As Indigenous organisations mature as corporate entities in this post-Determination era, those who have been on the journey in the last 3 decades have seen them transition from "Associations" to corporations under the CATSI Act.
However, the struggle over appropriate governance is still continuing.
On the one hand, as corporate entities under an Act that mirrors the private sector Corporations Act, their governance policies and behaviours are expected to be as robust and independent as those of private sector companies. On the other hand, many of these corporations are "closely-held" entities subject to close family relationships and cultural protocols often more powerful than the Act.
What are the central issues of governance that post-Determination Indigenous corporations need to be aware of and deal with?
The following article is an extract from our Whitepaper on The Building Blocks of Organisational Resilience where we identify that in order to cultivate resilience for the organisation, it must be aware of 6 Building Blocks, of which governance is one of them.
The Second Building Block - Governance
In the context of Indigenous organisations, Governance is both about how the Board of Directors work, as well as about how the organisation is governed in a holistic sense.
“How the organisation is governed” involves decision-making transparency, decision-implementation and how that involves a larger group to maintain legitimacy, and the overall model of whether the Board really represents the people and truly govern the activities of management.
In weak organisations, sometimes the tail wags the dog – managers tell the Board what policy they would like to implement, the Board signs off without due care or diligence, and the members are kept poorly informed about it.
In other weak organisations, the Board attempts to practice legal governance, but instead of setting strategies that the management can operationalise, they ask the management to write strategies which they quietly approve.
In true and transparent governance models, the Board truly represents the members without merely acceding to what the loud majority demand. They are not afraid to try to bend community demands to what they have considered and discussed as the better and more legitimate way for the organisation to benefit the members.
Once this “leadership” is shown, they discuss and provide policy and strategy to implement their ideas and discuss these with management to delegate management to come up with appropriate plans that operationalise their ideas.
In this way, strong organisations find a way to collaboratively work bottom-up and top-down at the same time.
The other aspect of good governance is the working of the Board of Directors.
Strong organisations understand the principle of governance as opposed to operational management. While the natural concern for “their” organisation is paramount, they have found a balance of remaining involved and influential without taking over or forcing operational design.
In many ways, the passion of Directors in “protecting” the organisation that they are so emotionally involved in creates a negative outcome. When they see management not doing something so obviously “right” to them, or doing something so obviously “wrong”, they start to actively take over operational decisions. This can add even more pressure on management and executives who, in many cases, are just trying to do the job.
Strong organisations’ Directors work through the Board structure via the Chairperson or appropriate committees to provide management with strategic direction and guidance. In this way management are provided with clear guidance about what is “right” or “wrong”, but they are still left to design and implement operational details themselves.
Should this take place properly, and management still not respond to strategic guidance and direction properly put forward, then strong organisations rely on their building block of good Human Capital systems to counsel, mentor, instruct, coach, and finally, if necessary, replace particularly recalcitrant management.
In our opinion, gained from seeing how strong Indigenous organisations work, resilient organisations display the following characteristics: -
- Their governance model blends traditional and culturally appropriate methods of governance, consensus and decision-making, with governance requirements of corporate legislation.
There is no “one-size fits all” template that can be imposed. The Board made up of people with specific local customs and traditions, must find what is right for them to use their Elders, cultural relationships, and protocols and responsibilities in the way they work within Gardiya law.
In 2003 Professor Mick Dodson co-authored a paper called “Governance for sustainable development: Strategic issues and principles for Indigenous Australian communities” (https://www.researchgate.net/publication/237134933_Governance_for_sustainable_development_Strategic_issues_and_principles_for_Indigenous_Australian_communities) where he describes the need to ensure a cultural “match” or cultural “fit” that is required to address mandate and legitimacy and take account of local culturally-based values and practices.
A “cultural match” is about developing realistic governing arrangements that connect local cultural values and standards with the values and standards of the external world of business and administration.
The other characteristics described below need to follow from the ability to find a “cultural match.”
Resilient organisations have found common ground around issues like who holds power and how that power is exercised, how disputes and decisions are handled, and how the rights and responsibilities of different members and leaders are respected.
- Resilient organisations have found consensus around the issues of who holds power and how that power is exercised, and how the rights and responsibilities of different members and leaders are respected.
This provides legitimacy and mandate about representative structures such as the Board of Directors.
All too often, the composition of, and the way the Directors are elected is a construction of legal brains experienced in corporate law, but not in cultural values and systems. All too often the Rule Books of corporations incorporated under the Corporations (Aboriginal & Torres Strait Islander) Act or CATSI Act, are taken straight from templates.
