1. GOVERNANCE
www.GovernanceAdvocate.com
Governance
Governance
is
the
structure,
relationships
and
processes
of
authority,
responsibility
and
accountability
in
a
business
or
organization.
Governance
is
not
a
procedure,
action
or
activity.
Governance
is
the
structure
of
responsibilities
and
accountabilities
in
a
business
or
organization.
Governance
itself
is
a
neutral
word
or
term.
The
word
“Governance”
by
itself
has
no
real
connotations,
positive
or
negative.
Governance
is
an
organizational
and
operational
term
for
the
structure
of
corporate
relationships.
Governance
needs
accompaniment
to
be
descriptive
such
as
“Good
Governance”,
“Bad
Governance”,
“Effective
Governance”,
“Accountable
Governance”
etc.
Governance
in
a
business
or
organization
may
be
good,
bad,
or
indifferent;
but
it
is
there,
the
structure
of
organizational
relationships
of
authority
and
responsibility
and
how
they
are
held
accountable.
If
authority
and
responsibility
are
not
held
accountable,
if
direction
is
not
clear
or
if
responsibilities
and
authority
are
not
defined,
it
does
not
mean
governance
is
absent,
it
means
the
governance
of
the
business
or
organization
has
unaccountable,
directionless,
confusing
or
ambiguous
elements.
Every
business
or
organization
has
governance,
because
processes
and
relationships
of
authority,
responsibility
and
accountability
are
systemic
to
every
business
or
organization.
The
processes
and
relationships
of
authority,
responsibility
and
accountability
may
be
dysfunctional,
abusive,
reactionary,
unethical,
or
they
may
be
effective,
accountable,
visionary,
and
ethical.
These
are
the
differences
between
good
and
bad
governance,
not
the
presence
or
absence
of
governance.
Circle
Governance
Circle
Governance
is
a
graphical
representation
of
good
governance.
Circle
Governance
uses
the
circular
nature
of
governance
responsibilities
and
accountabilities
to
illustrate,
focus
and
support
understanding
of
governance
roles
and
responsibilities
cultivating
an
awareness
of
how
governance
roles
depend
on
and
support
each
other
so
processes
can
be
developed
that
support
integrated,
effective,
accountable,
sustainable
and
ethical
efficiency
through
effective
execution
of
governance
responsibilities.

3. GOVERNANCE
www.GovernanceAdvocate.com
3
Board
of
Directors.
The
Board
of
Directors
hires
or
selects
the
CEO,
gives
direction
to
the
CEO,
holds
the
CEO
accountable,
and
if
needed
fires
the
CEO.
The
CEO
is
the
Board
of
Director’s
instrument
of
management
because
the
Board
of
Directors
is
not
in
a
position
to
manage
effectively.
This
must
also
be
clearly
understood.
The
Board
of
Directors
has
authority
over
the
organization
or
business,
but
individual
directors,
or
groups
of
directors,
have
no
authority.
So
the
Board
of
Directors
only
exists
when
they
are
meeting
formally.
In
between
meetings
the
authority
of
the
Board
of
Directors
only
exists
in
the
direction
they
have
given.
The
minutiae
of
management,
opportunities
and
risk
cannot
be
foreseen
in
the
broad
direction
the
Board
of
Directors
can
effectively
give
a
CEO.
The
Board
of
Directors
cannot
be
on
the
ground
when
the
day-­‐to-­‐day
management
decisions
need
to
be
made.
So
the
Board
of
Directors
must
choose
their
CEO
wisely
looking
for
the
experience
and
knowledge
to
manage
well
and
also
giving
good
direction
that
clearly
defines
goals
and
expectations
while
also
limiting
risk
from
bad
decisions
by
setting
limits
or
parameters
on
CEO
authority.
The
Board
of
Directors
may
decide
to
delegate
management
internally,
re:
a
board
member
is
the
CEO
and
some
cases
multiple
board
members
are
a
management
team.
This
can
create
substantial
conflict
of
interest
since
the
Board
of
Directors
is
responsible
for
oversight,
direction
and
accountability
of
management.
