The most healthy board/CEO* relationships occur when both parties work closely together with a common aim of furthering the organisation's goals and broadening its financial and membership support base.
While the board and the CEO are on the same team, they do not have the same roles. The board's job is to govern, the CEO's is to manage. It is important not to confuse the two.
Defining the roles and the relationship
The CEO and the board share responsibility for leadership within the community group but they fulfill this responsibility in different ways. While the board has ultimate power and carries most of the legal responsibility for the community group's actions, the CEO's power is more immediate, involving day-to-day influence.
It is important that both the board and the CEO are fully aware of where their roles begin and end. If there is any confusion in an organisation about roles and responsibilities, it can lead very quickly to conflict, inefficiency and low morale.
A close and trusting partnership between the board and the CEO is also essential for good governance. Board members need to have enough confidence in the CEO to trust that the operational micro-issues are being looked after. This frees board members to concentrate on their ultimate role of looking after the "big picture". One of the worst things a board can be accused of is micro-management – paying too much attention to detail and managing people unnecessarily, while neglecting their governance role.
The CEO's role
Although there is no textbook definition of what a CEO's role should entail, there is clear agreement that the role is critical in developing and maintaining the sustainability and effectiveness of the organisation.
It is up to the CEO to help set the agenda, assemble the information and make recommendations that shape the board's discussions.
Specifically, the CEO's tasks will include:
- Human resource management
An effective CEO will know how to attract, retain and motivate talented and enthusiastic staff and volunteers. The CEO is also responsible for managing paid and volunteer staff according to approved personnel policies and procedures that conform with current laws and regulations.
This involves identifying aims, objectives, strategies, responsibilities, timelines and the resources required to achieve the organisation's mission. The CEO oversees design, marketing, promotion, delivery and quality of programs, products and services. Responsibility also includes developing evaluation strategies and adjustment of systems, processes and structures in response to evaluation findings.
- Financial and physical resources management
It is the CEO's responsibility to present the yearly budget for board approval and to manage the organisation's resources within those budget guidelines according to current laws and regulations. This includes undertaking regular risk management analyses and implementing strategies to prevent and deal with perceived risks. The board is ultimately responsible for ensuring that these tasks are carried out to its satisfaction.
The CEO of a community group also oversees fundraising planning and implementation, including identifying resource requirements, researching funding sources, establishing strategies to approach funders, submitting proposals and administering fundraising records and documentation. Again, the board must have systems in place to ensure these things are done in a timely and effective manner.
- Providing a link between the staff and the board
It is the CEO's role to manage the staff – not the board's. The board should never undermine the authority of the CEO by instructing a staff member. The board can give an order to the CEO, but not the receptionist.
- Representing the organisation
The CEO needs to consistently present the organisation and is mission, programs, products and services in strong, positive images to relevant stakeholders and the general public. Board members, particularly the chair, may also need to carry out this role occasionally, but this should generally be left up to the CEO where possible.
- Setting standards
The board and the CEO have a dual role in setting the standards for the organisation. This includes setting a good example when it comes to ethical behaviour, loyalty, commitment, efficiency, and so on.
- Articulating the vision
The CEO is responsible for creating the right internal climate for the organisation. This is something that cannot be done by the board. An effective CEO is able to articulate the organisation's vision to staff and volunteers so that they know exactly why they do what they do – and feel great doing it.
- Board meeting roles
The CEO is responsible for ensuring that that the board is presented with clear and logical recommendations for action, preferably well before every board meeting to allow time for clarification and proper consideration. Most often the board will follow the advice of the CEO and the staff, not because the board is simply a rubber stamp but because the staff is being paid to get it right and most of the time they do. However, the CEO should not run the show; this means that the board should be given options where there are options, not simply presented with a single decision to approve.
The board's role in overseeing the CEO
One of the most important roles of a not-for-profit organisation board is the selection and monitoring of the CEO. The ability of the organisation to survive and thrive may well depend upon this choice.
It is up to the board to ensure that it recruits the best CEO possible. The Recruiting a great CEO for your community group help sheet deals with this process in more detail.
- Setting the CEO's pay
An important part of the recruitment process involves setting the CEO's pay – the package the board offers must be capable of attracting a suitable candidate but must not demand so large a proportion of the organisation's resources that it compromises its ability to realise its plans and programs. Setting the pay must be a board matter; you cannot allow the CEO to set their own salary or give the job to any of his or her subordinates.
- Monitoring & Reviewing the CEO
The board, in partnership with the CEO, should decide the process, time and form of the CEO's performance reviews. Reviews must be based on the CEO's job description and the objectives that should have been included in with it. The CEO's salary package will also need to be reviewed on a regular basis.
* In this help sheet we use the term "CEO" but it is intended to apply to whatever name your group has for its head person (coordinator, general manager, chief executive, etc.)