There needs to be a strong and effective relationship between the committee of management and the Chief Executive Officer (CEO) if an organisation is to be successful.  It is also vital that they understand the roles and responsibilities of each so there is no squabbling over leadership and decision making.

This is quite a different arrangement to the one Robin Hood had with the Merry Men.  He was the boss and the Merry Men did as they were told.  You cannot allow your committee of management to be told what to do.

Who is ultimately responsible?

The ultimate responsibility and accountability for the success and achievement of key objectives of the organisation is with the committee of management.   The committee of management sets the direction, develops the strategy and leads the organisation on behalf of the members.  As part of this role the committee of management is also required to ensure compliance with all legal requirements, develop governance policies, assess risk issues and make sure the organisation remains financially viable.  The role of the CEO is to make this happen by managing the day to day operations, implement policies as well as administer and report on the success or otherwise of attaining the stated objectives of the committee of management.

That is why the committee of management’s role is to govern and the CEO’s role is to manage.  Unfortunately the roles are sometimes the other way around and that leads to conflict.

Legal responsibilty

The other important responsibility of the committee of management is to make sure they appoint the right CEO for their organisation.  The committee of management members are the ones who are legally responsible and the CEO’s failure to discharge their duties properly can result in significant ramifications.

In Victoria new legislation came into force from the 1 July 2012 that relates to the Associations Incorporation Act (2010).  In summary, committee of management members of incorporated associations face penalties of up to $20,000 for breaches of new legal duties, including allowing their organisation to trade while insolvent.   Whereas in the past these duties and responsibilities related to larger organisations incorporated under the Corporations Act, these new changes will directly impact on the smaller organisations such as some sporting clubs and local community groups.

The right person for the job.

You can see now why it’s so important to appoint the right CEO – the committee of management is in effect delegating the CEO to act on their behalf to ensure compliance and discharge these legal responsibilities.  He or she must do it properly.

Remember, that it is the committee of management that is legally accountable and responsible.  They must direct and control the CEO and not allow the CEO to control them.   Get this wrong and the committee of management is putting themselves at considerable risk.