If
management
influences
or
controls
the
Board
of
Directors,
the
Board
of
Directors
is
compromised
or
neutered
in
their
fundamental
responsibilities.
Board
of
Directors
delegating
management
internally
is
generally
is
often
unavoidable
for
small
businesses
or
organizations
with
limited
resources
however
Boards
must
always
be
aware
of
their
oversight
responsibilities.
Staff
are
extensions
or
capacity
building
of
the
CEO
role
and
all
staff
work
or
volunteer
for
and
under
the
direction
of
the
CEO.
Staff
includes
employees,
contractors,
volunteers
and
anyone
else
that
works
in
the
operations
of
the
business
or
organization.
The
CEO
is
accountable
for
success
or
failure
of
all
aspects
of
operations.
Directors,
owners
and
members
who
work
or
volunteer
for
the
organization
or
business
need
to
understand
they
are
staff
accountable
to
the
CEO
when
they
do
so.
Board
of
Directors
Duties
Boards
of
Directors
have
specific,
legally
required,
duties:
Duty
of
Loyalty
— Directors
must
give
their
undivided
loyalty
to
the
organization
or
trust
and
must
not
let
matters
of
personal
interest
or
profit
come
into
conflict
with
the
interests
of
the
organization
or
trust.
Duty
of
Honesty
— Directors
must
act
honestly
at
all
times
when
dealing
with,
or
on
behalf
of,
the
organization
or
trust.
Duty
of
Care
— Directors
must
look
after
the
affairs
of
the
organization
or
trust
with
as
much
care,
good
sense
and
good
judgment
as
a
reasonable
person
would
in
the
same
circumstance.

4. GOVERNANCE
www.GovernanceAdvocate.com
4
Duty
of
Skill
— Directors
are
not
required
to
be
experts.
Directors
are
required
to
use
as
much
skill
in
making
decisions
for
the
organization
or
trust
as
any
similarly
skilled
reasonable
person.
Duty
of
Diligence
— Directors
must
be
diligent
about
their
work
as
directors.
Directors
need
to
attend
meetings
regularly,
read
all
minutes
and
reports
from
committees,
look
at
all
the
available
facts
including
expert
recommendations
on
issues,
but
then
make
up
their
own
minds
on
decisions.
Duty
of
Prudence
— Directors
are
expected
to
exercise
caution
and
common
sense
on
behalf
of
the
organization
or
trust.
Addressing
board
duties
can
be
complex
and
confusing.
Many
tasks
involved
require
knowledge
and
expertise
beyond
most
board
members.
Many
boards
try
to
address
this
lack
of
expertise
by
recruiting
“expert”
board
members.
This
can
create
hazards
such
as
other
board
members
deferring
to
the
“expert”
board
members
instead
of
giving
issues
their
own
consideration
or,
because
expert
board
members
have
an
enhanced
level
of
liability
being
on
a
board
because
of
their
expertise,
expert
board
members
may
make
decisions
that
safeguard
them
from
liability,
but
may
not
be
in
the
best
interests
of
the
business
or
organization.
Expertise
is
best
recruited
as
board
council
or
advisors,
not
voting
board
members.
This
puts
the
expert
in
a
neutral
position
regarding
liability
for
decisions
so
they
are
able
to
give
the
best
possible
advice.
An
example
of
expert
board
council
is
a
CPA
that
audits
the
accounts
of
an
organization.
They
are,
or
should
be,
independent
of
management.
They
do
an
analysis
of
the
organization’s
finances
that
they
present
to
the
board
as
audited
or
unaudited
financial
statements.
This
type
of
expert,
independent
advice
should
be
sought
whenever
needed
by
boards
so
boards
can
address
their
oversight
responsibilities
effectively.
CEO
Duties
The
CEO’s
duties
and
loyalty
are
to
business
or
organization
through
the
Board
of
Directors.
The
Board
of
Directors
hires
the
CEO,
sets
the
expectations
of
the
CEO
and
holds
the
CEO
accountable
however
the
Board
of
Directors
are
essentially
in
a
position
of
trusteeship.
