Discovering 10 Principles of Complementary Governance

Audio Podcast

The Complementary Model of Board Governance is an effective and rewarding governance approach. But only if you know how it works! In this episode of the Strategic Nonprofit Podcast, host Trista sits down with the CEO of AMC NPO Solutions, Tom Abbott. Listen in as they explain 10 key principles of the complementary board governance model for nonprofits.

Also read:

What is the Complementary Model of Board Governance?

The Complementary Model of Board Governance (Comp Model) is an effective and rewarding way to govern. In summary, the model focuses on ten principles influenced by two common models.

Altogether they set clear guidelines on the roles of the volunteer board and paid staff. As well as encouraging volunteer board members to provide progressive and collective leadership to the organization. At the same time, ensuring the CEO oversees the implementation of the board’s policies and manages the organization’s resources.

The title for the model derives from a paper written by Peter F. Drucker, which appears in his book “Managing For The Future.”

10 Principles of Complementary Governance

Ten principles underline the Complementary Model of board governance. These principles lay out the fundamental conventions within which the organizational structure. Some of them are unique. Others are common to the Carver and Traditional governance models. Discover the 10 principles of complementary governance in full below:

1. The board is responsible for both the governance and the management of the association.

Volunteer boards of directors are responsible not only for the governance of their organization but also in a comprehensive way for the effectiveness of the management of the organization.

Many statutes in government regulations, such as those dealing with labour standards, sales taxes, and unpaid employee wages, hold volunteer directors liable for management failures in these areas.

So for anyone to suggest that NPO volunteer directors should work exclusively at the policy level can leave those directors exposed both legally and financially. That’s why directors need to acknowledge and accept their overall responsibility for both governance and management.

2. The Executive Director is designated the Chief Executive Officer (CEO) of the association and is accountable to the board for the management of the society.

The dictionary of business terms defines a chief executive officer as “the officer who has ultimate management responsibility for an organization. The CEO reports directly to the board and appoints other managers to assist in carrying out the responsibilities of the organization.”

So once there’s an agreement that the senior staff person is, in fact, the CEO of the organization, it allows the board to hold that individual solely and entirely responsible for managing every aspect of the operation of the NPO.

3. The senior elected volunteer is the Chair of the Board of Directors.

As chair of the board of directors, the senior elected volunteer has all the responsibilities inherent in that position, including meeting and agenda preparation and meeting management. In addition, the chair’s responsible for:

  • Coordinating the activities of the board in developing the association and strategic plan
  • Approving the annual budget
  • Monitoring the performance of the organization
  • Determining the compensation of the CEO

4. The Board is responsible for determining all governing policies of the association; the CEO is responsible for determining all administrative policies of the association.

The mantra that boards make policy and the Executive Officer executes has been standard procedure with the NPO community for decades.

However, as Peter Drucker once wrote, “The trouble with this elegant answer is that no one knows or has ever known what policy is. Let alone where its boundaries lie.” As a result, there’s often constant wrangling, turf battles, and friction.

That’s why the fourth principle is essential in clarifying the policy-setting role of both the board and the CEO. As well as setting the boundaries for them.

Overall, it’s the board’s responsibility to debate and decide upon policies related to governing matters of the NPO. Such as:

  • The governance model
  • Organizational mission
  • Strategic goals of the organization
  • How the board will monitor organizational effects

However, purely administrative policies, such as office hours, banking arrangements, human resources, and payroll administration, are all established by the CEO. So while the board has significant responsibility for policy determination, that responsibility does not extend to defining administrative policies. Lastly, administrative policy matters should not be on the agenda for discussion at board meetings.

5. The Board defines and approves a Code of Conduct for the Directors and a separate Code of Conduct for the CEO.

When a board of directors articulates its expectations of directors by establishing a director’s code of conduct, it produces three positive outcomes:

  1. Directors are not subsequently surprised by the requirements of their position because they’ve been advised in advance of what’s expected of them.
  2. Directors can be held accountable for their volunteer performance. 
  3. There’s a greater probability that their performance will rise to meet the expectations that have been established. 

Similarly, when boards of directors communicate their expectations of the CEO by establishing a CEO code of conduct, the same benefits result. 

That’s because there’s often a gap between the expectations of a volunteer board and the directors’ performance. Or between the expectations of a CEO and the CEO’s actual performance because the board has not articulated its expectations.

6. Three types of committees or task forces may be used.

The Complementary Model of Board Governance identifies three alternative organizational components. They maintain the organization’s governance and management. They’re likewise known as statutory board committees (board committees or standing committees), policy task forces and CEO working committees.

7. Four monitoring options are available to the board.

One of the most important responsibilities of the board of directors is monitoring the performance of the organization – and taking the appropriate corrective action if things are not progressing as the board had planned. The Complementary Model establishes four methods for the board to use in meeting this responsibility:

•The CEO report
•Task force reports and board statutory committee reports
•External reports
•Financial report

8. The board makes an annual written appraisal of the CEO.

A major cause of confusion and misdirection within NPOs is a sheer lack of documentation. Committee terms of reference aren’t clearly spelt; job descriptions may not exist for directors; there may be no written strategic plan. Similarly, there might be no official set of strategic goals or a work plan for the CEO and subsequently, no written appraisal of the performance of the CEO.

9. The governance committee coordinates written appraisals of all-volunteer directors on the board.

Just because volunteer directors may not get paid for their board service does not mean that the NPO can have no performance standards for them. If the organization wants them to do a good job, then the volunteers need feedback on their performance as much as anyone else. Hence the place of this principle of The Complementary Model and the need for performance feedback to directors at least annually.

10. Board training is a priority, budgeted item.

Very few NPOs appreciate the correlation between volunteer training and volunteer performance. The linkage between effective board training and effective board performance should not come as a surprise. If your directors are not told what their role in the organization is, and if they are not provided with the training and other support necessary to fulfil that role, why should anyone be surprised if they are not successful and happy directors? You must therefore pay attention to this principle.

Read, Listen Or Watch: Operating Under The Complementary Model Of NPO Board Governance

Need help increasing your nonprofit’s effectiveness?

An efficient board starts with the implementation of an effective governance model. 

AMC’s governance training helps nonprofit boards navigate governance and management to stay focused on their organization’s mission and visions. It includes valuable tools and clear guidance to address many not-for-profit organizations’ governance challenges.

Join NPO Academy’s Online Board Governance Training and implement the Complementary Model of Board Governance to build an effective partnership between the volunteer board, CEO and staff.

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