Non-Profit Board Induction

Board Contents
1. Induction material
Board Basics - Orientation 2. Board role
3. Governance model
Information 4. Australian Institute of Company Directors -
Prepared July 2007 Code of conduct
5. Characteristics of high performing boards
This document to be read in conjunction with: 6. Board competencies
7. Maintaining enthusiasm
On Board: Serving on the Board of an Arts 8. The difference between Board & Operations
Organisation 9. Board role descriptions
http://www.ozco.gov.au/arts%5Fresources/pu 10. Recruitment & renewal
blications/on%5FBoard/ 11. Succession
Organisation’s rules or constitution 12. Board meetings
Induction material (see page 2 of this 13. Resources
document)
Other information
How to read financial statements
1
Board Basics - Induction
Prepared by Linda Carroli, July 2007
1. Induction material 2. Board role 5. Account to the public for the products and
services of the organisation and expenditures
Source: The Book of the Board Source:
of its funds, including:
http://www.managementhelp.org/Boards/brdrspo
As a new Board member you should receive a n.htm
to provide for fiscal accountability, approve
copy of the following:
the budget, and formulate policies related to
1. Provide continuity for the organisation by
contracts from public or private resources
The most recent Annual Report including setting up a corporation or legal existence, and to
to accept responsibility for all conditions and
most recent audited financial statements represent the organisation's point of view through
policies attached to new, innovative, or
Rules of Association interpretation of its products and services, and
experimental programs.
Business Plan including financial projections, advocacy for them
list of current board members, titles and
affiliations, Board organisation chart, Staff 2. Select and appoint a chief executive to "The board is responsible for creating the
organisation chart whom responsibility for the administration of the future, not minding the shop."
Annual Program organisation is delegated, including: John Carver
A biography of the CEO and other board
members to review and evaluate his/her performance
Two or three sets of Board meeting minutes regularly on the basis of a specific job A Board needs …
and supporting papers relating to any key description, including executive relations with Source: Cameron Ralph Pty Ltd
issues currently under discussion by the the Board, leadership in the organisation, in
Board program planning and implementation, and in People – Business acumen, courage, integrity,
Code of ethics or code of conduct (AICD management of the organisation and its diligence, independence of thought, wise use of
Code of conduct in this document) personnel social skills
Board role descriptions (in this document) to offer administrative guidance and
A list of key forthcoming dates (meetings, determine whether to retain or dismiss the Group Dynamics – Relationships between
events) executive Board and between Board and management
The newsletter, brochure or other
publications 3. Govern the organisation by broad policies Information – The right amount, about the right
Recent press cuttings relating to the and objectives, formulated and agreed upon by things
organisation’s work the chief executive and employees, including to
A copy of On Board: Serving on the Board of assign priorities and ensure the organisation's Decision Process – Agenda setting, problem
an Arts Organisation capacity to carry out programs by continually scoping, decision criteria, alternatives, risk
reviewing its work analysis
New board members should also:
4. Acquire sufficient resources for the Monitoring – Overseeing implementation,
Meet with the CEO
organisation's operations and to finance the assessment of Board and senior management
Meet with the Chair
Visit office and meet staff (when practical) products and services adequately
2
3. Governance model 4. Australian Institute of
Broad Specific Responsibilities
Source: Company Directors - Code of
Responsibilities
http://www.Boarddevelopment.org/display_docu
ment.cfm?document_id=112 Vision, Planning Creates vision, mission conduct
& Evaluation Sets policies for ends ie
desired results A director must act honestly, in good faith
