Ignorance is rarely bliss…and when it comes to governance, it can spell the downfall of an organisation!
But how do you know what you don’t know?
Well this is where keeping in the loop with sector networks and industry experts is so vital.
And to get you thinking, I have put together a list below of critical areas any governing body (of organisations big or small!) must consider.
Legislation and Regulations
Understanding your legislative obligations can be a minefield. One organisation I worked with did an audit of all the pieces of legislation they were bound by and it amounted to over 100! How on earth do you keep up with that many obligations on your organisation?
My Top Tip here is to put a Legislation Register in place…somewhere that you capture all the pieces of legislation (and related regulations) that your organisation needs to comply with.
How do you know what to include in your Legislation Register? Ask the government regulators you deal with (such as ASIC, the ACNC, your local workcover authority, Fair Work Australia – the list goes on), ask your funding body (or bodies), ask your peak body, ask similar organisations, ask more experienced people in your sector, ask your legal advisor and accountant, ask pro bono providers such as Not-for-profit Law.
The more you delve into this, the more you will uncover.
And have some sort of a bring-up system in place that supports you to meet the requirements of the various pieces of legislation to which you are accountable…without this your Legislation Register is little more than a list.
Standards
Are there industry standards for your sector? Are they mandatory or voluntary? Is your funding dependent upon complying with them?
These are all questions you need to know the answers to if you are going to be able to meet your obligations in relation to your industry standards.
If you have standards that are legislated, it is likely that you are going to be audited against them as well, so this is going to require good systems and processes to be operating within your organisation to ensure compliance.
And if legislated standards are not met, an organisation can be risking deregistration, defunding, reputational damage, and other serious negative consequences.
Rules or Constitution
Your organisation’s Rules, or Constitution, is a legally binding document…yet so many organisations I talk to have little to no knowledge of its existence or content.
Usually it contains you organisation’s Purpose(s), which is then in itself legally binding, and as such, it is illegal to work outside of its parameters.
Legislation generally requires anyone who joins a board or management committee to be familiar with the Rules (or Constitution), and that it be made available to members (if you have members). So make it your business to get yourself a copy, if you don’t have one already; and read it, understand it, and use it to guide you in governing your organisation.
Contracts and agreements
Contracts and agreements usually involve receiving funding (or some other material benefit) in exchange for providing a service. Such arrangements, once entered into, generally impose obligations on the parties, which if not met, can result in poor client outcomes, loss of reputation, loss of clients, defunding, and so on.
There may also be penalties included for not meeting your contractual obligations.
So make sure you understand what is required of you (seek legal advice before signing if unsure) and do what is necessary to uphold your end of the agreement.
Strategy
Strategy is how we ensure we deliver on our Purpose. Without a well thought-through documented strategy, what’s driving you forward? What’s keeping you on track? What’s keeping you accountable?
You know the old saying: ‘organisations don’t plan to fail, they fail to plan’…it is so true!
So make sure your organisation has a Strategic Plan in place that is a live document and gets regularly monitored and reviewed.
Financial obligations
Apart from the key obligation to keep your organisation solvent, there are a raft of other financial obligations we must meet when we are part of the governing body of an organisation. These obligations will vary a little depending on the turnover of your organisation, but start by having access to a good accountant who can advise you along the way (if your organisation has limited funds there are pro bono options available).
And remember, financial accountability is not just the Treasurer’s responsibility – it is shared by all members of the board or committee of management.
Managing risk
Looking after people’s health, safety, and wellbeing is certainly an important part of risk management, but there is so much more to mitigating the risks that could impact your organisation. Regardless of how big or small your organisation might be, or which sector you operate in, taking a strategic approach to managing risk is critical too.
Policies and procedures
Your policies and procedures state the agreed position on issues and the best ways to ensure optimal governance, management and operations in the context of your particular organisation.
(I use these terms to include all your internal guidelines, instructions, your Code of Conduct, and any other guiding documents, as well).
So it is critical that everyone within your organisation knows they exist, and knows they need to be followed.
Worried that your organisation is not meeting its obligations?
Perhaps you’re not even 100% sure what all your obligations are…
If you need help to get some clarity with all of this, I can help!
Get in touch with me on megan@mjbconsulting.net.au or 0421 525 048 to talk about how.
And if you’d like to receive my fortnightly Good Governance E-newsletter, with regular news, views, information, and events, just let me know.
I hope to hear from you soon!
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