Enterprise Governance Frameworks

Enterprise Governance Models

Enterprise governance is defined as the set of practices and responsibilities by board and executive management encompassing strategic direction, risk management, achievement of objectives and responsible usage of organizational resources (CIMA & IFA, 2004). Governance structures can be broken into two main types, policy boards and administrative boards (Literacy Basics, 2013). Policy boards outline the policies and have their executive director implement the policy. On the other hand, administrative boards are more involved in managing the organization through staff and committees (Literacy Basics, 2013). With these two broad categories, four common board models are:

Policy Board – also referred as management-team board, usually found in non-profit organizations (Banff Executive Leadership, 2005).

Policy Governance Board – also referred as Carver board, after founder John Carver with objective to develop policy. Such type of board has formal structure with executive director having clear scope (Banff Executive Leadership, 2005).

Working Board – these types of boards have some administrative functions like public relations, program planning, personnel, and financial management (Literacy Basics, 2013).

Collective Board – also referred as cooperative or coalition board which comprise of director and staff working as a single entity with consensus (Literacy Basics, 2013).

Policy Board

Structure of policy board is mostly suited for non-profit, charitable etc. organizations, where board assumes the ownership role of organization (Banff Executive Leadership, 2005). The structure of this governance model involves CEO and Management and several board committees. Challenges arise when committees by CEO intersects with board committees, thus lead to conflict at operational level (Banff Executive Leadership, 2005).

Policy Governance Board (Carver Policy)

The fundamental concept of this governance framework is to setup the outcomes desired by board and create policies and procedures to achieve those results (Banff Executive Leadership, 2005). CEO is tasked to achieve the results within limits set by board. This model does not have committees for board, instead board communicate with CEO univocally (Banff Executive Leadership, 2005).

Working Board

This model also referred as competency (skills/practices) model ensures that board members have knowledge, skills and work as a single team (Banff Executive Leadership, 2005). This strong model not only develops plans and procedures but also implement the strategy. Experienced board members can help bring new board members to bring them up to speed for their working roles in community relationship, trusteeship, fiduciary etc. (Banff Executive Leadership, 2005).

Collective Board

This type of board is consisted of members with equal vote, responsibilities, decision making, and accountability (Banff Executive Leadership, 2005). However, each member brings his own expertise in a certain area. Model is best for family owned businesses, corporations with no major shareholders etc. However, decision making can be slow in this model as powerful individuals can delay decisions due to equal voting rights (Banff Executive Leadership, 2005).

Table 1 compares the above mentioned four different enterprise governance boards with respect to vision, planning, evaluation, finance, human resources, organizational operations and community relations (Literacy Basics, 2013). It also highlights the way boards interacts with CEO on operational matters, as well as the way decisions are made by board (Literacy Basics, 2013).

Table 1:

Enterprise Governing Models and their attributes

References

Banff Executive Leadership Inc. (2005). Leadership Acumen – Models of Coporate / Board Governance. Retrieved from https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=2ahUKEwir2uud0MfiAhVQSK0KHQuyDtkQFjAAegQIBRAC&url=http%3A%2F%2Fwww.banffexeclead.com%2FNewsletter04%2FPDF%2FLeadership%2520Acumen%252021%2520V2%2520Models%2520of%2520Corporate%2520and%2520Board%2520Governance.pdf&usg=AOvVaw38etDtODMbkSWCtawe1HrC

Literacy Basics (2013). Governance Structure. Retrieved from http://literacybasics.ca/board-governance/governance-structures/

Chartered Institute of Management & International Federation of Accountants (2004).

Enterprise Governance – Getting the right balance. Retrieved from https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=2ahUKEwiRp6SBjK7iAhXyKDQIHXm9D6IQFjAAegQIBBAC&url=https%3A%2F%2Fwww.cimaglobal.com%2FDocuments%2FResearch%2520and%2520Insight%2F2010-06-24-tech_execrep_enterprise_governance_getting_the_balance_right_feb_2004.pdf&usg=AOvVaw0QAIg2K3JyMldgjJMgRxVh