined in the ASC Sports Governance Principles (2012) Principle 1.3, the incorporated body should have a constitution, which embodies the following key sections:

• Interpretation - objects and powers,
• Members - membership and meetings of members (general meetings),
• The board - powers (including delegations), election and appointment of board members, other roles (CEO and secretary) and meetings of the board,
• Reporting, recording and execution of company documents,
• Accounts,
• Auditors,
• Indemnity and insurance of board members, and
• Winding up.

The constitution should be written in a clear, unambiguous and succinct manner. It should not be overburdened with items that would be better served to be detailed in the organisation’s by-laws or policies. These are usually items that can be expected to be changed and updated from time to time. In these circumstances the board should, through by-law and policy development, be empowered to oversee and manage the issues.

The constitution should set out that the members’ powers are to elect/dismiss the board, approve/amend the constitution, and accept the financial accounts.

1.5. Planning Strategy and Direction

An effective board has a clear vision and understands the purpose and future direction of the organisation. An important function of the board is to plan organisational strategy and direction and develop a strategic plan that should guide staff and members to achieve identified objectives.

The ASC Sports Governance Principles (2012) states that the board should determine the process by which it oversees and develops the strategic direction, key objectives and performance measures as well as the core values and ethical framework for the organisation.

It is important that all key stakeholders are consulted through the strategic planning process to ensure future strategies address the most important issues facing the organisation and wider sport sector.

An example of the Vicsport Strategic Plan (2017-20) is provided below.

Download - Vicsport Strategic Plan (2017-20)

1.6. Measuring and Reporting

Once the board has identified and documented the organisation’s strategic priorities, the board is responsible for ensuring that objectives are accurately measured and that reporting on progress occurs.

The ASC Sports Governance Principles (2012) states that it is important that a board regularly reviews its strategic priorities to ensure it maintains its competitive advantage and is clear about what it wants management to focus on. The board’s agenda should reflect the strategic objectives of the organisation. It is also essential that the board ensures agenda items are linked to the strategic objectives of the organisation and that there is an alignment between the reporting from management and the key performance indicators that have been approved by the board.

The board should have in place an effective and efficient monitoring and evaluation system. This will include financial and non-financial monitoring. In particular, each board should monitor outcomes of the implementation of the strategies as the basis for the evaluation of overall performance and reporting to members.

It is essential that performance indicators are clear, concise and, more importantly, can actually be measured. They should also be aligned to strategic objectives and comprise both lead and lag indicators where possible.

It is also imperative that an organisation understands where they currently stand in relation to key performance indicators, so a comparison can be achieved between past, current and future result targets.

An example of a board agenda format which incorporates measuring and reporting of the strategic plan as a priority on the agenda can be found below.

Board Agenda (Vicsport)

1.7. Board Charter

A board charter is a one-source document which clearly sets out how the board performs its role. Second to the organisation's constitution, a board charter is a key governance policy document which defines the respective roles, responsibilities and authorities of the board and management in setting the direction, management and control of the organisation.

The ASC Sports Governance Principles (2012) states that the board and each committee established by the board should have terms of reference or board charter. The board charter should include, at a minimum:

• Purpose,
• Authority delegated,
• Composition (including the appointment of a Chair),
• Reporting requirements, and
• Delineation of the role of the board/committee and the role of management.

1.8. Board Sub-Committees

Board sub-committees allow board members to give closer attention to important issues facing the organisation than is possible for the full board. Board sub-committees are an effective way to distribute the work between board members and allow more detailed consideration of specific matters. The number of board sub-committees, size and mix, will vary from organisation to organisation depending on its size, complexity and the challenges it faces.Similar to a board charter, each sub-committee should also have clear terms of reference outlining the purpose of the committee.

Vicsport’s Good Governance Research (2013) suggests that board sub-committees may act as a suitable pathway for board succession and also provides an opportunity for individuals to be involved in leadership and decision making at another level. Vicsport research on women’s leadership roles in sport identified that females are more likely to apply for board positions if they have a better understanding of the organisation purpose and direction, the roles and responsibilities of the position and a clear understanding of the commitment and expectations of the position. Involvement in sub-committees provides an excellent opportunity for individuals to apply their skills and transition into a board or committee position.

