This article includes: 

Download full 'Guidance to Governance and Management' information as pdf.


Introduction

There is often a fine line between the governing body (trustees, management committee) and operational management in voluntary and community organisations. Both are leadership roles however it is important to maintain a clear distinction between the two.

A clear distinction supports good decision making and outcomes-focused activities. It will help you to be transparent and accountable in all your organisation’s actions, no matter what size the organisation may be.

This guide sets out where and why the distinction should be made.

Understanding the difference

Leadership can mean different things to different people. For voluntary and community organisations, effective leadership means people who build an inspiring vision and then support their operational team – often referred to as ‘staff’ or management – to achieve it. Both the governing body and management have key leadership roles, but they need to be executed differently. Effective leadership and governance happen when the two work together.

What is Governance?

Governance is the system by which organisations are directed and controlled. The governing body (‘trustees’) are legally responsible for the organisation, its assets and its actions. They should concentrate on the organisation as a whole and the future of that organisation for the sole good of their beneficiaries.

It is the governing body/trustees that not only determines the mission, policy and strategy, but then continues to ask itself:

  • Is the organisation working towards its mission?
  • Is the organisation having an impact?
  • Are we being given enough information from management to make good decisions?
  • Is the organisation financially and otherwise sustainable?

It is also the task of the governing body to set the organisation’s limits:

  • What is the risk appetite of the organisation?
  • What are the risks being faced by the organisation?
  • How will these be mitigated against?
  • Do you have accountability frameworks in place?
  • Do you have policies and procedures in place?
  • What are the organisations red lines as it grows and moves forward?

What is Management?

Management concentrates on implementing the aspirations and vision of the organisation in practical ways.

It is the management’s responsibility to:

  • Communicate expectations (mission, strategy, policies) to and set annual objectives for all staff
  • Support staff and/or volunteers to understand and work towards the strategic vision by creating work plans for staff based on the strategic plan
  • Allocate resources efficiently and effectively
  • Oversee the day-to-day operations and programme implementation in order to meet objectives, setting out Set out clear annual timelines and milestones
  • Report results to the board and act as the link between staff and trustees

‘Wearing Many Hats’ - very small groups:

In very small groups, the same people might take on both management and governance positions for a while. Even then knowing which ‘hat you have on’ for any given task will help decisions to be made for strategic reasons and then implemented and carried out. It can be easy to get distracted by delivering activities, so it is important to ensure time is set aside to get a good overview of the organisation and look at the future:

  • When do funding streams end?
  • When do you need to apply for more funding?
  • What funding or income streams are suitable for your organisation?
  • Do you need to continue to fund all the activities you have been doing?
  • How sustainable are your activities?

Marking the boundaries

A major obstacle in the governance of voluntary and community organisations is ensuring the Governing Body and Managers can delineate their different responsibilities.

“Management, Leadership, and Governance overlap and rarely if ever can cleanly separate:

  • Management focuses on performance; in general, it concerns work, done by people or machines and grouped into tasks, functions or processes.
  • Leadership focuses on people; in general, it concerns motivation, commitment, loyalty, and politics.
  • Governance focuses on power; it concerns policies, rules, regulations, the allocation of authority, and the limits, exercise and abuse of authority.”

- Principles of Management

Below is a brief table showing the lines between the two:

Board/Management Committee

Areas of overlap

Executive Officer/ Senior Management

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 funding to run organisation and it’s programmes

Making decisions about income generation i.e. ethics, mix, needs – creating income generation strategy

Ideas about the mix of income streams

Implementing income generation strategy

General framework for staffing matters

Staff performance issues; grievances

Staff matters such as leave, performance appraisals, conditions and detail of supervision

The governing body should expect certain things from its management, for example:

  • A cooperative and open relationship
  • Guidance on policy and strategy
  • The right information, in a timely fashion, to enable the governing body, individually and collectively to fulfil their duties
  • Management’s best interpretation of reports, performance and leading indicators

Management should also expect certain things from the governing body, for example:

  • Attendance and preparation for board meetings
  • Advice, guidance and informed feedback
  • Timely and quality information
  • Requests for further additional information and/or support as needed
  • Adherence to their duties as the governing body without drifting into the management domain

The Charity Governance Code

For more information visit: www.charitygovernancecode.org

Support

If you would like any support with policies and procedures or any other issues facing your organisation, please contact the VCS Support Team at Community Southwark: Email: [email protected] Telephone: 020 7358 7020