Limits means ie and in the best interests of the company as a
procedures & practices whole.
Finances Sets limits to CEO's A director has a duty to use due care and
financial decisions diligence in fulfilling the functions of office
Board reviews financial and exercising the powers attached to that
statements office.
May or may not be A director must use the powers of office for a
involved in fundraising proper purpose, in the best interests of the
Human ED = CEO company as a whole.
Resources Communication between A director must recognise that the primary
Chair & ED responsibility is to the company's
CEO ultimately shareholders as a whole but should, where
responsible to full Board appropriate, have regard for the interests of
Organisational Board receives reports all stakeholders of the company.
Operations Decisions made by A director must not make improper use of
voting information acquired as a director.
CEO attends to all A director must not take improper advantage
operations of the position of director.
Board plans directs A director must not allow personal interests,
Board work or the interests of any associated person, to
The governance model draws on elements of the No/limited committee conflict with the interests of the company.
Policy Governance Model and Policy Models structure; only when A director has an obligation to be
of governance. In general this means the Board needed to support the independent in judgement and actions and to
takes responsibility for the following: work of the Board take all reasonable steps to be satisfied as to
Community Develops awareness of the soundness of all decisions taken by the
Relations agency in community Board of directors.
Interprets & reflects Confidential information received by a
community needs to the director in the course of the exercise of
organisation directorial duties remains the property of the
company from which it was obtained and it is
improper to disclose it, or allow it to be
disclosed, unless that disclosure has been
authorised by that company, or the person
3
from whom the information is provided, or is 5. Characteristics of high 6. Board Competencies
required by law.
performing Boards Source: Australian Institute of Company Directors
A director should not engage in conduct likely
to bring discredit upon the company. Source: Pathways Australia, Australian Institute
Competencies for board members can be broken
A director has an obligation, at all times, to of Company Directors
into job-related skills necessary to do their job
comply with the spirit, as well as the letter, of
and personal qualities.
the law and with the principles of this Code. They know their mission and purpose
They understand their roles
Job-related competencies
Members have a range of skills and they
make the best use of them
They have ownership (of the Board and of Strategic expertise – the ability to review the
their roles) strategy through constructive questioning
They establish multiple sources of significant and suggestion
revenue Accounting and finance – the ability to read
They make correct CEO hiring decisions and comprehend the company’s accounts,
Appropriate new Board members are financial material presented to the board,
recruited as needed financial reporting requirements and some
They assess their own performance regularly understanding of corporate finance
They expect commitments to be met Legal– the board’s responsibility involves
They bring resources to the organisation overseeing compliance with numerous laws
They plan for succession as well as understanding an individual
Set a performance culture director’s legal duties and responsibilities
Meet legal requirements Managing risk –experience in managing
areas of major risk to the organisation
A high performing board includes: Managing people and achieving change
leaders Experience with financial markets
visionaries or strategic thinkers Industry knowledge – experience in similar
practical people organisations or industries.
analytical people
communicators who can deal with Personal qualities
stakeholder groups
While different directors can bring different
technical skills and knowledge to a board, there
are personal qualities that are desirable in all
board members:
Integrity – fulfilling a board member’s duties

