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Governance and Management 101

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Turning leadership to $$$$$ Governance and Management 101 Ron Scott, Stellaris A practical workshop for people new to governance or management. Discover the key differences between each role and learn how to manage situations where one person is wearing both hats. Ron is a professional director on both corporate and non-profit boards and is the author of The New Director a how to book for new directors in New Zealand. He is an experienced facilitator and has taught and talked in Australia, Britain and the USA.

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The only PTE in New Zealand to specialise in governance trainingOffers the Certificate in Governance (Level 7)Stellaris:

Only specialist Governance training PTE in New Zealand.Established in 2005 working in all business areas and found a real need for Governance educationHence all the directors going to jail!

Work nationwide and have recently launched the Certificate in Governance.Applications are being taken now for the 2013 start. Limited to 12 people.

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MeI give away millions of dollars a year:With TECT its $6 million

Professional director:TECTDHBAudit and subcommittee chairsUniversity of Waikato

EducationalistManaged and owned PTEs for over 25 years

I wrote the book on Governance in New Zealand highly recommend.

I consult to Boards now of all sizes: Trusts through to listed companies. 3What do you want?

Why in the world did you choose this workshop?

SynopsisWhat do funders look for in good governance?

In this workshop I thought we would look at what funders look for in a well governed organisation.

WHO IS HERE?ManagersOwnersShareholdersOther stakeholders

What is it that makes this workshop enticing? I like a free flow presentation that addresses the needs of the people here so will change it on a dime if required although I have some points I absolutely have to get across.4What funders look for?Why this topic?What do funders look for in governance?

Key PrincipalGovernance is there to add value for shareholders/stakeholders

Funders are looking for strong governance. But what does that mean?

Professionalism v amateursPlan on a page but is it too high level? The St Johns plan in a cartoon.A dashboard approach

Have a shared strategy internal and externalKnow strengths and weakness of organisation and use themHave a performance culture even volunteers have responsibilitiesManage to the facts not the assumptions. That means getting facts and challenging assumptionsHoild the team to account for objectivesMake the hard calls Close down non performing projectsCommunicateKnow the measures for good performance5HISTORY LESSONWhy Governance?

Where does Governance come from?

From Roman times there were entities that outlived the person ( forerunner of trusts)Mostly the owners and managers were limited in number and worked with each other directly at some level.Up until relatively recently you had to get the King or queen to agree to letting you have a company. The New Zealand company for example was set up by Royal Charter with owners like Thorndon, Lyall and Marjoibanks. They all disappeared off the Australia and Wakefield took it up in the 1830s.Limited liability from 1855 and for the first time owners did not have to be active in the business because they could judge how much they could afford to lose.

So Governance is largely about representing the owners in interaction with the management. In the same way that politicians represent the people. They are not there to do the bidding of the people. They are there to represent them in the decision making process. 6Governance Adds Value

Obviously Value is in terms of the objectives of the organisation

7Governance

Lots of Questions so far so lets have a look to see what the jobs of the Directors are.There are four:

Values and cultureStrategyHolding management to accountCompliance

8Which is the most important?Depends on where the business is at.9

CultureA bit fuzzy on what culture is..Clearly something more than this..

How we do things around hereCulture and values is a fuzzy concept.Its the way we do things around here.It enhances the values we like to have.

Exercise:Have a few minutes to list the values of your organisation.

Is that how outsiders will see it? What demonstrates/illustrates that?

VisionA world where people:Live in a free societyAre innovativeStretch to the limit of their potentialChallenge what isValuesTino rangitiratangaIntegrityChallenging what isMissionGet the knowledge. Gain the skills. Take Control

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leadership11

Performance CultureAre the volunteers volunteering?Is there just one person applying for grants or are the community supporting this organisation?

Does the team get held to account?

What communication happens?12

Importance of vision. But how do yo

Does the applicant know what its vision is?Is this project part of the vision?

13So what is your vision (what will it look like?)

What is your mission? (What will you do to achieve your vision?)Lets work it out!14

Compliance

Quality Management SystemHealth and Safety in Employment ActTreaty of WaitangiTax legislationImmigration RulesLocal Body rules (Zoning and Building Code)Companies ActIncorporated Societies rulesConstitution

Has the annual audit been done?Who by?Has the AGM been held in line with the constitution?15

Does the board sign off on strategy or help generate it?

