Policies and the Code of Conduct

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This page was authored by

David Fishel
Director of Positive Solutions and Founder of BoardConnect

The work of a charitable or public benefit company is framed first by its Constitution or ‘rules’.  Policies provide further and more specific guidance on how the company will operate.  Policy documents can promote transparency and consistency and reduce conflict. They also serve as a useful reference for staff and members of an organisation.

The benefit of policies

A policy describes a principle or approach which is intended to be followed by an organisation or individual.  It guides a specific area of activity, reflecting the values and culture which the organisation wishes to encourage.  Policies are often underpinned by ‘procedures’ which are detailed day-to-day implementation guidelines.  The dividing line between the two can be confusing – but there are no hard and fast rules.  It is for the board and CEO to determine what constitutes a policy and what a lower-level procedure.

Policies may apply to the conduct of the board itself, to the conduct of staff and volunteers, or to any area of organisational activity.  In this section the term ‘board policies’ refers to those policies which regulate board behaviour and processes.  This is spelled out only because all policies could be described as ‘board policies’ in that the approval and adoption of policies is often reserved to the board, regardless of what they cover. 

Some organisations confine themselves to a handful of key policies, others adopt a wide range.  Where the organisation is delivering complex and/ or high-risk services there is a case for a more comprehensive suite of policies.  Similarly, if the organisation is delivering across a wide geographic reach (such as an international aid organisation) there is a case for a fuller suite of policies, and procedures, to protect the organisation from risks which will be difficult to monitor day-by-day from a remote HQ. 

The value of policies in the context of governance is that they may:

  • Support the organisation’s need to comply with the law
  • Minimise risk – whether related to physical hazard, reputation, finances or otherwise
  • Support consistent behaviour within the organisation
  • Reflect and promote the values of the organisation
  • When combined with procedures, provide the CEO, staff and volunteers with a helpful framework for their activities

In the case of board policies, they may also support good planning and decision-making, ethical practice and a more efficient and harmonious boardroom.

The concept of governance includes both direction-giving and compliance.  It is not hard to see how policies assist with both of those functions.

The suite of policies

Board policies which are most often adopted include:

  • Board Member Induction
  • Board Recruitment and Succession
  • Code of Conduct for Board members
  • Conduct of Meetings Policy
  • Confidentiality Policy
  • Conflict of Interest
  • Directors Access and Indemnity*
  • Role of the Board

*Specifies what access to board data a director has after they  have left the board; and what protection (indemnification) against litigation the organisation puts in place for the board

Other board policies which are sometimes adopted include:

  • Attendance
  • Board Development
  • Board Self-Assessment Annual Review
  • Dispute Resolution
  • Board’s Decision-Making Process
  • Role of Committees & Terms of Reference
  • Role of the Chairperson
  • Transparency and Accountability

Other organisational policies may include:

  • Asset Protection
  • Budgeting and Financial Planning
  • Fundraising, Sponsorship, and Corporate Partnerships
  • Expenses
  • Reserves
  • Procurement
  • Role of the CEO
  • CEO Evaluation
  • Delegations
  • Remuneration and Employment Conditions
  • Legal Compliance
  • Risk Management
  • Role of Board Secretary
  • Diversity and gender equality
  • Recruitment (Board / Staff)
  • Complaints and grievance
  • Workplace Health and Safety
  • Media and Communications
  • Public Comment
  • Communication and Support to the Board
  • Monitoring of Organisational Performance
  • Strategic and Operational Planning
  • Succession planning
  • Workforce Development
  • Evaluation of performance
  • Membership

Many organisations will cover some of these topics within a higher-level policy.  For example, the board’s conflict of interest policy might be incorporated into the code of conduct.  Equally, many will adopt further policies which are specific to their industry and business activities – food hygiene, teaching and learning, artistic programming.

