Developing social business governance

A fundamental component of success for a social business is the strength of its governance.

Governance is the systems and processes concerned with ensuring the overall direction, supervision and accountability of an organisation.  

The most efficient way to ensure and maintain the strength of your governance is regularly providing training, information and support to all those involved.  


Developing the members of your social business 

The role of the members is important here. Members in this instance is taken to mean 'those with a vote', who have the power to change the governing documents, make and change corporate policy and elect (or fire) directors. The governing document defines who qualifies for a membership, but the methods of application, acceptance and inductions are a matter of policy and procedure.

This gives a social business considerable room for manoeuvre when it comes to setting probationary periods and a process for induction providing information about the social business over which they are acquiring so much power, as well as training and education on their role.  

 

The process of developing good training and induction begins with developing the base documentation - a job description, a membership agreement for them to sign to say that they will carry out that role and do so according to the policies in place, and qualification for membership (such as attending the training, signing the agreement and actually reading the policies).  

The assertiveness of the social business in setting standards for membership is key to creating a quality process. Set the standard for what an excellent member looks like and develop processes to enable probationary or prospective members to meet that standard. 

The next step is to develop the mechanisms by which these competent members are given information about performance and issues affecting their social business so that they are empowered to carry out their job description. Given that their time budgets are likely to be limited, rules of thumb like, little and often, brief and to the point and use of regular formats for ease of comparison and visuals such as graphs will help. As ever, customer-centred communication (tell them what they really need to know in the easiest possible form to understand) keeps the audience from turning off.  

Developing your social business Board of Directors 

The appointment of directors is usually from amongst the membership, so a quality process for recruitment and induction of members means that your social business is half way to having an appropriate pool from which to elect those directors (or equivalent).

In the case of a social business collective, the qualification for membership must include qualification for directorship. 

The roles of member and director are different and, as such, require different job descriptions and training plans. All directors have general responsibilities (codified in the 2006 Companies Act). Regulators provide organisations with additional legal status, such as financial service organisations or charities, with additional codes of conduct and advice on their job role. 

Beyond ensuring that directors are given adequate training for their general role, many social businesses give some or all of their directors specific responsibilities for oversight of different functions within the business such as marketing, human resources and so forth. This immediately enhances governance capacity by making someone responsible for keeping the Board up to speed on developments and issues in their areas of responsibility. The more they can be trained and provided with expert support, mentoring, information flow the better. 

The more of these oversight roles are assigned the more a social business defines the expertise it requires for good governance and therefore the more it is empowered to ask for it. For example, you may be able to access mentoring supplied by larger enterprises through their corporate social responsibility (CSR) programmes.  

The same process helps identify areas where there are gaps within the overall governance structure. This in turn drives the development of job descriptions for missing members of the team to be: 

  • recruited from among existing membership 
  • co-opted (if the governing document allows) from stakeholders 
  • recruited from volunteering organisations, trade associations and the like 

People who serve at Board level but have no right to vote are known as Shadow Directors.  They may in law have some of the duties and responsibilities of directors even if they are not registered as such. 

Other contributions to good governance

Outside of the forums of membership and directors, there may be other ways of mobilising contributions to good governance. Some social businesses make use of sub groups and working parties, often led by a director with co-opted contributors, to assist with the oversight of particular functions, projects or the development of products and services.

Others social enterprises use expert groups and/or user forums to provide additional monitoring of service provision as well as feedback and advice to the Board. Again, it’s is important to clarify the function of sub groups and forums by providing detailed job descriptions. Unless the governing document or the Board delegates specific power to these groups, they are advisory in nature.  

Download our questionnaire to help you get started with developing the capacity of your governance: