3.4 Board and Management Responsibilities

To improve the performance of the company, the Board and management need to have a mutual understanding of their respective roles and responsibilities. Fundamentally, it is the role of management to make operational decisions, to properly inform the Board of material events and issues, and to seek and be guided by the advice of the Board. It is the Board’s role to review the strategic and operational plans, to review progress against goals, to hold management to account for its decisions and actions, and to review performance of management.

The following list assigns responsibilities to either the Board or Management or both:

ACTIVITY RESPONSIBILITY
STRATEGIC PLAN:  
Initiate strategic planning process Either
Strategic planning session (off-site) Both
Draft strategic plan Management
Review and approve strategic plan Board
OPERATING PLAN:  
Develop annual operating plan Management
Develop functional plans: development, marketing, sales, human resources, facilities, and others as required Management
Approve annual operating plan Board
Approve functional plans Not required
FINANCIAL PLAN:  
Develop financial forecast Management
Develop annual budget, including revenue, expense, capital budgets Management
Develop monthly cashflow projection Management
Develop financing plan Management
Approve budget, cashflow projection, and financing plan Board
Establish limits for spending, material contracts and decisions Board
REVIEW:  
Prepare performance reports on achievement of goals and objectives of strategic plan, operating plan and budget: Management
- note variances, explain causes, suggest mitigation Management
- approve mitigation plan Board
- recommend changes in operating plan and budget Management
- review, approve (or disapprove) changes in operating plan and budget Board
Approve expenditures outside budget Board
Approve expenditures, contracts, decisions outside limits Board
Hire external auditors Board
PERSONNEL:  
Hire, review, compensate, replace CEO Board
Recommend Officers for appointment CEO
Approve Officers Board
Hire, review senior management CEO
Compensate senior management Board
Hire, review, compensate, replace staff Management
BOARD AND COMMITTEES:  
Recruit Directors Both; see Board Review
Elect Directors Shareholders at AGM; Board between AGMs
Appoint Chairman Board
Appoint Committee members Board
Appoint Committee Chairman Committee
Develop Committee mandate Committee
Approve Committee mandate Board
Plan Board meetings and Agenda see Organizing a Board Meeting