Principle 5. Manage relationships

Understand how the board should manage stakeholder relationships and instil organisational culture.

What this principle involves

The board supports the organisation’s relationships with external stakeholders and sets organisational culture. To do this, the board should:

The board should embrace stakeholder engagement as good governance, helping your organisation meet its goals.

The board should:

understand expectations of key stakeholders to inform decision-making and help meet your organisation’s goals
ensure there is a framework for open and meaningful engagement
build and maintain relationships with key stakeholders (including lapsed and potential)
promote your organisation through board members’ networks
support fundraising initiatives by attending events and providing in-kind or financial support
represent the best interests of key stakeholders as a whole rather than those of individuals, geographical areas or communities
ensure effective communication strategies are used to advise funding agencies and other key income providers about material changes in your organisation’s circumstances
mentor senior management and advocate for your organisation
role model continuous improvement and conduct board reviews periodically.

The board should model organisational values and set clear cultural direction and expectations around behaviours and decision-making.

The board should:

support your organisation’s purpose and strategy
exemplify committed behaviour, for example, read board papers in advance, attend meetings, actively contribute to add value
ensure the values are clear, regularly reviewed and reflected in all formal and informal communications
adopt a written code of ethics and/or code of conduct reflecting your organisation’s core values
articulate and role model expectations for conduct, including ethical behaviour, respect for diversity, holding each other accountable
be informed, bring a learning mindset, and continuously develop their knowledge of your organisation, the arts sector and emerging issues that may impact your organisation
recognise the board chair plays a crucial role in effective board performance – setting the tone, demonstrating effective leadership, modelling good board member practice, encouraging and developing a positive culture.

What leaders do and say sets the tone for the organisation’s overall culture. The board can do 3 things to support and govern organisational culture:

Set clear cultural direction and expectations around behaviours and decision-making. This creates a link between purpose (why your organisation exists) and strategic goals.
Use the levers at its disposal to reinforce these expectations. For example, embed expectations in your organisation’s policies, systems and processes. Strong cultures exist when there is clear alignment between expectations and the structures used to reinforce them.
Regularly test that expectations are being met, through reported metrics (formal) and observed behaviours (informal).