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Has ABC chairman overstepped his role? Asks Governance Institute

Governance Institute believes Michelle Guthrie’s controversial departure as managing director and the subsequent resignation of Justin Milne as ABC chairman highlights the importance of clearly defining and separating the responsibilities of board and management.

“When leadership structures include a managing director (MD) role, the distinction between the role of directors and managers may become blurred because they have board and management responsibilities,” said Governance Institute’s Acting Chief Executive, Meegan George .

“Boards that fail to establish a clear delegation of authority to the CEO and management run the risk of interfering unnecessarily and inappropriately in the operations of the organisation,” continued Ms George.

According to the ASX Corporate Governance Principles and Recommendations (3rd Edition), good governance requires an appropriate separation between the board, who have an oversight role and management, who are responsible for the implementation of strategic objectives and performance. These Principles are also relevant for public sector entities.

“The allegation is that the ABC Chair became too involved in the domain of management, particularly in relation to staffing, ” said Meegan George.

The CEO normally has delegated authority from the board to manage the day-to-day running of the organisation. As the organisation’s leader, they are responsible for the effective functioning of the organisation.

“The CEO has a clearly defined role to work with the management team to achieve the vision and implement the strategy of the organisation,” continued Ms George.

The role of the board is to oversee, guide and monitor the management and strategic direction of the organisation. In other words, oversight and stewardship.

“As leader of the board, the chair’s role is to ensure all directors contribute effectively and promote constructive and respectful relations between directors and between the board and management,” said Ms George.

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