Working alongside the CIC Regulator, NCVO, SEUK and leading CIC practitioners and stakeholders we have been helping develop a draft Framework for CIC Governance document to help CICs strengthen in this vital area.
We would welcome your views on the text included, and also wider comments on Governance to help ensure we shape and solve common problems.
I'll read the attachment and send some thoughts. In the meantime, here is a white paper we wrote on CIC governance that aimed to cover some of the basics. It is broad brush and doesn't go into the detail. Attached and link here: http://www.iridescentideas.com/file_download/6/Theme+Two+CIC+Corpor...
Sorry guys but this really is total nonsense. The additional measures outlined in both John and Gareth's documents are worthy and make sense, but in the context of regulatory governance represent additional burdens, responsibilities and costs. There is plenty of evidence that these sorts of requirements have a disproportionately burdensome impact on smaller enterprises, than they do on larger enterprises.
If the objective is to "protect the brand" then this IMHO is not a cost effective way to do it. Much cheaper and easier is an Industry driven approach, where a trade association is set up and membership is conditional on a number of "to be defined" quality criteria being met. No laws need to be created, no government agencies need to be set up or re-educated and no heavy handed and over the top bureaucracy needs to forced down the throat of the micro enterprises trying their best to do good in their community.
So please no to Governance Frameworks
Interesting thoughts - most of what was in our paper was either a) core company/directors duties and b) stuff you have to report to the regulator on CIC34. So other than thinking about the Nolan type principles, nothing is extra burden/responsibility. CIC directors pretty much have to do all this at present.
I think that any governance code should voluntary - I liked what NCVO/ACEVO produced for the voluntary sector - especially the simplified versions. Absolutely it is about governance being commensurate with the size/nature of the business.
It goes without saying that Directors duties apply, however by mandating a Framework you are straying into dangerous waters, since by its nature it favours the larger enterprise over the small.
At the end of the day it boils down to cash. If a 5 man CiC was to aim to meet the framework requirements what percentage of management time do you think it would spend on these governance activities 10%, or 70%. If you included ISO you could easily waste 90% of your resources on these activities.
Trust me, I went down ISO9000, I achieved the Business Link good employer accreditations - and it was a complete and total waste of time at massive cost. At the end of the day it boils down to having a good business and the right people. These make-work good governance activities are a distraction and do more damage than good. Making a code voluntary does not help since the implication is that companies not following it are bad. So what's the point and whats the motivation ? If it is to promote good practise then that's great, put it in a document and recommend Directors of companies read it. But please do not ask me to comply or give me the option of complying, voluntarily or otherwise.
If the framework document is a Best Practise Guide great - I will support and recommend it. But it should be no more than that.
I think it's a good first stab at a Code - most CICs I have contact with don't usually appreciate (or are even aware!) of their legal responsibilities, so anything that helps to clarify these is surely a good thing;
Also, most other sectors have voluntary governance codes (co-op societies, worker co-ops, housing co-ops, credit unions, charities, Irish charities, ...) so its perhaps raises the question as to why there's not been any for for CICs until now(ish)?
But all of these other Codes are all subject to review and revision (some are on their 3rd and 4th editions and most tend to be increasingly 'slimmed down' as they're revised!), so I wouldn't be too concerned about making sure everyone thinks its perfect before releasing it into the wild...
(be interested to know if any of these have been drawn upon in the drawing up of this Code?, and also if some of the issues identified in the wider national research by Social Enterprise UK into social enterprise governance was also picked up on?)
however... I think it's missing something in seeming to be orientated around the model of CIC where members/shareholders are directors (while this may be true for the majority, its not the full picture), especially as the default position in company law unless otherwise 'flipped' in the Articles is that Members have authority over the Directors (appoint/remove directors, agree changes to articles, appoint any auditor, decide to dissolve);
I also think that given the extensive powers of the CIC Regulator it would be useful to allude to these as 'encouragement' to CICs to seriously consider their approach to their governance (whether this leads to their adopting the code or not)
I have read your document for CIC Governance, and consider that it would add cost and red tape to any organisation, let alone a CIC.
Suggesting ISO 9000 is costly takes a lot of time. I have been involved with a CIC now for over a year and I am surprised how much the sector sounds and acts like the public sector and the more like the public sector an organisation becomes, the more costs are added internally and the expense of the front end.
While I can appreciate that Governance is important, implementing a public sector style solution would imply to me that the CIC that implements such a solution, has too much money.
There is of course one sector that may benefit, consultancy services.
As a director of a small, new, CIC without even the aspiration of becoming a1M+ CIC, I would appreciate a document which (perhaps) summarised/reminded me of the legal responsibilities, but also provided some advice and examples as to how these might be met, suitable for a micro-enterprise. Some 'other things you might like to think about' could include preparation to scale up (if that's what's right for your CIC), etc.