This document is part of the Serving Victoria: A guide for Public Sector CEOs resource.

This section of the guide provides an overview of key relationships for entities and their CEOs. It also provides key strategic and operational questions that incoming CEOs may wish to consider in managing their relationships. The questions are not intended to be a comprehensive list. Rather they focus on the ‘common traps’ that CEOs may face, as identified by current and former senior public sector leaders.

The Relationships with the Board

Where the governing body of a public entity is a board, generally it is the board that appoints a CEO to manage the day-to-day operations of the entity. As the primary link between the board and staff of the public entity, the CEO is critical to ensuring that the entity is responsive and accountable to board policies and priorities. The board delegates certain authorities to the CEO.

The board is responsible for providing overall direction for the entity, the CEO manages the day-to-day operations. In effect, the board plans ‘the route’ and the CEO has their ‘hands-on the wheel’. It is important that the board and the CEO know and understand the distinction between their respective roles. Whilst the CEO and the board share responsibility for leadership of the entity, they fulfil this responsibility in different ways. The CEO is usually a full-time position, unlike the governing board which only meets a number of times a year. The CEO, therefore, plays a key role in providing advice to the board on issues and risks as they arise. However there are clear differences in the respective roles.

Table 2 below distinguishes between the governance role of a board and the management role of the CEO.

Table 2: Governance and management responsibilities

Governance Role – Board Management Role – CEO
The board governs the entity. The CEO manages the complexity and details of the day-to-day business operations and individual operational functions.
The board sets the vision and strategy for the entity. The CEO works within the entity to articulate the vision and strategy.
The board acts on behalf of the government in a ‘trustee’ or ‘stewardship’ role and is accountable for the success or failure of an entity.

The CEO is accountable to the board.

 

Part 5 of the Public Administration Act provides a framework for good governance of public entities within the Victorian public sector. It specifies the governance principles, including the duties of the board.

The CEO is accountable to the board for:

  • implementing strategy and reporting progress;
  • implementing policies and working towards results in an efficient, prudent and ethical manner;
  • providing accurate and timely information;
  • financial management;
  • risk management;
  • human resource management;
  • occupational health and safety;
  • articulating and promoting the board’s vision for the entity;
  • setting standards;
  • delivering quality public services; and
  • overall performance (including the outcomes and behaviour of the entity).

However, every entity is different and the nature of the relationship between the board, the chair and the CEO can vary. Figure 3 below shows the range of responsibilities and demonstrates the requirement for a close and effective relationship between the CEO and the board.