The
Board
of
Directors
delegates
the
responsibilities
of
management
and
implementation
to
the
CEO.
Delegation
of
the
responsibilities
of
management
and
implementation
require
that
the
Board
of
Directors
hold
these
responsibilities
accountable
which
requires
these
duties
of
the
CEO:

5. GOVERNANCE
www.GovernanceAdvocate.com
5
Duty
to
Support
Board
Stewardship
and
Oversight:
• The
CEO
must
support
Board
of
Directors
organizational
or
business
oversight.
The
Board
of
Directors
gives
operational
direction
to
the
CEO,
the
CEO
must
keep
the
Board
of
Directors
cognizant
of
the
status
and
progress
of
the
CEO’s
efforts
to
implement
the
Board
of
Director’s
direction.
• Also,
anything
potentially
hazardous
to
the
business
or
organization
must
be
brought
to
the
attention
of
the
Board
of
Directors,
including
board
decisions
or
behaviours
that
create
hazards.
• Unrealized
potentials
and
opportunities
must
also
be
brought
to
the
Board
of
Directors
attention
whether
the
Board
has
recognized
the
potentials
or
opportunities
in
previous
direction,
or
not.
Duty
of
Effectiveness
and
Efficiency:
• The
CEO
has
the
responsibility
to
effectively
and
efficiently
manage
operations
and
implement
the
direction
of
the
Board
of
Directors.
The
Board
of
Directors
should
consider
their
CEO
to
be
an
expert
in
managing
operations.
Delegation
Governance
is
not
limited
to
the
relationship
between
the
Board
of
Directors
and
CEO.
When
you
look
at
the
relationships
between
the
various
governance
elements,
Ownership,
Board
of
Directors,
CEO,
Staff,
they
are
all
relationships
of
delegation.
Ownership
delegates
responsibility
for
organizational
direction
and
oversight
to
the
Board
of
Directors,
the
Board
of
Directors
delegates
operational
management
responsibility
to
the
CEO.
The
CEO
delegates
responsibility
of
components
of
operations
to
various
staff:
employees,
volunteers
or
contractors.
Delegation
of
authority
and
responsibility
is
systemic
in
any
business
or
organization.
For
the
CEO
especially,
effective
delegation
is
crucial
to
capacity
building.

6. GOVERNANCE
www.GovernanceAdvocate.com
6
Delegation
is
fundamentally
important
to
sustainability
and
success.
Delegation:
•Recruits
expertise
•Builds
capacity
•Focuses
resources,
responsibility
and
accountability
Delegation
is
the
assignment
of
a
responsibility
from
one
entity
to
another
entity.
Responsibility
rests
with
only
one
entity
at
a
time.
An
entity
may
be
one
individual,
or
an
entity
may
be
a
group
of
individuals.
When
the
ownership
assigns
the
responsibility
and
authority
of
organizational
oversight
to
a
board
of
directors,
this
responsibility
and
authority
does
not
rest
in
the
individual
board
members.
A
Board
of
Directors
is
one
entity,
and
the
authority
to
make
decisions
is
collective
and
therefore
only
exists
when
the
Board
members
or
directors
come
together
in
a
board
meeting.
When
the
Directors
are
not
meeting
their
authority
does
not
exist
except
in
the
decisions
they
made
during
the
Board
meeting.
This
is
one
of
the
reasons
a
Board
of
Directors
needs
to
delegate
operational
responsibility
to
an
individual.
Board
members
do
not
have
the
individual
authority
to
make
decisions.
These
relationships
of
delegation
are
the
organizational
structure
that
is
the
governance
of
the
business
or
organization.
The
quality,
effectiveness
and
accountability
of
the
relationships
of
delegated
responsibility
of
a
business
or
organization,
is
the
quality
of
governance.
That
is
the
difference
between
Good
Governance
and
Bad
Governance,
whether
delegation
is
effective
and
accountable,
or
not.
Good
governance,
at
its
essence,
is
effective,
accountable
delegation.
