Principle 3. Support systems and processes
Understand how the board should monitor performance including your organisation’s financial position and ensure the CEO and senior leaders are paid fairly.
- Author: Creative Australia, Dr Judith S. MacCormick, Bruce Rolph
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What this principle involves
The board supports the organisation’s viability. To do this, the board should:
- monitor and review reports on activities and financial position
- ensure the CEO, senior leadership and staff are paid fairly.
Principle 3.1 Monitor and review the organisation’s performance
The board must monitor and review your organisation’s activities and financial position. This ensures performance is strong, finances are well managed and activities support organisational goals.
How boards monitor and review the organisation’s position
The board should:
- ensure it gets the right information regularly from staff and management
- consider and approve your organisation’s proposed arts program and budget
- review, check and approve measures across strategic, financial and non-financial areas (for example, policies to do with whistleblowers, social media and diversity)
- interpret regular financial reports and check that spending matches your organisation’s objectives and priorities
- ensure your organisation has enough money to maintain solvency and is protected against fraud and theft
- critically review reports on activities to ensure these align with your organisation’s strategic vision and values
- approve, in advance, major capital spending or significant changes to approved budget or forecast
- clearly define performance measures for the Chief Executive Officer (CEO) or Artistic Director (AD) and explain how their performance will be reviewed over time.
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Principle 3.2 Reward fairly and responsibly
The board should support clear systems and processes to ensure senior leaders, like the CEO/AD and senior management, are paid fairly. Pay needs to be relative to the arts sector yet competitive to attract and retain talent.
How boards ensure senior leaders are paid fairly
The board should:
- ensure pay reflects clear, transparent sector benchmarks and performance expectations. Remuneration should also suit your organisation’s size and motivate people to grow and succeed
- make sure no one decides their own pay
- agree on termination terms and payments in advance
- mandate that someone cannot be paid if removed for misconduct
- disclose leadership pay and benefits.
Principle 4. Be accountable
Understand how the board should manage risk and meet reporting requirements.
