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GOVERNANCE REVIEWS

There is increasing research evidence that organizational performance is affected by governance practices and key factors in the organizational context, culture and dynamics. Boards in the private, public and voluntary sectors are devoting increased attention to ensuring that their approach to governance adds value to the organization and improves its overall effectiveness…whether this is in search of private profits or public good.

Synergy Associates uses the following definition of governance as a starting point for its work with boards:

Governance is the:

  • dynamic interaction between persons, structures, processes and traditions
  • that support the exercise of legitimate authority in
  • providing sound leadership, direction, oversight and control of an organization
  • to ensure that its purpose is achieved and that
  • there is proper accounting for the
    • (ethical) conduct of its affairs
    • (efficient) use of its resources and
    • results of its activities.

Synergy Associates offers Boards of Directors of Non-Profit organizations, Crown Agencies and private businesses the opportunity of a facilitated 'introspective review' of their governance structures and practices. Reviews of the performance of boards, committees, board and committee chairs, directors and CEOs in the nonprofit, public and private sectors, are customized to their current mandates.

The reviews consist of three basic components that may be used individually or in combination:

  • Online administration of one of the following:
    • Governance Self-Assessment Checklist
    • Board Effectiveness Quick Check
    • Board and Organizational Culture Assessment
  • 'Key Documents Review'
  • 'Key Informant Interviews'

The online surveys may be supplemented with additional items related to past performance on critical aspects of the board’s mandate (e.g. strategic planning or risk management) or other major initiatives for which the board has responsibility within the context of its governance mandate

A. ONLINE SURVEYS

  • 'Governance Self-Assessment Checklist'

The 'GSAC' or 'Checklist' was developed to assist Boards and Chief Executive Officers/Directors General in examining key aspects of governance within their own organizations. These include such dimensions as Board Structure, Board Responsibilities, Board Development and Management, Decision-making Processes and Organizational Culture. A 'Checklist' review would require board members and senior staff to complete the Checklist (approximately 35 minutes).

  • The Board Effectiveness Quick Check is a 16-item instrument that measures board effectiveness. It has been validated by published research (Non-Profit Management and Leadership journal, Spring 2005) to correlate very strongly with the larger 146-item ‘Governance Self-Evaluation Checklist’, with independent judgments of board effectiveness and with overall organizational performance. It tests the following items using a six-point rating scale:

    • Board orientation
    • Board direction for planning/priorities
    • CEO evaluation
    • Financial stability
    • Clarity of board/CEO roles
    • Efficient resource utilization
    • Board credibility
    • Board commitment to mission and values
    • Board compliance with policies/roles
    • Level of conflict
    • Board/CEO relationships
    • Crisis/risk management capability
    • Meeting management
    • Decision-making processes
    • Balance between stability and innovation
    • Accountability practices

  • Board and Organizational Culture Assessment

This 32-item checklist evaluates board and organizational culture on seven dimensions using a six-point rating scale:

  1. Role Clarity and Compliance
  2. Motivation and Commitment to Quality
  3. Communications and Decision-Making
  4. Learning Environment
  5. Trust and Teamwork
  6. Personal Satisfaction
  7. Director’s Duties

Individual items in this instrument have been validated by published research to correlate with high-performance organizations based on research by the Gallup organization, the Hauser Institute at Harvard University and research on the Governance Self-Assessment Checklist. However, the instrument as a whole has not been research-validated.

B. Key Documents Review

This consists of a review of 'Key Documents' such as Bylaws, Governance Policies, Strategic or Business plans, and financial and operational audits. We recommend that this be combined with either or both a 'Checklist' review and/or 'Interviews' since organizations seldom work in practice exactly as they appear on paper.

C. Key Informant Interviews

'Interviews' with a representative sample of board members, senior staff, workforce representatives and other key stakeholders or shareholders. Informants will be identified in consultation with the Board or Governance Committee Chair and Chief Executive Officer/Executive Director.

GOVERNANCE AUDITS

A more comprehensive governance audit provides an additional review of governance processes assessed against governance best practices. This includes a review of documented governance policies, informal practices, minutes of recent board meetings, strategic plans, board work plans, annual reports, financial statements and website content.

A 'Full Governance Review' will examine the importance of factors such as the relationship between the process for selecting your Board and its responsibility to account to its stakeholders. It will consider such factors as Governance Structure; Board Responsibilities; Financial Circumstances; Governance and Management Practices; Organizational Size and Developmental Stage; Clarity of Roles and Objectives; Adequacy of Information, Performance Monitoring and Accountability Systems; Transparency and Effectiveness of Decision-Making Processes; Leadership Capacity; Organizational Effectiveness; and, Adaptability and Flexibility.

The principles used for reference are those commonly accepted by organizations such as the OECD, the World Bank, the United Nations Development Agency, the Canadian Institute of Chartered Accountants and the Canadian Comprehensive Audit Foundation. These are:

  • Legitimacy
  • Ethical Conduct
  • Transparency
  • Responsible Stewardship
  • Predictability
  • Participation or Engagement of Stake/Shareholders
  • Accountability

REPORTS AND FOLLOW-UP CONSULTATIONS

The responses are then analyzed and consolidated into an interpretative report with recommendations. This highlights areas that respondents and our own analysis have identified as particular strengths…or weaknesses that require attention. A more comprehensive review process will, of course, result in a more comprehensive report. A draft of the report is offered to the Board Chair and CEO/DG prior to final editing to ensure that it is validated by their own perceptions. Follow-up consultation is available to assist in interpretation and implementation strategy.

BENEFITS

  • Individual board members and senior management reflect upon their knowledge of important aspects of their organization's structures and practices as well as their own 'value added' contributions.
  • This is a non-threatening, 'asset-based' self-reflective process that will generate creative and constructive approaches to your enterprise.
  • It will aid your board in identifying strengths and weaknesses in important dimensions of governance and organizational stewardship and in establishing priorities for aspects that may require attention.
  • You will gain confidence in those things that work well in your organization and know which may need a bit of your attention now and in the longer term.
  • This process will stimulate and focus thoughtful discussion amongst board members and their CEO/DG.
  • This is very much a self-evaluation process in which your organization will be given an opportunity to see its own reflection in a 'Governance Mirror'.

COSTS

Costs will be negotiated with each organization on an individual basis and will be sensitive to the resources of the organization as well as to its size, complexity and a number of other factors.

A 'Full Governance Review' is normally advised. However, partial reviews using only one or two of the techniques may satisfy your immediate needs. The cost will depend on the volume of material that must be reviewed, the number of interviewees, travel time and other expenses.

Copyright 2004 Synergy Associates Inc.  All Rights Reserved