What does a policy look like

It is recommended that policy documents include a record of the date created, a recommended due date for revision, and the author’s contact details.  A suggested structure could also include:

Purpose: Outlines why this policy exists

Scope: Describes situations where the policy may be applied, and who it applies to

Policy: Specific behavioural guidance to board or staff, dependent upon nature of the policy

Procedures: Steps to implement the policy – this may be in a separate document

Principles: Detail the principles which underpin the policy

Developing and monitoring policies

The drafting of policies can be undertaken by staff, board or consultants/ contractors.  However, their approval should generally be a power held by the board.  Some areas of activity (financial, health and safety, regulatory compliance) may present significant risk for the organisation – and for the board itself – if not properly guided.  The approval of adequate policies is a prudent protection, and will be taken as evidence of a diligent board.

The board also needs to be satisfied that those implementing the policies have had the training and support necessary, and that the policies are being actively followed.  A periodic report to the board on policy implementation would be a routine way of covering this.  Equally, ensuring policies remain current (that is, adequate for the organisation’s evolving work, and aligned with most recent legislation) can also be ensured through periodic review.  Some organisations have a policy calendar, specifying when the policy was adopted, when its implementation will be reported to the board and when it will be subject to review.

The Code of Conduct

A code of conduct may be developed for board or staff.  The board code of conduct will typically include a series of statements guiding board behaviour, both within the boardroom and also more broadly.  This may encompass:

  • Personal commitment and responsibility
  • Respectfulness, honesty and integrity
  • Harmonious working
  • Communications and confidentiality
  • Conflicts of interest

While policies may not have the force of law, they are powerful tools for documenting and promoting the culture of the organisation.  In particular, the code of conduct reflects behavioural values and principles which the board prizes.  While the Chair has no special power to ‘discipline’ a board member, the code of conduct supports the Chair’s authority in encouraging positive behaviour and good governance.

Specifies what access to board data a director has after they  have left the board; and what protection (indemnification) against litigation the organisation puts in place for the board

Code of Conduct for Board Members (Template)

[The organisation]’s Values

In all our operations and relationships we value:

set out here your values or principles

Conduct

Personal behaviour – it is expected that board members will:

  • Act ethically, with honesty and integrity, in the best interests of [the organisation] at all times
  • Not make improper use of their position as board members to gain advantage for themselves or for any other person
  • Exercise due care, diligence and skill
  • Take individual responsibility to contribute actively to all aspects of the board’s role according to the board member duty statement
  • Make decisions fairly, impartially and promptly, considering all available information, legislation, policies and procedures
  • Make reasonable enquiries to remain properly informed
  • Understand the financial, strategic and other implications of decisions
  • Act in a financially responsible manner
  • Understand financial reports, audit reports and other financial material that comes before the board
  • Attend a minimum of 75% of board meetings
  • Treat colleagues with respect, courtesy, honesty and fairness, and have proper regard for their interests, rights, safety and welfare
  • Not harass, bully or discriminate against colleagues, members of the public and/or employees
  • Contribute to a harmonious, safe and productive board environment/culture through professional workplace relationships

Communication and official information – it is expected that board members will:

  • Channel all communication between board and staff on business matters through the Chairperson and the CEO/Manager
  • Not disclose official information or documents acquired through membership of the board, other than as required by law or where agreed by decision of the board
  • Not make any unauthorised public statements regarding the business of [the organisation]
  • Support, adhere to and not contradict the formal decisions of the board made in its meetings
  • Respect the confidentiality and privacy of all information as it pertains to individuals
  • Ensure information gained as a Director is only applied to proper purposes

Conflicts of interest – it is expected that board members will:

  • Disclose any personal or business interests which may give rise to actual or perceived conflicts of interest
  • Not allow personal or financial interests, or the interests of any associated person, to conflict with the interests of [the organisation]
  • Where conflicts of interest do arise, ensure they are managed in the public interest
  • Ensure that they decline gifts or favours that may cast doubt on their ability to apply independent judgment as a board member

In addition, board members commit to:

  • Taking responsibility for reporting improper conduct or misconduct which has been, or may be occurring in the workplace, reporting the details to the relevant people or agency
  • Taking responsibility for contributing in a constructive, courteous and positive way to enhance good governance and the reputation of the board of [the organisation]

 

David Fishel, Director of Positive Solutions and Founder of BoardConnect.
Book of the Board, publ. Federation Press, Sydney, 2003 (3rd edn. 2014). Available from Federation Press and from Positive Solutions info@positive-solutions.com.au.

Last modified: 
12 Jun, 2018