• Shayne Leslie

5 Must-Have Board Policies


Beyond the Board Policies we often discuss, like role of the director, board and CEO, here are 5 more must-haves. Remember, we have our sensational policy handbook with 40 pre-written policies therein!

Here we look at: CEO Recruitment, CEO Evaluation, Cost of Governance, Decision Making and Dispute Resolution.

1. CEO Recruitment

It may not be an annual event (well, you hope not) but when it happens, as a board you need a ready-to-go set of instructions.

Recruitment is not as easy as putting up a job advertisement then reading some resumes.

Hiring an innovative CEO or manager will have 300 times the impact on your business. A poor CEO or manager will cost the business in missed opportunities, leadership vacuums, zero strategy execution and drive talented people away.

Top performing businesses bring the same level of rigor to people-decisions that they do to financial and other key decisions.

Headings to consider in your Board policy include

  • Strategic link

  • Key responsibilities

  • Selection criteria

  • Selecting an independent recruiter

2. CEO Evaluation

It is important to set down in policy the clear reasons why the board conducts an evaluation. The reason can’t be “just because we should”!

The reasons why you’re conducting the evaluation will guide the process of the evaluation. It will also give notice to the CEO as to what standards they will be held accountable.

Establishing policy will mean that, when the CEO begins their employment, they will have pre-notification that evaluation is part of the board culture and not something that is organised with a month’s notice.

Headings to consider in your Board policy include

  • Purpose of evaluation

  • Link with Key Responsibilities

  • Timing

  • Participation of Board Members (note: it shouldn’t be delegated to one board member)

  • Evidence standards

3. Cost of Governance

A well-governed entity adds value to the organisation. Professional development, governance tasks and resources require appropriate budgeting. This policy defines what constitutes a cost of governance so that annual funding may be apportioned.

Statutory requirements are always budgeted, I find. However, most needed in-house board training or research is omitted. Budget should be held in reserve for CEO recruitment, including managing the business without a CEO in the short term.

Headings to consider in your Board policy include

  • Governance Budget

  • Auditing

  • AGM and Elections

  • Honorariums

  • Expenses

  • Annual Decision Making Calendar

  • Professional Development

  • Consultation and Research

  • Strategic Planning

  • Board and CEO Evaluation

  • Recruitment of CEO

  • Board Succession Planning

4. Decision Making

Ask any of my classes about the exercise I give on decision making. I talk about the decision making process, then give them a decision paper. In every situation, directors make an immediate decision without using the tools they just learned!

This is why decision making MUST be a policy to help an organisation thrive.

Cleary articulate you decision making process (there are many to choose from).

Differentiate between annual decision making (e.g. strategy review, budgets, and policy reviews) and decisions made in board meetings. Differentiate, as well, between individual decision making (unfettered decisions) and decision making as a group (e.g. how to avoid groupthink).

You may also like to put a link to decision making and your risk framework.

Headings to consider in your Board policy include

  • Decision Making Process

  • Annual Decision Making

  • Monthly Decision Making

  • Individual Decision Making

  • Group Decision Making

  • Third Party Input

  • Decision Making and the Risk Framework

5. Dispute Resolution

The CEO is protected by the general protections provisions of the Fair Work Act 2009. You can’t just ‘sack’ them.

If a dispute arises between the board and/or an individual director with the CEO, there must be clear instructions on how the matter is to be handled. This avoids costly legal fees. Other major issues are addressed, such as representation, deadlines to meet and discuss issues and an escalation process.

Headings to consider in your Board policy include

  • Personal dispute

  • Contractual dispute

  • Levels of discussion before escalation

  • Continuation of work

  • Steps to be followed in resolving

  • Commencing Legal Proceedings

Would you like to avoid writing these must-have policies out? We have already completed them for you!

Our 40 Board Policies to Help Your Organisation Thrive comes in an un-editable or tailored version. Email nick@integratedgovernance.com.au for a smaple copy or call 1300 76 22 38

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