Principle 1: Roles and responsibilities are clear and understood

There is clarity regarding the roles and responsibilities of the board, individual members, the chief executive off​​icer and the minister. Appropriate instruments are established that describe responsibilities for the board collectively and for individual members conforming to the public sector principles in Part 2 of the Public Sector Management Act 1994 (PSM Act). Processes exist to ensure these are known and understood.

R​oles

Governance arrangements for boards can be complex. It is essential that key stakeholders understand the roles, responsibilities and reporting arrangements present in the board environment. These roles include:

Clarifying a governing board’s role in relation to operational matters, and ensuring the board maintains a strategic rather than reactive focus, can have a significant influence on performance.

Governing boards should generally hold management to account for progress towards strategic outcomes and the management of the public sector body’s operations. The board should usually be concerned with operational matters through oversight of management’s performance, and not through direct involvement or work on operational matters as this potentially compromises a more strategic focus. Exceptions to this may include boards that have operational tasks articulated in legislation or their charter. In addition, it is important to note the diversity of boards and that the right balance of strategic and operational focus will depend on the board’s terms of reference and the expectations of key stakeholders, such as the minister.

Dele​gations

Legislation, such as the enabling legislation for a public sector body, may create a statutory power that vests in a particular individual or body able to exercise that power.

A delegation is where a party with authority or power to do something, authorises another party to act on the first party’s behalf. It is normal for boards to delegate certain powers to other parties.

Subject to any restrictions in legislation on the board’s power to delegate, the board may delegate powers or functions to any of its members, a subcommittee, the CEO or a staff member. Delegating powers or functions does not absolve the board or its members from accountability for those powers or functions.

Delegation decisions should be made formally by the board. A decision to delegate must be recorded in the minutes of the relevant board meeting and the chair must sign an instrument of delegation on behalf of the board.

A person who holds a delegation must take care to comply with the limits of the delegation and any conditions placed on the delegation. The board should ensure it receives a regular report on the use of delegations so that it knows how frequently delegations are being used and that they are being applied in the way that was intended.

It is good governance to keep a register of delegations.

Responsibiliti​es

Ind​uction

It is good governance to provide a structured and well-designed board induction process to ensure new board members are aware of their roles and responsibilities, and understand the objectives and operations of the public sector body overseen by the board. 

A good induction process should include face-to-face meetings with the chair, CEO and key employees, as well as provision of an orientation pack. The orientation pack should be provided prior to the face-to-face meetings to enable the board member to read the documents contained therein and to prepare any questions for discussion during the face-to-face meetings. 

As part of the induction process, board members need to be made aware of their responsibilities in three key areas: 

  • corporate governance 
  • the structure and culture of the organisation 
  • the personal qualities they are expected to bring as a board member. 

A comprehensive induction process for new board members provides a clear understanding of the public sector operating environment, roles and responsibilities, the code of conduct, core operations, reporting requirements, compliance obligations, governance systems, performance expectations, the need for commitment and all other matters necessary to enable them to perform their role. It will also help them to contribute more quickly and appropriately. 

The chair is responsible for the induction of new board members. However, the chair may seek assistance from other key board members or employees. 

Legislative​ requirements

In addition to any applicable enabling legislation of a board, there is a range of legislation that may apply to a board or its members, depending on the nature of the board. Please note the following list is not an exhaustive list of all the obligations that may apply to boards and their members.

Fiduciary obligations

A board member is often in a similar position to a company director, where at common law and under statute, public sector board members have a fiduciary duty to act in the best interests of the body as a whole. The Statutory Corporations (Liability of Directors) Act 1996 sets out  directors’ fiduciary relationship with, and duties to, corporation relevant to Western Australian public sector bodies. Company directors and government board members acting in a fiduciary capacity have an obligation to:

  1. act honestly and exercise powers for their proper purpose
  2. manage conflicts of interest
  3. act in good faith
  4. exercise diligence, care and skill.

Acting ​honestly and exercising powers for their proper purpose

As a board member you should act openly and honestly at all times in the performance of your duties. You should ensure information acquired by virtue of your position is not used to gain an advantage, either directly or indirectly, for yourself or any other person.

Managing co​nflicts of interest

A conflict of interest arises where there is a conflict between the performance of a public duty, and private or personal interests. Confidence in the board’s functions is dependent upon the accountable and ethical decision making of individual board members to put the interests of the public before their own private interests. As such, all potential perceived or actual conflicts of interest should be promptly identified and appropriately managed.

It is not always possible to avoid situations where a conflict of interest could be perceived to exist. In small communities and some specialist industries, a conflict of interest can be almost inevitable; it is how the conflict is managed that is important. Further information on managing conflicts of interest is available in the Conflicts of interest resource listed on this page.  

Act in​ good faith

As a board member you are in a position of trust and, as such, your actions and standards of behaviour are required to be exemplary. You should always act in the interests of the public sector body and the responsible minister you serve. You should not act in your own interest or pursue your own personal agenda.

Exer​cise diligence, care and skill

You must exercise diligence, care and skill in the performance of your duties. You should take reasonable steps to inform yourself about the functions of the board, its business and activities and the circumstances in which it operates. You should also give close attention to matters of the board by obtaining sufficient information and advice, and exercising discretion to enable your to make conscientious and informed decisions while maintaining confidentiality.

Boa​rd charter

The board charter documents the role, composition and processes related to the key governance activities of the board. A board charter should outline the:

  • Roles and responsibilities of the board, minister, chairperson, board members and CEO.
  • Structure of the board, including the minimum and maximum size, composition of skills, expertise and level of independence, tenure and subcommittees.
  • Process for board meetings, including the frequency of meetings, quorums and resolutions, code of conduct and access to advice.
  • Obligations and mechanisms to ensure stewardship, accountability and transparency. This should include the process for supporting the minister in the nomination, appointment and retirement of board members, setting remuneration for board members, performance evaluation, and timeframe for when the board will assess whether it has fulfilled its purpose and whether there is a continuing need for its functions.

Many of these attributes are contained within the legislation, with which the charter should be consistent. The charter will not specify all the workings of the board; rather it should be a high-level document that will typically be supported by other internal documents, such as:

  • a schedule of delegations to the CEO
  • gifts and benefits register
  • controlled assets register
  • CEO authority limitations
  • code of conduct (discussed below)
  • strategic and operational policies.

Quick ​review – Roles and responsibilities

  • Does the board have a documented board charter that clearly sets out the roles and responsibilities of the board and individual members?
  • Has the minister issued a statement of expectation to the board and has the board responded with a statement of intent?
  • Is there a formal induction process in place for new board members?
  • Are delegations of authority from the board to the CEO/chief employee formally documented?

Resou​rces

Further information is available under good governance guides.


Page last updated 23 May 2017