What is strategy?What is Strategy?Generalship , The art of war, management of an army in a campaign - Oxford DictionaryAcquisition and allocation of assets (+stewardship)Designing and creating tomorrows business in a future paradigm Neil RichardsonStrategy is a methodology for systematically spotting and exploiting opportunities to improve your position over time. Tonight is not about setting strategy but about the concepts behind strategic thinking.We deal with methods to develop a strategy, the concept of how much permission we have to set plans an goals for future Boards and look at problem solving.We wont cover the skill set of the Board because we have covered that somewhat in previous sessions.Styles of strategic planning in the public and not for profit sectors: (page 355 of Lynch)BureaucraticOrganised anarchyPolitical powerThere are 5 key elements of strategic decisions:Sustainable decisions (market ,resources etc)Processes to deliver the strategyCompetitive advantage (If not the first ten by innovation)Exploit linkages between the Chamber and its environment (Council, membership, competitors, suppliers etc)Vision How is the world going to be different (or the same)How can we deliver long term added value to the organisationSun Tsu summarised these in The Art of War by:Analysis (gathering information PEST, SWOT)Vision(evaluating opportunities arising out of unmet needs)Movement(Make moves to where you can be certain to succeed)Positioning(Make the changes pay)This is a cycle. Not a once only event.Short and Long term goalsShould you have long term goals when the future is so unpredictable?Does that mean that strategy development and strategy implementation merge and change as events change?What makes good strategy?Value addedConsistency (with business environment: efficient use of resources, rate of change in the environment, organisational ability)Competitive test (is the organisation sustaining competitive advantage)Purpose of the organisationRisk v ResourcesFlexibilityInfluencers:General environment Opportunities and Threats, changability (complexity and novelty) v predictability (rate of change and visibility of the future)Political /Economic issues/ Socio-cultural / Technology /Environmental/ legal (PESTEL)Industry specific e.g life cycleOrganisation Porters Five Forces: Bargaining power of Suppliers, Bargaining power of Buyers, Threats of new entrants, substitutes, competitor rivalryCompetitor Co-operatorCustomer

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PESTELPoliticalEconomic issuesSocio-culturalTechnologyEnvironmental Legal

What is Strategy?Generalship , The art of war, management of an army in a campaign - Oxford DictionaryAcquisition and allocation of assets

Designing and creating tomorrows business in a future paradigm Neil Richardson

Pestle (from Latin pistillum meaning pounder) and mortar (mortarium meaning receptacle for pounding)

Strategy is :A philosophy: integrated decisions making about allocating resources to goalsA method:A planned approach to achieving goals (a stratagem)A plan:The business plan

Exercise:

Lets have a look at the industry using PESTELPolitical /Economic issues/ Socio-cultural / Technology /Environmental/ legal (PESTEL)

General environment Opportunities and Threats, changeability (complexity and novelty) v predictability (rate of change and visibility of the future)Industry specific e.g life cycleOrganisation Porters Five Forces: Bargaining power of Suppliers, Bargaining power of Buyers, Threats of new entrants, substitutes, competitor rivalryCompetitor Co-operatorCustomer

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Holding Management to AccountWhat are the measures?Do they fit the Vision Mission and ValuesIts why the Chair is asked to sign off?

What are the policies that ensure that management is doing as it should?

And here let us note that in most NFPs in the country Management and Directors are very much the same.

How do you get the team to be accountable for volunteering?18

CONCLUSION19Is there a shared strategy between the directors and the rest of the organisation?Can the organisation identify the strengths and weaknesses?How widely spread is the work?What facts does the organisation gather to support its work?Is the team held to account?Are non performing projects closed down?How is communication demonstrated?How do you measure successHow do you measure good performance?Is there a shared strategy between the directors and the rest of the organisation?Can the organisation identify the strengths and weaknesses?How widely spread is the work?What facts does the organisation gather to support its work?Is the team held to account?Are non performing projects closed down?How is communication demonstrated?How do you measure successHow do you measure good performance?

20FOUR KEY ROLES FOR TRUSTEES/DIRECTORSValues And CultureComplianceStrategyHolding management to account

GET THESE RIGHT AND GET THE $$$$

So what have we learned?21