Governance and Management: Knowing the Difference

The following article gives you some information on the division of governance and management roles in an organisation. Sections include:

• Governance vs Management
• The Governing Body's Role
• Allocating Responsibilities

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Governance vs Management

A major obstacle in the governance of community organisations is ensuring the Governing Body and Managers are able to delineate their different responsibilities. "Governance" is the strategic task of setting the organisation's goals, direction, limitations and accountability frameworks. "Management" is the allocation of resources and overseeing the day-to-day operations of the organisation.

One way to think about this is that Governance determines the "What?" - what the organisation does and what it should become in the future. Management determines the "How?" - how the organisation will reach those goals and aspirations.

The Governing Body's Role

The Board or Committee of an organisation is the group of members elected by the membership to take responsibility for the governance and strategic direction of the organisation. It is usually also responsible for employing the Managing Director or Executive Officer.

They are responsible for all aspects of the continued or ongoing operation of the organisation. This means it has to find a way it can delegate the day-to-day business, functions and activities of the organisation to Management, and still account for its responsibilities back to the membership.

The single most important feature of good governance is a clear segregation of the responsibilities and accountabilities of the board from those of the management. The board's job is to oversee management, not to manage.

It can be difficult to separate what is and isn't the board's business. A useful rule is to always consider matters before the board in terms of the strategic direction of the organisation. Set up board meetings to ensure the board is constantly monitoring whether the goals of the strategic plan are being met, or will be met. While the board should be aware of all the organisation's operations, it needs to keep its eye on the overall strategy and big picture for the organisation.

Some useful strategies for ensuring the delineation of roles is clear include:

• Including a Duty Statement for the Board in the organisation's Governance Policy
• Implementing a Director/CEO limitations policy, articulating the limits of Management's authority
• Ensuring that Board members undergo basic training in governance to help them understand the role of the governing body

In some small organisations, some of the management duties of the organisation will remain with the Board, or an Executive or Management Committee of the Board comprising Office Bearers of the organisation. It is still important in these circumstances to clearly articulate the different roles of the Board, Management Committee and Staff, although the allocation of roles may not necessarily be along a strict division of governance and management responsibilities.

Allocating Responsibilities

Here is a list of the kinds of things you may wish to formally 'segregate' between the board and management. Areas where there may be some overlap are also shown.

Board/Management Committee	Possible overlap	Executive Officer
Setting strategic plan and monitoring it	Meeting strategic plan objectives	Implementation and driving strategic plan
Approving purchasing over an agreed limit	Purchasing limit	Purchasing below a certain agreed limit within board approved budget
Overseeing finances through financial reports to board	Keeping projects within budget	Detailed understanding of financial position and project-by-project status
Risk management	Constant assessment of risk, financial and otherwise	Reporting to board on risk, actual and potential, developing risk management plan
Making contacts for potential funding, passing on grant information	Ideas about the number and mix of grant proposals	Applying for funding, securing sufficient grant monies to run organisation
General framework for staffing matters	Staff performance issues; grievances	Staff matters such as leave, performance appraisals, conditions and detail of supervision

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