Policies and the Code of Conduct

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 head quarter. 

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:

*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:

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.

Examples for excellent and simple Codes of Conduct follow these tips:

  • Written for the reader. It is easy to understand and doesn’t include any technical or legal jargon.
  • Comprehensive. It covers all important details that may impact the daily lives of employees and answers common questions that arise.
  • Supported by leadership. It has been acknowledged and approved by the corporation’s senior management team and /or the board. This can be acknowledged by a foreword written by the CEO or board.
  • Accessible. It is available to all employees, current investors and potential investors.
  • Visually appealing. It follows a style that is clean and reflective of the organization.

Download a template for a board Code of Conduct is here.

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.

It 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. For a downloadable plain English version click here.

Written by David Fishel, Director of Positive Solutions and Founder of BoardConnect.

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