Welcome to the second chapter of the sport governance course, where you will explore different governance models, and how an organization should choose the style of governance and the structure of the Board that suits the organization's leadership type.

In this chapter we will explore:

• Governance models
• What are the different types of Board models? 
• Comparing the different roles of the Board 
• What Works Well / What to Watch Out For
• Board Structure
• And finish with a quiz

Governance Models

Overview

Not-for-profit organizations may look to governance models for one of two reasons: 1) they are a new association and need to adopt a model at set up; or 2) a need has arisen in an established organization to change the way they are governed. How a Board chooses to organize itself as a newly developed organization will greatly influence how Directors work together to govern the organization and how staff might interact with them. There is no one 'perfect' Board design for all types of non-profits.

In an established organization, one way of addressing the need to create better governance is to make changes to the governance model used by the Board. It is sometimes observed that Boards adopt a model based upon the way they best work together, when in fact a more effective Board uses its model to better its representation and processes.

What is the importance of governance models?

• Defines the division of power through the allocation of authorities and responsibilities.
• Includes processes and structures used to direct and manage an organization's operations and activities.
• Establishes mechanisms to achieve accountability between members and the Board of Directors and management.

Why would a Board consider changing or improving its governance model?

• Business model of the sport has changed
• Members are dissatisfied with Board performance
• High rate of staff or volunteer turnover or difficulty attracting new Board Directors
• Lack of capacity for necessary duties or responsibilities
• Lack of clarity in decision-making authority
• Concentration of power
• Inflexibility, inefficiency, duplication
• Board is overly involved in operations
• Size - too large or too small
• Conflict of loyalty of Board Directors
• Will not conform with new Canada Not-for-profit Corporations Act

What are the different types of Board models?

• Administrative
  Boards make and implement all governance and operations decisions.
• Management
  Boards make governance decisions and share decision making for operations with staff and committees.
• Policy
  Boards make governance decisions and delegate the responsibility for operations decisions to the senior staff person.
• Policy Governance®
  Boards make decisions in four policy categories that 1) specify results to be achieved; 2) set limits on CEO decision and actions; 3) specify how the Board will perform its responsibilities and 4) state how it will delegate authority to CEO and assure accountability.

How do you decide which model fits?

• Which decisions does the Board want to make for itself and which decisions does it want to delegate?
• How much involvement does the Board want to have in the operations?
• How will the reporting relationship between the Board and staff be defined?

What else affects the choice of model?

• Culture, values, history of the organization
• Complexity and performance of the organization
• Environment in which the organization exists
• Stage of the organization's evolution
• Stakeholder needs and expectations
• Personalities, experience and capability of Directors and chief executive

In every model, the responsibilities of stewardship are the same

• Exercise legally required duties of care and loyalty
• Ensure regular connection with members and stakeholders about needs, values, priorities
• Establish foundation: Mission, Vision, Values
• Ensure open and transparent decision-making
• Ensure external representation of organization's interests nationally and internationally
• Accountability to members for organization progress and oversight

Comparing the different roles of the Board

Policy Governance Board

Directions to the Board

• Policies that direct how the Board will work
• Policies that state how Board delegates authority to CEO and monitors accountability

Directions to the CEO

• Polices that state expected organizational results
• Policies that state unacceptable circumstances or situations in achieving results 

What Works Well / What to Watch Out For

Board Structure

Overview

A Board of Directors should be made up of a group of individuals who bring the breadth and variety of professional skills needed to guide the governing of the organization. The size of the Board is often laid out in the bylaws of the organization as are many of the elements of the corporate structure. Within the corporate structure the Board is often responsible to appoint Board committees and officers to carry out the work of governance.

Board Structure

In any type of Board model, the structure of the Board is made up of the following components:

1. Size
2. Constituency & Competency
3. Terms of Office
4. External Directors
5. Election of Chair

1. Size

What does the industry say about the size of the Board?

