decision making - ourcommunity.com.au · to its decision making. 30 . 31...
TRANSCRIPT
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Board Mee)ng Exercise
Just prior to today’s Board Meeting an anonymous benefactor agreed to donate $35,000 on condition that:
1. You make a decision today. 2. You apply the funds to:
– Rollout a community education program, or – Do a community needs analysis, or – Appoint a project officer
Your organisation has been restricted for funds and is under some pressure to diversify funding sources. You have ten minutes.
My Top 10 Tips and Checks for Decision Making
1. Vision, Mission and Values 2. Legal Duties – Conflict 3. Legal Duties – Care and Diligence 4. Planning 5. Board Meetings 6. Meeting Papers 7. Decision Making Tool 8. Meeting Agenda 9. Solidarity 10. Keep your sense of humour
No 1. Vision, Mission and Values
The Board is the guardian of the organisation’s vision, mission and values. The decision making process should always consider them to provide guidance and to protect against Mission Drift.
No 2. Legal Responsibili)es -‐ Conflict of Interest
• A conflict of interest is when a person who is part of the decision making process is considering an issue in which they or a close family member stand to benefit in some way.
• Conflicts of interest are not a problem in themselves.
• Problems occur when a conflict of interest is not properly dealt with.
• Check your Conflict of Interest Process.
Common Process:
1. Register of interests
2. Declare interests before discussing issues
3. Give opinion if asked or required but do not seek to unduly influence
4. Excuse yourself from decision-‐making process or implementaJon
5. Record declaraJon and acJons in meeJng minutes
The role of the Chair
No 3. Legal Responsibility – Care and Diligence Centro Case: 29 June 2011, Centro Properties Group and Centro Retail Group – failure to disclose, incorrect classification of funds
Centro Case: some thoughts
While it’s about finance, it's not about finance Key items for us to consider:
1. Know what you can and can't delegate
2. Minute delegations clearly
3. Understand basic finance and strategy
4. Examine your decision process
5. Participate
6. Review your information flows
His Honour held that:
Directors cannot substitute reliance upon the advice of management for their own attention and examination of an important matter that falls specifically within the Board’s responsibilities as with the reporting obligations. The Act places upon the Board and each director the specific task of approving the financial statements. Consequently, each member of the board was charged with the responsibility of attending to and focusing on these accounts and, under these circumstances, could not delegate or ‘abdicate’ that responsibility to others.
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[124] In my view, the objective duty of competence requires that the directors have the ability to read and understand the financial statements, including the understanding that financial statements classify assets and liabilities as current and non-current, and what those concepts mean. This classification is relevant to the assessment of solvency and liquidity. Equally, a director should have an understanding of the need to disclose certain events post balance sheet date.
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Really – what can go wrong with not for profits?
And if it does am I REALLY likely to be prosecuted?
http://www.theage.com.au/victoria/uniting-church-sells-assets-to-recover-college-debts-20130607-2nvm8.html
No 3. Legal Responsibilities - The Duty to Act with Care and Diligence
Board members must exercise their powers and discharge their duJes with the care and diligence of a “reasonable person” in their posiJon. In general terms you will meet the duty of care and diligence if you:
• Make a decision to take, or not to take, acJon in good faith and for a proper purpose;
• Do not have any material personal interest in the maSer; • Inform yourself about the maSer to the extent you reasonably
believe is appropriate; • Reasonably believe that your judgement is in the Board’s best
interests.
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Duty to act bona fide (in good faith)
Directors have a duty to act bona fide (in good faith) in the interests of the organisaJon as a whole.
The test as to whether this duty has been complied with is a subjecJve test of “honesty or good faith”.
For example, a director cannot assume the organisaJon’s interests correspond with their own interests – they need to consider the organisaJon’s interests as a separate enJty.
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No 4. Planning
• Consider your Strategic Plan before making a decision – is it in-‐line with your plan?
• Consider your current annual Business Plan (OperaJonal Plan) and Budget
• If an addiJon is made to your plan, what will be effected? What will need to drop off to free up resources?