Effective
delegation
requires
clear
and
formal
articulation
of
expectations
as
well
as
a
commitment
to
monitor
the
responsibility
delegated
to
ensure
expectations
are
met.
Expectations
encompassing
both
what
is
to
be
accomplished
and
how
it
is
to
accomplished
including
limits
or
parameters
on
authority
and
responsibilities.
• Expectations
o Objectives
o Values
• Parameters
–
What
is
allowed
in
pursuit
of
the
objectives
by
defining
what
is
not
allowed
o Hard
Parameters
–
Actions
that
are
not
permitted
under
any
circumstances
(Legal
and
Policy
Breaches)
o Soft
Parameters
–
Actions
that
are
permitted
only
with
permission
from
a
higher
authority.
• Accountability
o Past
§ Have
there
been
legal
or
policy
breaches?
o Present
§ Has
progress
met
expectations
to
this
point?
o Future

7. GOVERNANCE
www.GovernanceAdvocate.com
7
§ Will
progress
continue
to
align
with
and
progress
to
expectations?
What
is
the
plan
to
realize
expectations
and
respect
parameters?
Does
planning
need
to
be
re-­‐aligned
or
do
expectations
and
parameters
need
to
be
reviewed
or
refined?
Rules
of
Delegation
1. Responsibility
can
only
reside
with
one
entity
at
any
one
time.
2. An
entity
can
be
an
individual,
or
a
group
of
individuals.
3. If
an
entity
is
a
group,
authority
resides
in
the
whole
group,
not
individuals
or
parts
of
the
group.
4. Delegated
authority
accompanies
delegated
responsibility.
5. Delegated
authority
and
responsibility
must
be
held
accountable
by
the
entity
that
delegates
the
authority
and
responsibility.
6. Any
limits
on
authority
and
responsibility
are
also
limits
on
accountability.
7. Applying
accountability
to
oneself
is
a
conflict
of
interest.
8. The
entity
that
delegates
responsibility
and
authority
is
responsible
for
holding
that
responsibility
and
authority
accountable.
9. Accountability
encompasses
past,
present
and
future.
10. Accountability
is
applied
from
the
perspective
of
the
core
responsibilities
of
the
entity
delegating.
Responsible
Delegation
Delegation
must
first
be
appropriate
to
be
effective
and
accountable.
To
delegate
effectively,
responsibilities
must
be
recognized
and
categorized:
1. Core
Responsibilities
• Responsibilities
fundamental
to
a
governance
role
• Core
responsibilities
cannot
be
delegated
2. Subsidiary
responsibilities
• Responsibilities
that
support
the
core
responsibilities
of
the
governance
role.
• Subsidiary
responsibilities
generally
can
be
delegated,
and
often
should
be
delegated,
depending
on
resources
and
circumstances.
3. Responsibilities
of
others
• Responsibilities
that
are
not
part
of
your
governance
role
because:

8. GOVERNANCE
www.GovernanceAdvocate.com
8
• The
responsibility
have
been
delegated
by
your
governance
role
and
your
responsibility
is
now
support
and
accountability
of
that
responsibility
or
• The
responsibility
is
not
part
of
your
governance
role
or
responsibilities
and
your
responsibility
is
to
ensure
that
your
actions
do
not
conflict
but
support
all
other
roles
and
responsibilities
in
the
business
or
organization.
Governance
Relationships
The
Board
–
CEO
relationship
is
the
foundation
of
good
governance
is
a
business
or
organization.
The
board
needs
to
delegate
operational
responsibility
to
someone.
There
are
two
reasons
for
this:
1. The
board
of
director’s
core
responsibility
is
organizational
oversight,
not
organizational
management.
Organizational
management
is
a
subsidiary
responsibility
to
organizational
oversight.
Board
involvement
in
management
can
conflict
with
the
board’s
oversight
responsibilities
of
direction
and
accountability
of
management.
2. The
authority
of
the
board
of
directors
to
make
decisions
exists
only
when
the
board
members
come
together
in
formal
board
meetings.