and responsibilities, putting the
organisation’s interests before personal
interests, acting ethically
4
Curiosity and courage – a board member 7. Maintaining enthusiasm 8. The difference between Board
must have the curiosity to ask questions and
Source: Pathways Australia & Operations
the courage to persist in asking or to
challenge management and fellow board
Undertake an annual Board review
members where necessary Board responsibilities
Be sure that roles within the Board are
Interpersonal skills – a board member must Source: Adapted from Pathways Australia,
clearly defined
work well in a group, listen well, be tactful but Australian Business Arts Foundation
Ensure that each member is clear about the
able to communicate their point of view
organisation’s goals, mission and ethics
frankly Meets, develops coherent decision-making
Ensure Boardroom procedures are effective
Genuine interest in the organisation and its processes and gets results
and efficient. If they don’t suit those on the
business Sets long term goals and ensures effective
Board, change them
Instinct – good business instincts and planning – strikes a balance between short
Take plenty of time to recruit Board
acumen, ability to get to the crux of the issue term and longer term health of the
members. The right people ensure a strong
quickly organisation
and effective Board
An active contributor – there is no room on Having the final say when determining yearly
Pay attention to the needs and moral of
boards today for those who do not contribute. objectives
Board members
Commentators also suggest that board Confirms policy and ensures the mission of
Expect a high standard and hold people
members ensure that they have adequate the organisation is adhered to – is highly
accountable
time to devote to the organisation’s affairs. mission focused
Make full use of your Board members’ skills
and expertise Finalising budgets and allocating funds
Ensure the workload of all Board members is Maintains it health - Appointing new Board
comparable members, evaluating the Board’s
Keep the Board informed about and performance and providing appropriate
interested in the organisation induction
Determine an appropriate length of service Taking ultimate responsibility for all legal
for your Board members matters
Recognise Board decisions that are Taking ultimate responsibility for compliance
successful with regulatory requirements (eg annual
Keep the organisation informed of Board general meeting etc)
decisions Appointing auditors and approving the audit
Make the Board accessible so a great divide of the financial records (via AGM)
does not occur between members, Managing committees
volunteers, workers and the Board (but Maintaining and building the organisation’s
establish some protocols for Board-staff public profile and enhancing organisation’s
contact) public profile
Implement a mechanism to allow members to Managing risks
have their say or to suggest ideas for the Approving any changes of additions outside
organisation the budget
Conduct exit interview with Board members Taking responsibility for the company’s
financial records
5
Confirms and monitors organisation’s Ensuring risk management programs are 9. Board role descriptions
programs and services implemented
Source: The Book of the Board
Evaluating Board members and their Ensuring that achievements are recognised
Refer also to the organisations rules of
performance and documented
constitution
Employing the organisation’s CEO, supports Promoting the organisation
them, setting their remuneration and
evaluating their performance against agreed Board Member
Joint Responsibilities
targets and plans. Discussing ideas and forming long-term
Adapts to the environment in which the Function
goals
organisation operates Planning organisational strategies
Serve as Court of Appeal Provide governance to the organisation
Designing programs to achieve the group's
Ensures adequate resources and that those Represent the organisation to the community
mission – mostly CEO’s role
resources are effectively managed Accept the ultimate legal authority for the
Proposing fundraising ideas
organisation
Ensuring risk management programs are
Operational responsibilities (CEO & implemented
Qualifications/Skills
Staff) Ensuring that achievements are recognised
Source: Pathways Australia and documented
Knowledge and skills in one or more areas of
Promoting the organisation Board governance eg policy, finance,
Providing information to the Board, including programs or personnel
recommendations for action In understanding the difference between Board
Supporting the Board’s planning function and Operations, we understand more fully our Term
Determining community needs – clients, roles, are equipped to fulfil our duties and roles,
members etc and diminish the risk of micromanagement.
Board members are elected by the members
Operating programs and reporting on their at the Annual General Meeting and serve a
successes and shortcomings Micromanagement two year term.
Evaluating performance Source: Wikipedia A maximum of three two-year terms may be
Organising the organisation’s events, served.
fundraising activities etc once approved by Micromanagement is a management style where
the Board a manager [board] closely observes or controls Requirements
Managing volunteers and staff (other than the work of their employees [CEO], generally
the CEO) used as a pejorative term. In contrast to giving Commitment to the work of the organisation
Implementing Board decisions general instructions on smaller tasks while Willingness to serve on at least one
Conducting day-to-day financial operations supervising larger concerns, the micromanager committee and actively participate
Monitoring and managing daily operations monitors and assesses every step. Attendance at Board meetings
Discussing ideas and forming long-term A time commitment of five hours per month
goals (include Board preparation, meeting and
Planning organisational strategies committee meeting time)
Designing programs to achieve the group’s Attendance at Annual General Meeting
mission where possible
Proposing fundraising ideas
6
Be informed of the services and programs Be assured that management succession is A time commitment of 5-8 hours per month
provided by organisation and publicly support properly being provided (includes Board preparation, meeting, sub-
them Appoint independent auditors subject to committee and meeting time)
