Abbotsford Flying Club
Organizational Governance & Structure
Written by Tom Grozier
Overview
This article identifies the main features of the governance model, structure and the administrative processes that are used in the administration of the affairs of the AFC.
As a bit of background, there are a number of different models of organizational governance that are used in different jurisdictions. Each can be identified and differentiated by their different characteristics. However, in most developed countries there are basically three different types of organizational governance models: Anglo-American model (typically used in Canada and other common law countries), the German (Western European), and Japanese models. Each of these different models has unique elements that are required by the particular countries and/or jurisdictions in which an organization operates. Because the AFC is incorporated in British Columbia under this province’s legal statute, the type of governance model used by the AFC comes within bounds of what is called the Anglo-American governance model.
The process of initially forming and then subsequently updating, transforming and developing the organizational governance model (along with changes in provincial statute from time to time) is intended to make the governance process effective, understandable and clear to all Members. In addition, the governance structure and processes influence the willingness of new members to come into the organization, participate by investing their energies in AFC activities and (hopefully) be willing to participate in the governance of the organization. For the AFC to be successful, it is crucial that the governance model be as clear and concise as possible, and for Membership to be able to understand the method and process of the AFC’s organizational governance.
Introduction
In general, organizational governance is a complex process that involves organizational, legal, economic, motivational, and social tools, the combination of which provide the unique environment that allows an organization to optimize its outcomes, minimize costs and reduce or eliminate the potential for organizational strife. This is accomplished by reducing the gap between organizational governance process, economic activities, regulatory and governmental obligations, and Membership expectations. A well-organized governance model is not limited by any particular Member or Membership group’s self-interest goals and expectations; it has to consider only the best interests of Membership as a whole, and to some degree, the interests of suppliers, creditors, representatives of the local community, and government officials, (i.e. stakeholders other than Members). The future success of the AFC depends on the efficiency and sufficiency of its governance methods to satisfy all of these parties.
Basic Principles of Organizational Governance
The term “organizational governance” can be defined in various ways, but it has many common characteristics, regarding the implementation of appropriate system of governance to establish, implement, develop and update formal rules and guidance for the conduct of the AFC’s affairs. British Columbia’s provincial statute (the Societies Act of British Columbia) provides the primary guidance on organizational structure and methodology of governance and these rules govern the relationship between the AFC (as an organization) and the Membership. The relationship of the AFC to other stakeholders (non-members) is generally governed by other statutes and/or by contract. All forms of governance (organizational, statutory or contractual), generally have requirements concerning transparency and accessibility of information regarding the organization.
The Key Organizational Players (groups) and their roles
There are four key players (groups of players) in the governance of the AFC:
1. the Board of Directors (the Board), acting as a group by majority vote,
2. the elected officers, acting individually within the bounds of their statutory and by-law authorities, and as directed by the Board,
3. the Board appointees and committees, acting individually or as a group within the bounds of their authorities delegated by the Board,
4. and the Membership, acting individually or as a group, subject to the limitations discussed below.
The Board must work together in their decision-making process. Every action or decision made must be made by consensus supported by majority vote of the members of the Board.
The officers, board appointees and committees, are responsible for setting and pursuing the AFC’s Strategies, Objectives and Goals, and in being involved with matters concerning strategic planning, risk management, and financial. Committees report to the Board, with all of their duties coming within the boundaries of the authorities granted to them by the Board or by the AFC’s By-Laws.
Members have a right (generally on an annual basis) to elect directors and officers and have the right to be informed of key organizational matters and decisions. Beyond that, except on matters pertaining to Special Business, Members (unless authorized by the Board) generally do not participate in the day-to-day business affairs of the AFC.
Generally, the President (in some cases, other officers) act as the AFC’s spokesman, to engage individual Members, the Membership in general and stakeholders, to inform them, to share and examine matters pertaining to the AFC’s affairs and activities, to invite parties to meetings, and to provide a dialog, etc.
As the AFC has to be a good citizen in the local, regional, and provincial community where the AFC operates, the AFC must be responsible for the environment and the sustainability of its operations, and to bring to the benefit of the Membership, both short-run and long-run benefits. Being responsible and sustainable economically, socially, and environmentally, encourages present Members, new members coming to the AFC and key stakeholders to cooperate and help build a “sustainable” image of the AFC.
The AFC, like all citizens, must obey the existing statutory rules and regulations, to protect its Members and stakeholders, and ensure further development based on a transparent way of doing its business and conducting its affairs.
Best Practices and Basic Principles for Organizational Governance
The best practices and basic principles of the AFC’s governance model under provincial statute and in the AFC Constitution and By-laws are as follows:
Principle #1: Provide the foundation for the AFC’s governance framework
The organizational governance framework must be compliant with the current statutory requirements and is designed to provide the AFC with the best chance to succeed (both presently and into the future) by performing efficiently, transparently, in a socially responsible and economically efficient manner.
