Chapter 1: Principles of Good Governance

Welcome to the first chapter of the sport governance course, where you will learn about Sport Canada's five key principles of good governance.

In this chapter we will explore:

 

What is governance?

Governance in its broadest interpretation refers to how an organization is run, including the various processes, systems, and controls that are employed. But in a more practical sense, it is really about a governance team, or Board, being able to strategically direct and lead an organization. This includes being able to make key decisions regarding priorities and roles, to define expectations and delegate authority, and to adhere to legal requirements. It is not about managing programs or people, nor about operational details. Ultimately the application of good governance serves to realize organizational goals.

Good governance is also about achieving desired results in a manner consistent with organizational values and accepted social norms. This is particularly true in the world of sport where our product is people - in particular, our athletes. Sport governance must meld the passion and dedication of volunteers into a focused governance team, operating with integrity and striving to enhance the experiences of the participants, and the performance and reputation of the sport.

Characteristics of Good Governance

  • Lean, clear, empowering bylaws
  • A Board educated about its role
  • An active and engaged Board
  • Committees that address the key components of the Board's work
  • Terms of reference (for committees) and position descriptions (for individuals)
  • A vision, mission, and a plan
  • Organizational values that are widely communicated and reflected in policies, plans, programs, decisions, actions
  • Separation of governance and management roles
  • Effective relationships within the Board, and between Board and staff

Why does governance matter for sport organizations?

  • Strategic thinking and direction-setting are fundamental to success
  • The sport environment is complex and the demands on leaders are significant
  • Management can thrive when supported by strong governance
  • Organizations need to be accountable to their members and stakeholders
  • Organizations want to be recognized as credible by the public
  • Funding partners expect results and accountability
  • Participants in sport have high expectations of their organization and its leaders.

The Potential of a Commitment to Governance Principles

Sport Canada believes that improving governance practices will unleash potential in the sport system. Real-life Canadian examples demonstrate that creative, knowledgeable and determined leaders can make a significant difference for their sport and the overall system. Five principles of effective governance have been identified. Although not an exhaustive list, the principles identified describe characteristics of effective governance that virtually any member, director, funding partner, stakeholder, athlete, coach or official would agree are important.

Five Principles underpinned by a commitment to high standards of ethical behaviour

  • Commitment to Vision, Value and Guided by a Strategic Plan
  • Clarity of Roles and Responsibilities
  • Effective Financial Control
  • Focused on Human Resources
  • Transparent and Accountable for Outcomes and Results

What makes up the high standards of ethical behaviour?

Central to the five governance principles is the expectation that Directors will model the highest standards of ethical behaviour, acting honestly and in good faith, and in the best interests of their organization. As guardians of their organization, Directors are looked to for leadership and vision. They set the strategic direction, and protect the reputation and integrity of the organization.

Acknowledging that standards of ethical behaviour must come from the top, a few common practices have emerged in determining how organizations can set up a governance model that increases their effectiveness and optimizes their ability to be stewards:

  • Select Board Directors who know the business
  • Compensate staff with a view of long-term success
  • Strengthen and invest in Board Directors development
  • Adopt a comprehensive and strategic approach to managing risk
  • Evaluate impact and monitor performance regularly
  • Go beyond - consider the triple bottom line (economic, environmental and social interests) when measuring your organization's performance
  • Be accountable to your members, to each other, to the public
  • Communicate your commitment to generate trust and shared understanding
  • Set high standards to stimulate continuous improvement

There are several areas that are integral to implementing a high standard of ethical behaviour and underpin the five governance principles.

Legal responsibilities
Directors ensure that the organization complies with the Canada Not-for-Profit Corporation Act (NPCA) and acts in accordance with its By-laws. The Board ensures that the Constitution, Bylaws, and policies are up to date and meet legal requirements.

Moral responsibilities
Directors have a responsibility to want to serve the organization and see it develop and grow. They must be able to endorse the mission and values, and care passionately about the work of the organization. Directors need to commit the time, energy and expertise to ensure a positive future for the organization.

Standards, regulatory and policy functions
Directors require current policies, systems and structures to guide the direction and operations in an effective and efficient manner. The Board should be conscious of the standards to which it operates, and its role in exercising appropriate and effective control over the organization. Being aware of the regulatory and legal requirements and ensuring a clear set of policies is in place are essential for accountability.

Performance Measurement
Determining how the organization will measure its success is a key component of effective governance. The organization should decide on performance indicators to measure progress in achieving the mission, values and strategic plan. Measurement strategies to assess the Board and staff performances are also essential to effective governance. Sport organizations succeed when they accomplish what they set out to do within the constraints of budget, volunteer and staff time.

Culture of respect, tolerance, inclusiveness, and integrity
A culture of respect, tolerance, inclusiveness, and integrity is a function of the organization's leaders. Directors should establish and model a code of conduct with high ethical standards that describes how people treat each other, how decisions are made, who is included, and how people communicate. Ethical behaviour puts the needs of the organization ahead of individual interests.

The very nature of sport is that it is for everyone. Diversity, inclusiveness, and the ability to appeal to and represent all of society need to be understood and demonstrated by Directors. By embracing differences and similarities, the Board can ensure its composition and membership reflect the wider society.

What are the recommended practices for not-for-profit Boards of Directors?

Eight tasks required of the Boards of charities and public-benefit not-for-profits to further develop effective governance:

  • steering toward the mission and guiding strategic planning;
  • being transparent, including communicating to members, stakeholders and the public and making information available upon request;
  • developing appropriate structures;
  • ensuring the Board understands its role and avoids conflicts of interest;
  • maintaining fiscal responsibility;
  • ensuring that an effective management team is in place and overseeing its activities;
  • implementing assessment and control systems; and,
  • planning for the succession and diversity of the Board.

Summary

In this chapter we learned:

  • Good governance is also about achieving desired results in a manner consistent with organizational values and accepted social norms.
  • The characteristics of good governance and how they matter to sport organizations.
  • The importance of good governance in the context of Sport Canada's governance principles which are Commitment to Vision, Value and Guided by a Strategic Plan, Clarity of Roles and Responsibilities, Effective Financial Control, Focused on Human Resources and Transparent and Accountable for Outcomes and Results underpinned by a commitment to high standards of ethical behaviour

Quiz

Now that you have completed this chapter, go to the quiz and test your knowledge.