Prepare for an participate in the discussions approval by members Attendance at Annual General Meeting
and the deliberations of the Board Review compliance with relevant material Be informed of the services and programs of
Be aware and abstain from any conflict of laws affecting the organisation organisation and publicly support them
interest Undertake Board development and training Prepare for and participate in the discussions
as opportunities arise and the deliberations of the Board
Major Duties Foster positive working relationships with
Chair other Board members and the organisation’s
Govern the organisation by the broad policies staff
developed by the Board Function Be aware of and abstain from any conflict of
Establish overall long and short term goals, interest
objectives and priorities for the organisation Ensures the Board fulfils its responsibilities
Recommend policy to the Board for the governance of the organisation Responsibilities
Promote the organisation membership Be a ‘partner’ to the CEO, helping them
through community networking and other achieve the mission of the organisation Provide leadership and direction to the Board
agreed methods Optimise the relationship between the Board Chair meetings of the Board. See that it
Be accountable to the funders for programs and management functions effectively, interacts with
and services provided and funds expended management optimally and fulfils its duties.
Monitor and evaluate the effective of the Qualifications/Skills With the CEO develop agendas
organisation through a regular review of Serve as ex-officio memer of other Board
programs and services Completed one year of Board membership committees
Provide candid and constructive criticism, term and has an understanding of meeting Call special meetings if necessary
advice and comments procedures Arrange for Vice to Chair meetings in the
Approve major actions of organisation, such absence of Chair
as capital expenditure and major program Term With the CEO recommend composition of the
and service changes Board Committees. Recommend committee
Annually review the performance of the The Chair serves for a one year term chairperson with an eye to future succession
Board and take steps to improve its Work with the nominating committee to
performance Requirements recruit new Board members
Seek nominations for election to the Board Assist the CEO in recruiting Board and other
when appropriate Commitment to the work of organisation talent for whatever volunteer assignments
Prepare for and participate in the discussions Knowledge and skills in one or more areas of are needed
and the deliberations of the Board Board governance: policy, finance, programs Periodically consult with Board members on
Foster a positive working relationship with and/or personnel their roles and help them assess their
other Board members and organisation staff Willingness to serve on at least one performance
Be aware of and abstain from any conflict of committee Establish overall long and short term goals,
interest Attendance at Board meetings objectives and priorities for the organisation
in meeting its core business
7
Ensure Board members receive agenda and Function
minutes in a timely manner Term
Reflect any concerns management has in ?
regard the role of the Board or individual The Vice-Chair serves for a one year term
trustees. Reflect to the CEO the concerns of Qualifications/Skills
the Board and other constituencies. Requirements
Prepare a review of the CEO and Completed one year of Board membership
recommend salary for consideration by the Commitment to the work of the organisation Able to read, understand and interpret
appropriate committee Knowledge and skills in one or more areas of financial statements
Oversee searches for a new CEO Board governance: policy, finance, programs
Annually focus the Board’s attention on and personnel Term
matters of organisational governance that Willingness to serve on at least one
relate to its own structure, role and committee The Treasurer serves a one year term
relationship to management Attendance at Board meetings
Work in partnership with the CEO to make A time commitment of five hours per month Requirements
sure Board resolutions are carried out (includes Board preparation, committee and
Service as an alternate spokesperson meeting time) Commitment to the work of the organisation
Enhance relationships with other community Attendance at Annual General Meeting Willingness to serve on at least one
groups and agencies where possible committee
Fulfil such assignments as the Chair and Be informed of the services and programs Attendance at monthly Board meetings
CEO agree are appropriate and desirable for provided by organisation and publicly support A time commitment of five hours a month
the Chair to perform them (includes Board preparation, meeting,
Adhere to general duties outlines in the Prepare for and participate in the discussions committee and meeting time)
Board member job description and deliberations of the Board Attendance at Annual General Meeting if
Undertake development and training as Foster a positive working relationship with possible
opportunities arise other Board members and the organisation’s Be informed of the services and programs
staff provided by the organisation and publicly
Vice-Chair Be aware of and abstain from any conflict of support them
interest Prepare for and participate in the discussion
Function and the deliberations of the Board
Major Duties Foster a positive working relationship with
Fulfil Chair position in the absence of the other Board members and the general staff
Chairperson at meetings Fulfil Chair position in the absence of the Be aware and abstain from any conflict of
Co-chair meetings where appropriate Chairperson at meetings interest
Adhere to general duties outlines in the
Qualifications/Skills Board member job description Major Duties
Completed one year of Board membership Treasurer Ability to read, understand and interpret
term and have an understanding of meeting financial statements for Board members
procedures
8
Signing authority on behalf of the Board for 10. Recruitment & renewal 11. Succession
financial matters if practical
Source: Adapted from Australian Business Arts Source: Australian Institute of Company Directors
Ensure audited financial statements are
Foundation
presented to the Board on an annual basis
Succession planning is closely connected with
Calls the motion at the Annual General