These templates were established only as guidelines but in the haste of incorporation, insufficient time or attention were spent in seeing how the legalistic paragraphs “matched” local cultural representational and decision-making standards.
Another Aboriginal leader we have often worked with, Professor Peter Yu (Vice President First Nations, ANU) has described this dilemma:
“The challenge to develop Indigenous governance structures is daunting…existing governance structures do not relate to the cultural integrity of the community. They exist for the requirements of government accountability systems and the management of largesse. They are not Aboriginal structures.” (Aboriginal Rights and Governance – A Kimberley Perspective, 2002, P Yu)
If care and time is taken, a legitimate mandate allows strong organisations to develop structures around their Boards such as sub-committees and cultural reference groups to help corporate strategy and decisions.
These governance structures are then able to create effective management structures to operationalise decisions as well as remain capable of exercising sound corporate governance as required under the Acts.
- The Directors have developed a dispute resolution and disagreement process that is agreed as fair and can be consistently relied upon to deal with disputes and disagreements amongst Directors and between the Board and staff and the Board and members.
Sometimes, but not always, this is embodied in “charters” or “memoranda of understanding” or policies and procedures.
The key feature is that the process is known, and it is seen to be fair by consensus so that where there may be instances of an aggrieved party continuing to feel aggrieved, the weight of consensus helps to stop it from getting out of hand.
- As already stated above, strong organisations work through the Board structure to ensure the limitation and separation of powers, to separate the responsibilities of governing, from those of operational management.
While aware of how the management are performing, strong Boards of Directors remain as stewards of the corporation providing strategy and guidance, while also instilling discipline of performance when required – “eyes in, fingers out.”
- Strong governance structures allow the development of effective financial management and administrative systems.
In weaker organisations, these functions are “left to staff.”
Being untrained and feeling that they pay high salaries to management, the Directors may be tempted or shamed to abrogate their responsibilities to keep “eyes in.” All too often we hear the premise that “we pay you to do that, so what’s gone wrong?”
Strong organisations encourage their Directors to take an interest and to not feel shame. Their experience is seen in the context of learning and taking charge at the same time.
Resilient Boards ask for and are provided with information and explanation, sufficient to ensure they understand not only their financial and organisational performance but also understand the quality of the financial and administrative systems operated, as well as the quality and timeliness of the information they receive.
They will know when management staff are inadequate or are “hiding” something from them.
- Strong, resilient organisations’ governance models create, evaluate and frequently review strategic issues and policies.
They build capacity in the Planning building block and participate in strategic planning. Regular strategic plans are prepared with realistic strategies that are handed over to management to prepare rolling business and operational plans that directly implement the long-term strategies.
The Board endorse management’s business plans to ensure the strategy is being implemented with appropriate resources and evaluate the outcomes.
They also provide over-arching and clear developmental policies so that management and staff are clear about the parameters of the organisation’s work – what is “in” and what is “out”.
In fulfilling their responsibility of doing their work with care and diligence, a resilient organisation’s Board does not neglect to prepare Risk Management and Crisis Plans.
Their policies, strategies and attention over risk become the foundation of further development, clarity in direction, and organisational security.
Organisations that successfully build the Governance building block start with training but don’t rely on it.
Clearly, working in the external constraints of corporate legislation, those that work within it do need to understand the legislated duties and responsibilities of Directors, and the principles of corporate governance.
To many, particularly in remote areas, this is a step up from community meetings, certainly in terms of process, legal duties, responsibilities and records. It is important to understand what is required.
But then, those organisations who develop this building block will take the time to discuss and agree on where the “cultural match” lies. How do we do things here within the confines of corporate legislation but appropriate to our traditional cultural values and standards?
Once agreed, these local processes should be discussed widely to gain legitimacy and mandate and then written into Rule Books or constitutions. Policies, charters or codes of conduct that follow on from these agreed processes can then be written and communicated.
Agreements about the cultural match and “how things work here” can also lead to specific structures being instituted such as Elders Reference Groups or Land Use Sub-Committees with appropriate powers and delegations.
Regularly, these organisations will review their own governance performance (as far as possible checking on member or community opinions to gauge continuing legitimacy and mandates) as well as review the continuing “cultural match” that is being applied.
These organisations will create systems to implement planning cycles where long-term strategic plans are prepared every 3 to 5 years, followed by properly endorsed management business plans and program or unit operational plans.
This takes time, but it is an investment in resilience.
If you would like to know more about the Building Blocks of Organisational Resilience, you can download the Whitepaper here.
Should you wish to discuss how we can help you develop appropriate governance systems, protocols and practices for you, contact us for a no-obligation discussion on 08 9242 2085, or email