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  1. Good Governance in Credit Unions Governance Matters Kate Costello

  2. Effective Governance • understand the role of the Board • get the right skills and encourage the right behaviour • introduce effective processes

  3. Understand the Role of the Board Governance is what the Board does or should do to be a “value-adder” to the organisation rather than just a “cost-centre”. It is different from what management does or should do.

  4. What is Governance “The Board’s role is to create the future of the organisation, not just mind the shop”. John Carver

  5. The Role of the Board Strategy Formulation Outward Looking Accountability Compliance Roles Appoint CEO Performance Roles InwardLooking Monitoring and Supervision Policy Making Past & Present Future *adapted from Tricker, RI: International Corporate Governance (1994) p149

  6. Accountability Those you can’t say no to! • the law and regulation • constituent document or • empowering legislation • creditors (eg. bank; suppliers) • other contractors (eg government • funding; sponsors)

  7. Accountability Those you need to listen to! • owners (shareholders; members; government) • customers • staff • the community

  8. Good Governance in Accountability • “listening” to stakeholders • risk management • organisational culture

  9. What is Strategy • what is “Strategy”? – • Michael Porter • the gut, the head, the heart • answer the hard questions

  10. Good Governance in Strategy • longer term strategic plan (with measures) • aligned operational/business/annual plan (with measures) • aligned budgets

  11. Good Governance in Strategy • dedicate some board meetings to strategic matters • spend the first hour on a strategic issue • reorganise the agenda (decision; discussion; noting)

  12. Policy “I define policy as the value or perspective that underlies action. Of course that means everyone in the organisation makes policy including staff members, but boards must make the broadest and most inclusive policies in order to control the organisation. The trick is for the board to make distinctions between the types and sizes of policy, so that what is delegated is clear”. Carver J: Reinventing Your Board, P41

  13. Good Governance in Policy • Carver argues that the board only has one employee, the CEO. • “The board will: • instruct only the CEO • view all organisational performance as that of the CEO • view any organisational failure to comply with board policy as the failure of the CEO • require that the CEO keep the organisational performance within policy criteria and restore it to this state should there be policy violations • never in its official capacity, help the CEO manage” • John Carver

  14. Good Governance in Policy • Matters reserved for the board • Policy separated from minutes • Board Manual

  15. Monitoring and Supervision • By strategic KPIs • By annual KPIs • By compliance with board policy • By agreeing what information will • come to the board, in what format

  16. CEO and Succession • “hire and fire” the CEO • remunerate and reward • assess performance • plan for succession

  17. Get the Right Skills • size of the board • board skill set • committees • the right ones? • clear terms of reference? • reviewed, or task forces? • amend constituent document to • make right

  18. Board Member Knowledge • induction • management update sessions • expert reports • expert development sessions • Board and director • performance evaluation

  19. Encourage the Right Behaviour Board Effectiveness Research Shey Newitt Compliant but not contributing: why Australian boards are being under-utilised

  20. Working Relationships • Chair – CEO relationship critical • behaviour and teamwork • a “living” Code of Conduct

  21. Introduce Effective Processes • calendar • papers before meeting • clear, concise, precise papers • duration of meetings • calibre of minutes plus action list • receipt of minutes after meeting

  22. Effective Governance • understand the role of the Board • get the right skills and encourage the right behaviour • introduce effective processes

  23. Good Governance in Credit Unions

  24. Structure and Skills • size of board • “fit”: skill set; appointed and/or elected directors; terms for board renewal • “proper”: not too bureaucratic

  25. Structure and Skills • Nomination and Remuneration Committee with independents • the right committee

  26. Accountability • communication from, and to, members • the AGM • relationship with APRA

  27. Accountability • reports on governance • “capture” corporate social responsibility

  28. Strategy • a true differentiation? • mergers • enough time on strategy • longer term plan

  29. Policy • matters reserved • centralise all board-endorsed policies • HR and remuneration/reward policies align with strategy

  30. Policy • outsourced service providers • user-friendly style • risk management

  31. Monitoring and Supervision • by KPIs – strategic and annual • by the information the board receives • by policy compliance reports

  32. CEO and Succession • CEO or Managing Director? • performance management • annual succession planning including for CEO direct reports

  33. Leadership and Teamwork • the right chair • succession planning for the chair • performance evaluation

  34. Meetings • duration and timing • format for submissions • annual calendar • meeting without management

  35. In Summary • The right directors and chair • A strategic view • The right processes • Your checklist

  36. Understanding Good Governance in Credit Unions Governance Matters