Board members are primarily drawn from and the processes for recruitment, induction and
Meeting to appoint the Auditor (if possible)
elected by membership. There are occasional appraisal of Board members. Board succession
Acts as a response to other committees
temporary vacancies on the Board that can be planning allows Board members to match the
Adhere to general duties outlines in the
filled by invited appointees. organisation’s future needs based on long term
Board member job description
vision with the best qualified potential board
Develop Board nomination materials for members available.
members and distribute PRIOR to
nomination ie with call for nominations A regular skills audit of the current board and
Board members resigning from their roles comparison with future needs will highlight any
prior to an election should suggest potential gaps and assist in targeting succession plans.
replacements
Maintain a list of potential Board candidates, The Board should maintain a list of potential
including the particular skills they can bring to candidates and monitor it regularly. The
the organisation. Board members should availability of highly sought after directors will
make recommendations. vary so Board members should keep in touch
Solicit information about potential new Board with all potential candidates. The Board should
members including biographical information, also use existing services such as AbaF’s
why they want to join the Board, what they BoardBank.
hope to bring to the Board, what they would
like to get from their Board membership and A successful process will:
any questions they might have Be continuous, driven and controlled by the
Identify any skills that are desirable to meet board, involve CEO input
any strategic goals – refer to Business Plan Be easily executed in a crisis
and undertake Board skills audit Consider the corporate strategy
Prospective Board members should meet Develop talent pools at all levels
with the Board Chair and/or CEO, hear an Avoid the loss of key skills and knowledge
overview of the organsiation and receive
relevant organisational materials describing
the organisation’s services to the community
and receive a Board member job description.
Prospective Board member may wish to
meet with other Board members.
Identify any potential conflicts of interest
Ensure induction material is assembled
9
12. Board meetings Decision making Checklist for meetings
Source: Pathways Australia, The Book of the
Board Clarify what is being decided Before the meeting
Spend time generating and exploring
Purpose of Board meetings alternative courses of action (there are Be sure you are clear on the decisions
usually more than two options) needed
Consider the strengths and weakness of the Prepare more. Do your homework
Plan for the future
alternatives Form a tentative judgment on all issues
CEO to consult the Board on specific issues
Ensure any necessary factual data or expert Be aware of the particular customs, rules and
Formulate policy
advice has been sourced etiquette for meeting
Make decisions beyond the remit of the CEO
Make the decision
Discuss ideas
Ensure those implementing the decision are At the meeting
Allocate tasks
clear on what they have to do
Receive information - obtain regular updates
Follow up Approach the meeting and your Board
on progress
Monitor progress - evaluate organisational colleagues with a positive attitude
performance Rules of order Arrive early
Get to know one another If you’re leading, be prepared to separate the
A Board member moves that a decision be process from substance for your meeting
made (this is proposing that the Board go on partners. As a participant, watch for
For Board meetings to work
record in favour of a certain definite action) tendencies to mix process and substance
Another member of the group will second the Separate facts from beliefs, look out for
There should be high attendance emotional build-ups, clarify agreement and
motions which means ‘support’ for the action
Agenda should be well prepared disagreement, make people feel important,
proposed (this ensures the issue is of interest
Clarity about decisions to be made protect the integrity of the group and the
to more than one person)
Papers distributed in advance individual members
Once the motions has been made and
Board members are well prepared As a participant, contribute early, clearly and
seconded there is discussion, clarification
A balance between routine monitoring and often – but thoughtfully
and debate
strategic long range issues Divide big problems into sub-problems, and
When the subject has been covered fully,
Effective chairing address them separately whenever possible
there is a vote
Run to time Separate the problems discussed from the
Prior to the discussion and vote, the person
Constructive atmosphere people discussing them
in the Chair should restate the motion to be
Everyone contributes Make your own points clearly and concisely.
certain everyone knows what is being
Decisions taken with proper evidence and Don’t get lost in philosophy
discussed and decided
well structured debate Don’t waste bullets on issues not important to
Board agrees on decision making process you. Know when to quit
Look for every opportunity to show courtesy
and respect. Listen attentively and
demonstrate your attention to others
Be there in mind as well as body - give 100%
10
13. Resources
After the meeting
More information about boards and governance
Follow up assignments quickly
available here:
Boards, Committees & Governance Centre

http://www.ourcommunity.com.au/boards
Australian Institute of Company Directors

http://www.companydirectors.com.au
Board Source
http://www.communitybuilders.nsw.gov.au
Australian Business Arts Foundation

http://www.abaf.org.au
Board Development
http://www.boarddevelopment.org
The Centre of Philanthropy and Nonprofit Studies

http://www.bus.qut.edu.au/research/cpns/
Not for Profit Network

http://www.nfpn.com.au/
Pathways Australia
http://www.pathwaysaustralia.com.au/Publication
s_Articles.asp
Community Door
http://www.qld.gov.au/ngo
11

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Board Contents

How to read financial statements

Integrity – fulfilling a board member’s duties

Boards, Committees & Governance Centre

Australian Institute of Company Directors

Australian Business Arts Foundation

The Centre of Philanthropy and Nonprofit Studies

Not for Profit Network

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