The
board
of
directors
is
actually
considered
a
single
entity,
not
a
group
of
individual
people.
Board
authority
exists
in
the
whole
board,
not
individual
directors.
Hence
the
importance
of
board
meeting
effectiveness
where
the
board
decides
who
will
have
responsibility,
what
they
will
accomplish
and
evaluate
progress
and
effectiveness
of
what
they
have
previously
delegated.
The
cleanest
delegation
of
operational
responsibility
by
a
board
of
directors
is
to
a
non-­‐board
member,
generally
a
CEO
or
Executive
Director.
Giving
direction
to
a
single
person
who
can
effectively
be
held
accountable
allows
clarity
of
operational
responsibility
and
authority,
and
accountability
is
un-­‐conflicted.
The
board
can
delegate
operational
responsibility
to
multiple
persons
however
when
responsibility
is
divided,
authority
and
accountability
are
also
divided
which
generally
results
in
less
operational
effectiveness
and
efficiency;
and
accountability
is
confusing
and
conflicted.
The
board
can
also
invest
operational
authority
in
a
board
member
or
members,
but
this
can
conflict
with
the
board’s
oversight
responsibilities
of
holding
the
responsibilities
they
delegate
accountable.
When
the
board
is
evaluating
the
performance
of
anyone
they
have
delegated
responsibility
to
that
person
would
be
in
a
conflict
of
interest
if
they
take
part
in
performing
the
evaluation.
Many
smaller
organizations
with
limited
resources,
have
no
choice
but
to
delegate
internally,
but
the
board
members
both
individually
and
as
a
group
must
keep
in
mind
that
the
board
has
the
responsibility
of
operational
oversight
and
any
authority
they
delegate,
externally
or
internally,
must
be
held
accountable
by
the
board.
The
board
can
invest
operational
authorities
in
individual
or
groups
of
board
members.
This
should
not
be
done
if
the
board
has
a
CEO
as
it
undermines
CEO
effectiveness
and
accountability.
The
board
has
the
responsibility
of
holding
the
authority
and
responsibilities
it
delegates
accountable,
whether
it
is
the
CEO
or
others.
If
board
members
are
given
any
operational
authority,
the
board
has
the
responsibility
of
holding
those
board
members
accountable,
a
situation
with
potential
conflicts
of
interest.
Also
any
authority
invested
in
someone
other
than
the
CEO,
the
CEO
cannot
ethically
be
held
accountable
for.
If
the
CEO
is
not
given
certain
authorities
or
responsibilities,
how

9. GOVERNANCE
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9
can
the
CEO
ethically
be
held
accountable
for
those
responsibilities?
Not
delegating
decisively
is
also
weak
governance.
Effective
delegation
is
not
only
delegating
responsibility,
authority
must
be
delegated
as
well.
Authority
is
not
intrinsic
to
responsibility.
Authority
is
a
resource,
a
very
important
resource
in
effectiveness
but
also
a
resource
that
can
be
abused
and
misused
like
any
other
important
resource.
Authority
needs
to
be
defined
much
like
a
budget
defines
the
use
of
financial
resources,
not
only
what
the
authority
being
invested
is,
but
also
what
the
limits
or
parameters
on
the
use
of
that
authority.
As
responsibility
is
delegated
from
Ownership
to
Board,
from
board
to
CEO,
from
CEO
to
staff,
authority
is
a
resource
that
also
needs
to
be
invested
so
responsibilities
can
be
addressed
and
pursued
effectively,
ethically
and
accountably.
When
the
ownership
of
a
business
or
organization
creates
a
board
of
directors,
the
responsibility
they
invest
in
the
board
of
directors
is
oversight
of
operations.
In
order
to
effectively
address
the
board’s
oversight
role
the
board
needs
the
authority
to
direct
operations
and
hold
operations
accountable.
If
the
ownership
retains
any
authority
to
direct
operations
they
confuse
direction
and
undermine
the
board
of
director’s
ability
to
effectively
direct.
The
authority
of
the
board
of
directors
should
be
defined
by
limits
that
are
part
of
mandatory
accountability
of
the
board
of
directors
to
the
ownership.
