Ethical Trading Initiative
GOVERNANCE AND MANAGEMENT OF ETI
Purpose
| 1. |
This paper defines the roles and responsibilities of the ETI
Chair, Board and Director. It should be read in conjuction with the job
description of the Director of ETI and the Governance and Management paper of
the Board's Governance Working Group (5 November 2001). |
Role of the ETI Chair
| 2. |
The purpose of the office of Chair is to provide leadership, overview
and co-ordination of the ETI. Three key functions are:
- Chairing the tripartite Board to ensure policy decisions are both
presented to the Board and appropriately considered
- A strong internal and external ambassadorial role, leading on
high level contact with member organisations and appropriate national
and international organisations
- To serve as a member of the Remuneration Committee
|
| 3. |
Further definition is required with respect to the leadership and
oversight role of the Chair and the potential for overlap between the
policy and representational functions of the Chair and Director. |
Leadership and overview role of the Chair
| 4. |
Although it is the function of the Board to formally review the
performance of the Director, the Chair should lead on the setting of
performance targets for the Secretariat and ensure that Board members are
involved in the annual appraisal of the Director's performance against these.
The Chair and the Director will monitor progress against these targets in
regular meetings throughout the year. In this respect, the Chair will act in an
advisory capacity to the Director including providing advice on the development
and definition of policy proposals to be considered by the Board. |
| 5. |
The Chair will also lead on an appraisal process of the ETI
Board, that will assess its own efficacy in accordance with accepted good
practice in organisational governance. The Chair will take lead responsibility
in ensuring that proposals to enhance the Board's performance are acted upon
and reviewed. |
| 6. |
It is the role of the Chair to ensure that the Board and the ETI
functions in accordance with ETI's Memorandum and Articles of Association and
that the Board appoints the officers necessary to exercise its duties and
maximise its effectiveness. These may include the office of Treasurer, Company
Secretary, Vice Chair and any co-opted Directors deemed neccesary by the Board.
With the advice and support of the Director, the Chair will further ensure that
due process is followed with respect to the Annual General Meeting, the
election of Directors and financial accountability. |
Overlap between policy and representational
functions of Chair and Director
| 7. |
It would be counter-productive to define detailed parameters for
the representational role of the Chair and the Director. However, there are
established protocols that ETI observes with respect to the division of labour
between the Chair and the Director when representing ETI to senior figures in
government and industry. For example, the Chair will lead on any communications
with The Secretary of State for International Development and other
cabinet-level politicians from the UK and normally, elsewhere. ETI also ensures
that the Chair leads, at least in the first instance, on communications with
Board-level Directors of large companies and the same is also true of very
senior Trade Union and NGO officials. |
| 8. |
The internal ambassadorial role of the Chair ought be limited to
those occasions where the Chair's gravitas is essential to communicate the
message. Where ETI seeks greater commitment to membership principles the role
of the Chair is essential. With respect to corporate members such
communications are restricted to (a) recruitment of new members (b) reviewing
and seeking improvement in membership performance based on the analysis of
member's annual reports, and (c) the procedure to disengage a member as a
result of persistent under-performance. The Chair may also be called upon to
engender greater commitment from trade union and development organisations.
|
The role of the ETI Board
| 9. |
In reviewing its own role, the ETI Board made the transition from
a Management to a Governance role in November 2001 and its duties are outlined
in the Governance and Management paper of the Board's Governance Working Group
(5 November 2001). |
| 10. |
Further procedure and clarity is required to enable the Board to
exercise these responsibilities, in particular to ensure:
- adequate policy is in place to enable ETI to meet its goals
and that policy has been fully considered
- appropriate plans and targets have been set and the Board
reviews progress against these
- adequate participation of members in the constituent
sectors
- representational roles do not conflict with the role of ETI
Director
- remuneration of the ETI Chair.
|
Board overview of policy and progress against
targets
| 11. |
Simply put,
- the role of the Board is to ensure that ETI has clear
strategic direction and adequate policy
- the role of the Director is to draft strategy and policy in
consultation with the members where appropriate and to ensure that those
decisions are implemented
- the role of the Chair is to ensure that policy options are
tabled, decided upon by the Board at the agreed time and according to agreed
process and that policy is then implemented.
However, ETI's single focus on learning and the nature of the
tripartite alliance means that some issues that would be regarded as
"operational" in most organisations are politically important for ETI members
to agree upon and therefore become Board considerations. The question of "what
is policy?" therefore requires further definition. |
| 12. |
In addition to overall strategic direction, the Board will
approve a second tier of policy directions such as (i) a learning strategy
defining priority learning areas for ETI and (ii) an external communications
strategy defining which organisations ETI should engage with in order to
achieve its goals. Once policy questions are agreed, it is then the role of the
Director to ensure that programmes, projects and initiatives are put in place
to generate and communicate good practice. Each individual project that
satisfies agreed policy positions will not be put to the Board. Two examples of
these are a new experimental project or a seminar agenda. However, where very
significant or new initiatives are being developed, detailed terms of reference
will require Board approval. Two examples of the latter are terms of reference
for ETI's impact assessment, and a training strategy for members. |
| 13. |
The role of the Secretariat is, and will remain, to facilitate
the identification of good practice by the membership and promote as good
practice the learning that has been agreed in tripartite working groups. Good
practice is therefore generated and agreed by ETI members in tripartite working
groups that have been mandated to work on a particular area. |
| 14. |
Human resource management policy is the remit of the Director who
is now charged with responsibility for policy decision-making with respect to
the Secretariat. However, any change in terms and conditions of Secretariat
staff with respect to pay and any other benefits must be agreed by the
Remuneration Committee of the Board. |
| 15. |
The Board should instigate an annual "awayday" to ensure adequate
review and debate of key policy issues. In a fast-changing field it is
important that the Board takes time out together when the discipline of a busy
agenda does not stifle debate or "blue skies" thinking. From November 2002
onwards, policy papers should be circulated to the Directors two weeks in
advance of Board Meetings allowing more time for pre-discussion. |
| 16. |
Where remuneration of the ETI Chair is to be considered it will
be discussed and decided upon by the entire ETI Board. Remuneration of
Secretariat staff will be considered by a Remuneration Sub-Committee of the
Board. |
Membership Participation
| 17. |
Until now, the Board has formally reviewed corporate progress
against membership commitments to implement the Base Code in their supply
chains as well as participation in ETI activities. NGO and Trade Union members
have different membership commitments. They agree to participate in the
development of ETI's good practice and in the governance of the organisation.
The Secretariat will prepare an analysis of Trade Union and NGO participation
against these commitments based on their annual reports. The Board should
consider action proposed to increase participation where needed. |
Conflict between representational role and fiduciary
duties of Director
| 18. |
The Director will ensure that ETI keeps an up-to-date register of
interests of all serving Directors in keeping with good practice in
organisational governance. |
Role of the ETI Director
| 19. |
The duties of the Director were defined during the recruitment
process. This paper offers further clarity on the Director's role by defining
policy responsibilities and any areas of overlap between Director, Chair and
Board. No further clarification is necessary. |
[Ends]
Approved by the ETI Board on July 30th 2002
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