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No 5. Board Mee)ngs
• The probability is that if your meeJngs are not successful then your organisaJon will not be either.
• All Boards must hold meeJngs, and must do so as ocen as your consJtuJon dictates.
• Boards must be commiSed to making good, legal and ethical decisions that are to the benefit of the organisaJon.
• Board meeting debates are not philosophical discussions or academic explorations. They are simply the way to reach decisions.
• At the end of the debate you must have taken a decision, even if that decision is to defer a decision until the next meeting.
• The decisions need to be clarified by the chair in advance “Do we adopt proposal 1, 2 or 3?”
• All decisions need to be recorded in the minutes of the meeting.
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The role of the Chair
The Chair serves as the Board’s figurehead. Introduces and frames items for decisions.
Encourages all members to speak up, share their view and participate in Board decisions.
Boards are expected to make collective decisions and if tied, some constitutions allow the Chair an additional casting vote – this gives important directional power.
Usually, however, a good Chair will resolve the matter by maintaining the status quo.
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No 6. The Mee)ng Papers
Ø Sent out at least a week before the meeting.
Ø Accompanied by any necessary background papers – proposals, financials, etc.
Ø Read the papers
Ø Highlight the motions you are asked to vote on
Ø Ensure sufficient information is provided
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No 7. Decision Making Tool
Consider using a Decision Making Tool to ensure you have sufficient information …
Background: What is the issue we are trying to decide? Is this )meframe dependent? What are the op)ons available (including no decision)? What are the benefits and costs of each op)on? Does it
support our mission? Op)on Benefit Cost Comment
A B
How do we get informa)on (data) to assist us in the decision? Who have we consulted? What are the criteria to decide? (Financial, planned, social,
cultural) What are the risks and how do we mi)gate? (finance,
opera)on, reputa)on, stakeholder Has plan been budgeted? What are the social benefits to our organisa)on/members What are the cultural benefits to our organisa)on/members? Who wins/loses from this decision? How and Who will communicate this decision to stakeholders? How will we review/ measure success of the decision?
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“The motion has been made and seconded that we stick our heads in sand”
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Put any item that calls for energy and fresh ideas near the beginning of the agenda.
Also put urgent items early on, in case the meeting has to break with unfinished business.
No 8. The Meeting Agenda
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Suggested order of business:
1. Matters for decision (e.g. adoption of policy; adoption of financial reports;
2. Matters for discussion (e.g. progress on recruitment of new CEO; update on ongoing HR issue)
3. Matters for noting (e.g. correspondence; CEO report; minutes from subcommittee meetings)
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“Perhaps it would help if I go over it one more time”
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Decision Making Tool
(Briefing Papers)
For Decision For Discussion For Info
Minutes Ac)ons
Agenda
No 9. Solidarity
An incorporated association is, in the eyes of the law, a legal person – but only one legal person: it can only have one opinion at a time.
Board solidarity means that a decision taken by the board is a decision of all board members.
All Board members are responsible for the decisions made by the Board, even if they were not present at the meeting.
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Solidarity – The Chair
It is improper for Board members to behave as if a decision hadn’t happened, or criticise the decision to outsiders, or keep agitating outside the board for their own proposition. It is the Chair’s role to remind all Board members before concluding the meeting, of the requirement ‘in the best interest of the organisation’ for solidarity around decisions made.
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No 10. Keep your Sense of Humour
• Voluntary Service for your ‘community’ is important and it should also be fun, so use appropriate humour – it can help defuse tense situations and bring members closer together.
• A board that can laugh at the right time is usually one that can move on and take a balanced, more objective approach to its decision making.
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Board Mee)ng Exercise
Just prior to today’s Board Meeting an anonymous benefactor agreed to donate $35,000 on condition that:
1. You make a decision today. 2. You apply the funds to:
– Rollout a community education program, or – Do a community needs analysis, or – Appoint a project officer
Your organisation has been restricted for funds and is under some pressure to diversify funding sources. You have ten minutes.
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