• 2010 Board Source Non-Profit Governance Index shows an average of 16 members
• Survey by Sport Law & Strategy Group of 58 NSOs shows approximate average 12-14 members
• Canada Not-for-Profit Act requires a minimum of 3 Board members in organizations that receive more than $10,000 in public funding
• Research is inconclusive about relationship between size and effectiveness

Small Boards

Large Boards

Recommendations:

• Visit the question of size on a regular basis.
• Be clear how board size contributes to board's work.
• Understand the rationale for board's current size.
• Choose board size that facilitates effective decision-making with balance of competency, diversity, inclusiveness, credibility, and cost-efficiency.
• Remember you can add advisory councils, ad hoc work groups or committees, or honorary councils.
• Be aware of common challenges your board size creates and introduce compensating practices.

2. Constituency and Competency

• Constituency-based/representational board
  • Take into consideration how representation (provincial/territorial, athlete, coach, official, etc) impacts on the Board. These members may come with the right skill set, however you may not have the chance to make a determined decision about who the representative is and may end up with whoever is there regardless of their aptitude for the Board
• Impact of new Canada Not-for-Profit Corporations Act on representation
  • For example, an Ex-Officio Director is no longer allowed on Boards. This means that people who had a place on the Board due to the title they hold are now prohibited.
• Board profile - individual and collective - should fit the governance model:
  • Required competencies: skills, knowledge and qualities required for an individual to be effective
  • Desired diversity and inclusiveness: gender balance, official languages capacity, geographic perspective for the Board to be effective
• Elected, selected, appointed
  • How Directors are added to the Board has an impact on the kind of profiles/skills available in terms of competencies needed for the work of the Board

Common Skill Sets for Board members:

3. Terms of Office

The terms of office should fit the demands of the model. Three aspects to be addressed include:

Recommendations:

• A term of three years is common with up to two, three-year terms considered good practice. A third term of three years could be advantageous or desirable, particularly if the Director becomes an executive of the Board. Therefore a maximum of 9 years (3 x3) is the optimal length of time for a Director to be on a Board.
• Term limits can be helpful in revitalizing boards through planned turnover, and they help force Boards to clean out ineffective Directors.
• Terms of office should also be staggered so that no more than a third to a half of your Board is up for election in any one year.
• All of this should be part of a succession plan so that Directors' skills can be developed over multiple terms of office allowing them to evolve into more senior Board responsibilities.

4. External Directors

External Directors come from outside your organization's membership, and contribute the following benefits:

• Add expertise (corporate, broader sport)
• Add a different kind of experience
• Add dimension to the Boards decision-making
• Objectivity
• Deeper pockets or broader contacts
• Corporate exchange

The question that needs to be asked when considering an external director is, is there sufficient equity in relationship for the external director? The organization needs to make sure that there is sufficient reason for them to keep coming back; for example career development.

Recommendations:

As our society becomes more diverse, boards are recognizing the need to follow suit in order to reflect their communities and to ensure that a multiplicity of voices contribute to the organization. 

5. Election of Chair

Option 1

• President or Chairperson is elected at the annual general meeting

Option 2

• Board Chair is elected by the members of the Board
• This is more likely the scenario in a Policy or Policy Governance Board

Role of the Board Chair

• Cultivate a productive, constructive partnership with the Chief Executive
• Foster an environment that builds trust among Board members
• Resolve conflict, build consensus, and reach compromise
• Encourage Board members to frame and discuss strategic questions
• Establish clear expectations of Board service

Recommendations

• Be deliberate in choice and consistent in implementation
• Get the right people: individual skills and composite group
• Boards need to take responsibility for the effectiveness of their own process
• The only TRUE measure of a Board's effectiveness is whether the organization achieves the results it should within the boundaries of prudent and ethical action

Summary

In this chapter we learned:

• The different types of Board models.
• The different roles of the Board in each model.
• What works well and what to watch out for in each model.
• About the components of board structure including Size, Constituency & Competency, Terms of Office, External Directors and Election of Chair.

Quiz

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