Fellows Corner

Best Practices in Governance

Claude Haw

Modernizing the CMA’s governance model

This is a section of Muse magazine where we feature, from time to time, our Fellows’ work and their contribution to the CMA. Over the past few months, the most significant contribution in this domain came in the form of the work and advice from CMA Fellow Morris Flewwelling with respect to the CMA’s governance review. Morris Flewwelling has been a CMA Fellow since 2000. He had a distinguished political career as mayor of Red Deer in Alberta, as well as museum experience as executive director of the Red Deer and District Museum, president of the Alberta Museums Association and the Canadian Museums Association, and Governor and founding Chair of the Heritage Canada Foundation. Under the leadership of Claude Haw from the Business Sherpa Group, Morris worked in tandem with me and our Board to ensure museological relevance and to add his extensive governance experience to this very important project to modernize the CMA’s governance model. I am most grateful to Morris for his contribution and to the Fellows for recommending him.

Dr. Vanda Vitali, Ph.D.
Executive Director and CEO
Canadian Museums Association

In the Canadian Museums Association’s (CMA’s) new strategic plan, one of the goals is to revitalize and strengthen its internal capacity in order to better position the association to deliver on an increasingly important mandate in support of the museum sector. The CMA committed to the objective of creating a more inclusive, representative and effective governance model.

Over the past few months there has been significant work in this area. It has been a pleasure to work, on behalf of Business Sherpa Group, with the senior team and Board of Directors at the CMA to complete a governance review and suggest changes. This important work involved CMA Fellow Morris Flewwelling, who contributed extensive knowledge, experience and wisdom to the exercise.

The CMA had last undertaken significant changes to governance with the member approval of By-law No. 1 in 2014 to address the changes required to comply with the new Canada Not-for-profit Corporations Act (CNCA). We conducted the latest review for a number of reasons. It is of course important to ensure the CMA remains in compliance with relevant legislation. We needed look at the CMA’s Board composition and size to ensure it fits with the CMA’s size and its ambition. We also needed to look at the CMA’s membership categories, so they can remain relevant for a contemporary membership institution. And more generally we worked to ensure more contemporary language, greater alignment with the strategic plan and the current environment in which we all operate.

While some changes were recommended because they are considered best practices for governance today, others were proposed to streamline the operation of the organization with clearer separation between the duties of the Board of Directors and the senior management team. The changes, which are being discussed in a Special General Meeting and will ultimately be voted on by the membership, are proposed in support of the evolution and growth in the organization and should help CMA be stronger going forward.

For those readers interested in general guidance on governance best practices, this article includes a few thoughts about board responsibilities and efficient board operations. Each organization is unique but some governance principles apply generally.

Board responsibilities and structure

The Board of Directors acts as the steward of the corporation and has five key responsibilities:

Strategic Planning Process
Risk Identification and Mitigation
Succession Planning — Senior Management and Board of Directors
Communications Policy for Corporation
Management Information and Financial Controls

Each individual board member has a fiduciary duty to the corporation:

Requires Director to act honestly, in good faith and in the best interests of the corporation
Prevents Director from disclosing confidential information about the corporation (Duty of Confidentiality)
Obliges Director to share certain information with the corporation (Duty to Disclose)
Breaching fiduciary duty carries significant ramifications
Irreconcilable differences should result in resignation of the Director

Each Director must exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances (Duty of Care):

Requires spending the time necessary to make an informed business judgment.
Must apply whatever knowledge, education and experience that they have to the business and affairs of the corporation.
When particular skills or expertise is required that directors do not possess, seek out experience and expertise from others.
All directors have the same Duty of Care.

An institution’s board mandate document should include a description of the key duties and responsibilities of the Board as a whole as well as individual Board members. Conflict of Interest guidelines should either be included in this document or attached as an appendix.

Each standing committee should have a Terms of Reference document which includes a description of the key duties and responsibilities of the Committee and how the work of the Committee is brought to the Board for review, ratification or approval.

It is recommended that Board of Directors be large enough to have sufficient expertise and general experience while addressing any need for geographic or sectoral representation but no larger than necessary. Smaller Boards make it easier to schedule meetings, have quorum and make decisions.

Board operation

Board meetings should be scheduled as far in advance as possible and best practice is to schedule a full year in advance. Notice and agenda should be provided to Board members at least one week in advance except in emergencies.

Consider the use of a Consent Agenda — routine items for information only or not normally requiring discussion would be approved with a single motion. Any item can be requested to be moved to the AOB (any other business) section of the agenda by any Board member before the vote.

Add a Declaration of Conflict to the start of all meetings to reinforce that all Board members are required to identify any real, potential or perceived Conflict of Interest.

Add an In-Camera section at the end of every meeting — the first part of the In-Camera would include the CEO and the second part would include only board members. This is used to discuss any sensitive issues between the Board and management but also to allow the Board members to suggest changes to improve Board operation.

All routine committee and management reports should be provided in written form at least 48 hours in advance of the meeting. Each report should indicate if it is for information only or is a recommendation for a Board decision.

All Board members should participate in decision making and whenever possible decisions should be by consensus. If a major decision is being made it may be helpful to have a vote by show of hands. Anyone with a Conflict of Interest should not participate in the discussions or voting.

Meeting minutes should capture date, location, members in attendance and decisions made. The minutes should show if any vote is unanimous and if anyone declares a Conflict of Interest.

The Board should complete a simplified annual self-assessment of Board operations. This can be done with an online survey of all Board members. The results should be compared to the previous year and also against any objectives where improved performance is indicated.

All organizations should complete a detailed strategic planning exercise every three or four years and the Board has the responsibility to ensure that this happens. The Board’s involvement can range from approving the final plan to being actively involved in the strategic planning process. The norm is somewhere between those two options. The Board should assess the organization against the approved strategic plan at least annually.

Management and the Board should identify the skills, expertise and experience that would lead to the best overall Board and organization performance. Historically Boards were comprised of many like-minded individuals which led to a congenial atmosphere but often did not yield the best results overall for the organization. Best practice today is to have a Board that is diverse, at least to the degree that the organization members are diverse. A Skills Matrix is often used as a tool to assess the relative strengths and weaknesses of the current Board members and identify those areas that should be the focus in recruiting new Board members.

All organizations should provide a live (in-person or online) orientation session for all new Board members to welcome them to the organization and provide sufficient information for them to hit the ground running.

In closing, we believe that with the changes being put forward, the CMA is in a strong position from a governance point-of-view going forward. For any Muse readers interested in discussing governance best practices, we would be pleased to connect. M

Claude Haw is Lead for Strategy, Governance and Leadership Development at Business Sherpa Group (BSG) where he focuses on strategic planning, governance and leadership development projects for clients, typically small and medium enterprises (SMEs), both not-for-profit and owner/operator corporations.

Contact: chaw@businesssherpagroup.com

Business Sherpa Group (BSG) provides consulting and advisory services in strategic planning, governance and leadership development for clients, typically small and medium enterprises (SMEs), both not-for-profit and owner/operator corporations.