1.9. Governance Sub-Committees

In many cases board members recognise and even become frustrated by the need for improved governance but are often stretched for time, skills and resources to implement change. This is a common situation for many NFP boards that are run by volunteers who are also required to juggle other work and life commitments.

Establishing a governance sub-committee is one way of allocating the responsibility of good governance tasks to a skilled and dedicated group. This strategy has been successful throughout Vicsport’s Good Governance work with Victorian SSAs by decreasing the burden from the board whilst improving accountability and achievement of identified actions.

The following governance sub-committee terms of reference template is provided by Board Connect and outlines the common purpose, responsibilities and accountability of a governance sub-committee.

Governance Sub-Committee Terms of Reference (Board Connect)

1.10. Board Roles and Responsibility

The role of board members will vary depending on the size, resources and nature of the sport, however to assist in clarifying the roles and authority of the board and office bearers, Vicsport has developed and sourced relevant information and templates which can be found throughout sections 1.11 – 1.16.

1.11. Board Member Role Description

The individuals that make up a board influence the future direction, decision making and culture of an organisation and are equipped with the responsibility of setting and determining its strategic direction. It is therefore imperative that board members have a clear understanding of their roles and responsibilities as this will have a direct influence on board operations and performance.

Individual board members can have different perceptions and expectations regarding their role. Time spent on operational discussion versus strategic matters presents a common challenge for sporting organisations.

A board role description should be developed and implemented to clearly outline the key roles, responsibilities and expectations of all board members.

Board Member Role Description (Vicsport)

1.12. Office Bearer Role Description

A board operates more effectively if the members and office-bearers of the board know their respective duties and obligations.

The Institute of Community Directors Australia has developed a “Board Office Bearer Policy” that seeks to ensure that members and office-bearers of the board know their respective duties and obligations. The policy provides position statements for:

• the Chair,
• the Treasurer,
• the Secretary, and
• Ordinary Board Members.

Board Office Bearer Policy and Position Statements (The Institute of Community Directors)

1.13. Separation of Powers

A clear separation of powers and responsibilities should exist between the board, the CEO and staff. Guidelines and documented role descriptions should provide a clear outline as to the duties of the board, along with the management and operational roles of the CEO and staff.

The Governance Institute of Australia provides further information regarding the separation of authority between board (council) and management in the following link.

Separation of Authority Between Board (council) and Management (The Governance Institute of Australia)

1.14. Delegations of Authority

The ASC Sports Governance Principles (2012) states that the governance structure should recognise that individual board members, the CEO (or similar), their staff, board committees and management meetings hold no authority to act on behalf of the organisation by virtue of their position alone. All authority rests with the board, which may delegate authority to any person or committee.

Each such delegation should be clearly documented in a delegation manual or similar. Normally there will be significant delegations to the CEO.

The board may also formally delegate responsibilities to a sub-committee to aid in effective governance and management of the organisation. These responsibilities should be clearly outlined in relevant sub-committee terms of reference documentation.

Delegations Policy, Procedure & Schedule (The Institute of Community Directors)

1.15. Board Code of Conduct

A board code of conduct clearly describes the expectations of board members specifically relating to the behaviour, culture, values and ethical standards as agreed to by the board. Developing and committing to an agreed set of behaviours and values can have a very positive effect on board operations and culture. It can strengthen board unity and help to develop leadership, trust, integrity and transparency within the board as well as with staff, members and stakeholders. A Code of Conduct may also assist to manage conflict or dispute should it arise.

Board Code of Conduct (Vicsport)

1.16. Board Member Profiles

Including a profile of each board member on your organisations web site improves communication with members and potential board candidates about the current composition of the board. Board member profiles help to provide a face to your board members and should highlight skills, academic achievements, professional experience and involvement with the sport.

Vicsport research (2013) also suggests that profiling female board members and women in leadership positions is an important strategy to creating role models for other women and promoting diversity throughout sport.

Board Member Profile (Vicsport)