Principle #2: The rights of Members
Members have a right;
• to be informed of the organization’s key decisions and the AFC’s performance on a specified basis,
• to join in and vote at the annual general meetings and at extraordinary general meetings called to conduct Special Business, which includes specific special business matters, AFC By-law amendments and could include the dismissal and replacement of any officer(s) and/or particular Board members and/or the Board as a whole.
Note that Special Business decisions have prescribed notice requirements, are evidenced by special resolutions which are voted upon at a duly called extraordinary general meeting of the Membership. Note also that extraordinary general meetings must meet prescribed quorum requirements for special resolutions to be voted upon and for such resolutions to be passed requires the agreement of 2/3 of the Members in attendance at the extraordinary general meeting.
Principle #3: The equal right to vote and fair treatment of Members
Voting procedures and privileges should be clear and be explained to all Members, to prevent confusion, misunderstandings and the misusage of the voting system.
Members of the Board and officers must inform the Board of any personal benefit that may be obtained from any transaction that affects the AFC.
Principle #4: The rights of stakeholders
All stakeholders’ rights are generally protected by contract or by statute. Stakeholders generally have the right to access information that is required for their purposes.
All stakeholders and their representatives generally know the procedures for communication with the Board and officers regarding any requests for information allowed to them by statute or by contract, regarding potential or existing legal issues, potentially illegal or unethical decisions, rights violations, etc.
Principle #5: Transparency
Subject to statutory requirements, statutory privacy limits and AFC policy, transparency and accessibility should be provided to Members and key stakeholders of information regarding the AFC’s financial matters, operational performance and results, key organizational Mission, Vision, Strategies, Objectives, Goals and interests, potential economic risks, and the organizational governance framework and structure.
Principle #6: The responsibilities of the Board
The Board must act in the best interests of the AFC and the Membership as a whole. The Board should fairly take into account the interests of any Member or Members while always acting in the best interests of the AFC and the Membership as a whole.
To best fulfill the AFC’s Vision and Mission the Board is responsible for creating, following, and updating (if needed), the organizational structure, short and long term Strategies, Objectives and Goals, operational and asset risk policies, budgeting and financial planning, monitoring and evaluation of the AFC’s performance, overseeing potential conflicts and problems, and the approval of significant expenditures, acquisitions, and capital expenditures and divestitures.
The Board’s functions include, guiding and monitoring the activities of the AFC officers.
The Board members must identify and eliminate possible conflicts of interest of the Board members, officers, Members, and stakeholders, as well as deal with issues on the misuse of AFC assets.
The AFC’s Version of the Anglo-American governance model
The Anglo-American governance model is that which is used in the United Kingdom, the United States of America, Canada, Australia, New Zealand, etc. This model of governance is typically characterized by the absence of dominant shareholders, and in cases where there are no shareholders, (as is the case with the AFC, being a not-for-profit corporation registered under the Societies Act of BC) the absence of dominant Members.
A key feature of this organizational governance model is that (subject to the different rights prescribed for different classes of membership) no Member has or can demand special rights or privileges.
In addition, continuous changes in Membership are common for this model of governance.
The Membership’s election of Members from their ranks to serve on the Board and the existence of a Board itself, is the primary and fundamental feature of the Anglo-American model which is the basic model that is used for the AFC governance framework.
A non-exclusive list of the Board’s primary functions includes the following:
1. the appointment of Board appointees and Board committees with specific authorities and responsibilities,
2. the evaluation, update and development of the AFC’s Mission and Vision statements for the future,
3. the evaluation, development, update and implementation of the AFC’s organizational Strategies, Objectives, Goals and policies to fulfill the AFC’s Vision and Mission,
4. monitoring the fulfillment of organization’s Strategies, Objectives, Goals and legal obligations, etc.
5. the evaluation, development, update and implementation of the AFC’s organizational governance framework, as required by statute or to better service the interests of the Membership and meet the AFC’s long-term Vision, Mission, Strategies, Objectives and Goals,
6. the evaluation of the financial performance and distribution of the AFC’s assets,
7. to oversee and approve significant financial expenditures, contracts for services and goods, and any significant acquisition and divesture of AFC assets,
8. the evaluation of all presently existing, new or future risks facing the AFC,
9. deal with Membership admissions, conflict and disciplinary matters,
10. the evaluation of the performance and activities of officers,
11. ensuring the legacy of organization’s activities.
The existence of the Board is the key feature of the AFC’s governance framework, as the Board is elected by Members for the sole purpose of representing the Membership’s interests in all matters of concern to the AFC. In the AFC structure the Board consists solely of Members elected to serve as officers and directors. However, if the AFC By-laws were to be amended the Board could also include non-members, commonly referred to as outsiders. Generally, an outsider would only be invited to join the Board to provide specific functions or guidance.
In the AFC, the day-to-day management duties are conducted by the officers (who are also Board members). AFC officers generally make all routine decisions on day-to-day basis regarding operational activities. In addition, the Board can appoint a committee or committees (if needed) and can appoint individual Members (including directors), as considered appropriate in the circumstances, to supplement the roles of the officers, and to conduct specific operational functions of the AFC.