Written by Lidka Scott
Boards should govern not manage, this simple philosophy is often misunderstood, a fact that is clear when you look at the meeting minutes coming out of many organizations and the topics Boards spend their time discussing.
Fundamentally, Boards should ensure their organization is well managed, they are not to supposed to try and manage the organization. The role of those in governance and those in management (Non- Executives compared to Executives) are distinct. The CEO is the bridge between both sides, however, quite often, you see Boards engaged in HR matters, procurement activities, and day-to-day operations.
People who know me may have heard one of my favourite mantras, I am not going to buy a dog, then go outside and sit on the porch at night barking. Similarly, the Board should set the tone, framework, and arrangements that allows the CEO to be successful in managing the organization.
Public Authority Boards in the Cayman Islands have 21 general and specific responsibilities under the Public Authorities Act. However, from experience, many Board members have not actively considered these responsibilities, what they mean, or how to go about with their effective discharge.
For example, when it comes to human resources the Public Authorities Act states “All public authorities shall prepare and act pursuant to a human resource policy and procedural manual; and such manual shall be in compliance with this Law and approved by the board.” The unfortunate situation is that many organizations either have an HR manual that is a relic from a different time, or they have nothing at all. The Board then seeks to intervene in individual HR conflicts instead of holding the CEO accountable for adherence to the policies and procedures the Board approved for managing human resources.
Similarly, the CEO is legally mandated to act consistent with the procurement policy framework established by the Board and local legislation, yet many Boards feel it is their responsibility to ensure contracts are awarded to the right person or entity.
A review of the human resources and procurement manuals, risk management strategy, medium term strategic plan and ownership agreement with the Cabinet should be annual features on the Board’s agenda. These are the tools in the Board’s toolbox to ensure its focus is appropriately placed on strategic direction, the health of the organization, how risks are being managed, talent management and retention policies, service mix and reputational management.
When a Board is acting appropriately in its governance role you will hear key questions being asked of the CEO such as: how do we prioritize our capital spend? How do we assess the effectiveness of our services? Are they reaching the people we are intended to serve? Are we considered a good place to work? How is that measured? How does our actual performance compare to the goals agreed for the year?
Cayman Islands statutory authorities and government owned companies are expected to follow uniform processes for effective administration, that is a principal aim of the Public Authorities Act. Sadly, very few Board understand their responsibilities and even fewer practice them. Years of experience allows FINCOR to provide strategic guidance to Directors, allowing them to be more effective, achieve the policy goals of the Government of the day and protect the organization’s reputation.
When you were put on a Board, you were not given a crown, you were given the responsibility to bring out the best in others, through effective and efficient administration. Let us help you to achieve that.
Written by Lidka Scott