Minimum
accountability
of
the
board
of
directors
is
defined
in
corporate
law
and
usually
includes
requirements
of
specific
annual
reporting
to
the
ownership
and
the
ability
to
determine
who
the
board
of
directors
are.
By-­‐laws
or
constitution
further
refine
the
ownership
expectations
and
accountability
of
the
board
of
directors.
But
the
ownership
should
have
a
board
of
directors,
or
not,
ownership
should
delegate
oversight
of
operations
to
the
board
of
directors,
or
not.
By-­‐laws
could
include
a
requirement
that
board
decisions
of
specific
types
and
magnitude
need
to
be
brought
to
a
general
meeting
for
ratification.
But
the
ownership
should
stay
out
of
giving
operational
direction.
It
is
weak
and
messy
governance.
If
the
ownership
is
not
satisfied
with
the
oversight
of
the
board
of
directors,
they
should
tell
the
board
so,
or
replace
the
directors,
not
circumvent
their
board
of
directors.
The
same
applies
to
the
Board
–
CEO
relationship.
When
the
board
of
directors
hires
a
CEO,
they

10. GOVERNANCE
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10
invest
operational
responsibility
in
the
CEO.
Operational
responsibility
should
include
operational
authority.
The
board
has
specific
expectations
of
operations.
The
CEO
needs
resources
to
accomplish
the
board’s
expectations,
including
authority.
CEO
authority
should
be
defined,
including
limits
on
authority
where
operational
decisions
of
specific
types
and
magnitudes
need
to
be
brought
back
to
the
board
for
ratification.
But
the
board
should
stay
out
of
the
management
they
have
delegated.
Board
involvement
in
management
is
weak
and
messy
governance.
If
the
board
is
not
satisfied
with
the
operational
management
of
the
CEO,
they
should
tell
the
CEO,
or
replace
CEO,
not
circumvent
CEO.
The
CEO
also
needs
to
delegate
decisively.
Staff,
volunteers,
contractors
are
all
capacity
building
to
extend
the
capabilities
of
the
CEO.
Not
delegating
authority
with
responsibility
limits
the
effectiveness
of
the
delegation.
Again,
delegated
responsibility
and
authority
has
to
be
defined,
and
held
accountable.
Board
member
involved
in
operations
is
a
tricky
issue.
Outside
of
board
meetings,
board
members
are
people
with
titles
not
authority,
so
being
involved
in
operations
should
theoretically
not
be
a
problem.
However,
board
members
involved
in
operations
have
to
be
aware
that
this
is
potentially
an
awkward
situation
for
the
CEO
and
the
board
member.
The
CEO
has
responsibility
and
authority
over
operations
and
will
be
held
accountable
for
operational
success,
or
lack
thereof.
A
board
member
involved
in
operations
must
be
under
the
authority
of
the
CEO;
otherwise
it
compromises
the
CEO
and
operational
effectiveness.
If
a
board
member
cannot
separate
their
board
self
from
their
self
in
operations,
they
should
relinquish
one
of
their
responsibilities.
Each
element
in
an
organization
or
business,
Ownership,
Board
of
Directors,
CEO,
Staff,
has
a
role
and
responsibilities
in
the
sustainable
effectiveness
of
their
business
or
organization.
Each
governance
element
is
distinct
but
not
separate
from
each
of
the
other
governance
elements
because
they
depend
on
each
other.
Governance
is
a
structure
of
relationships,
and
as
any
structure
is
weaker
if
any
of
its
materials
or
components
is
weak,
a
business
or
organization’s
governance
is
weaker
if
any
of
its
governance
elements
is
weak.
Each
element,
and
the
business
or
organization
as
a
whole,
depends
on
the
quality
of
performance
of
all
of
the
other
elements,
like
a
chain
that
is
only
as
strong
as
its
weakest
link.
Prepared
by
Al
Errington
©
Copyright
2013,
GovernanceAdvocate.com
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Rights
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publication
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otherwise,
without
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