CHAPTER 7 - GOVERNANCE AND THE BOARD OF TRUSTEES

7.1. Introduction

The Panel reviewed the organization and functioning of the Board of Trustees. Particular attention was paid to its role in fulfilling its governance obligations with respect to i) its interaction with management; ii) its internal management and selection procedures; iii) in particular its oversight of the financial and scientific management at IPGRI; and iv) the use of CCERs as a management tool and external review procedure.

7.2. Organization

The Board consists of 15 members who meet twice a year, once in Rome and once at a Regional Office. The Board membership since the last EPMR is shown in Table 7.1., excluding the DG who is an ex officio but voting member. About one third are female, including the Chair, who is Thai. There is a wide and valuable selection of professions, disciplines and nationalities represented.

The Board has four permanent Task Groups, the principal ones being those that cover Financial Issues (FITG), Programme Oversight (POTG) and Nominations (NTG), which meet when the Board meets. There is an Executive Committee of the Board that is comprised of the Chair, the DG, the FAO appointee and the leaders of the Task Groups on Financial Issues and Programme Oversight. This is convened by electronic means and meets face to face at the time of Board meetings. Ad hoc Task Groups are set up to deal with particular issues as and when they arise, for example a Search Task Group for a new DG was constituted. A Board Policies and Procedures Manual sets out the modus operandi which is largely adhered to. New Board members are given an orientation at a Board meeting where they attend as observers prior to the first meeting they attend as a voting member.

7.2.1. Functioning

Two members of the Panel attended a Board meeting and formed the opinion that it operates in an open and participatory manner. Membership of the Task Groups is decided prior to each Board meeting by the Board Chair in consultation with the DG and members are revolved in order that all rotate between the Task Groups during their service on the Board. It is stipulated in the Board Manual that Task Group Leaders rotate each year but, in practice, there has been an attempt to retain the Leader of the FITG for longer. An analysis of the membership of the three important Task Groups since the last EPMR, tabulated in Table 7.2, shows that in the case of both the FITG and NTG there has been at least one member who has chaired the group for a considerable number of meetings. In the case of the FITG the same board member chaired seven consecutive meetings and while it is assures continuity and familiarity with the issues and personalities if the Leader continues for more than one year an appropriate term is probably three years for the Leader of the FITG.

Table 7.1 - Composition of IPGRI’s Board of Trustees

*/**/*** indicates Board Chair

The FITG is charged with maintaining close contact with the Director of Finance and Administration; meeting with the external auditors to review the annual accounts and plans for forthcoming audits; and reviewing the internal audit reports at each Board meeting. The POTG is charged with oversight of the Centre’s programme activities and for providing appropriate policies for the development of the programme and for communicating with the DDGP on this issue.

Table 7.2 - Membership of Board Task Groups (March ’98 to March ’03)

Board members give the Centre, on average, about 12 days a year. This does not include travel time but does include the time of the Chair who also attends the CGIAR AGM and the CBC meeting.

7.2.2. Relationship with Management

The Chair sets the style of a Board’s interaction with senior management. At IPGRI it is open and supportive. The DG, the Assistant DG who functions as Board secretary and other senior staff members all appear to interact easily with Board members. CCERs are used as a routine management review tool so Board members interact with thematic and regional staff at CCER Board presentations. About half of the Board at any time participate in field trips arranged at the time of Board Meetings. However, while interaction between the five most senior of the Institute’s staff and the Board is good, it is disappointing that other senior staff appears unaware of the depth of experience and expertise in the Board and therefore do not avail themselves of this source of advice more.

There is no formal framework for contact between the Board Chair and the DG during periods between the two Board meetings, though the present incumbents are in continual electronic contact. They normally meet during the year at the CGIAR AGM and at the two IPGRI Board meetings. Furthermore there is no Board approved authority on spending limits or written agreement on matters that require prior discussion or approval with the Chair and Board. The Panel noted, for example, that the recent decision to lend a sister CGIAR Centre US$1 million was taken by the DG in consultation with the MEC and on a non-objection basis, with less than a week’s notice being given, by the Chair and Leader of the FITG. The Panel believes that norms of good practice require that the relationship between the Board and management be more formally structured and that the Board and in particular the Chair, have the means to perform their oversight role in an independent and focused manner. For example, the Chair should have and be seen to have the ability to investigate at any time the Board’s concerns without recourse to Management, which might even include hiring experts to advise the Board on a particular issue where there is a disagreement with Management. A number of changes would assist in this process, including regular interactions between the Chair and the DG; sharing the deliberations of the MEC with the Chair; making clear the issues and expenditure levels on which management has to inform and seek approval from the Board; and, providing the Chair with a discretionary budget.

7.2.3. Effectiveness

At the time of its meetings the Board fulfils its functions effectively and with due regard to governance issues. The large majority of Board members are in full employment, including one being a Cabinet Minister and they give enough of their time to ensure the effectiveness of the Board at Board meetings. However they operate very much on a reactive rather than proactive basis. This is particularly so of the Task Group Leaders for Financial Issues and Programme Oversight. Board members do play some part in assisting in fund raising from their home governments and, on occasion, interact professionally on joint projects. But by and large and compared to international NGOs outside of the CGIAR, the DG and the senior management manage the Institute with relatively little oversight by the Board of Trustees outside of the semi-annual Board meetings.

The Board’s own self evaluation for the last five meetings ranked the lack of financial expertise on the Board consistently as the lowest score out its ten evaluation criteria. This is not surprising as during the last seven years there have only been three Board members with a financial background. At a time when the budget of IPGRI is growing very quickly and when more emphasis is being placed on policy work and the function of in situ conservation and conservation through use, the Board should ensure that two of the next three members have a financial background and one a development economics background. This will enlarge the number of Board members who potentially could lead the FITG. The Panel suggests that the universe from which Board members are selected is widened to include more of the private sector.

7.3. Selection Procedures and Performance

The Nominations Task Group accepts recommendations from all parties and, at the present time, has a list of some 20 candidates. It is not clear, however, how proactive the NTG and the Chair are in identifying and encouraging candidates with the appropriate background to submit their résumés. The staff is encouraged to put names forward.

The selection of the present Chair was by caucus rather than by open selection. Nevertheless each member of the Board expressed satisfaction with the outcome and the present Chair, who was a member of the Board and had served on two of the Task Groups including chairing the POTG for a year, has proved very competent and committed. Most importantly she has overseen a transparent and efficient selection process for the new DG, the first to be hired since the creation of IPGRI.

Nevertheless the rules regarding the composition of a quorum need to be reviewed and, in particular, the voting rights of the DG. It is theoretically possible in the present situation that the incumbent DG could have a deciding vote on the choice of their successor.

7.4. Cost Effectiveness

The direct costs of operating the Board, out of unrestricted funding, were about US$170 000 in 2002 and are budgeted at US$250 000 in 2003, which includes the cost of the selection process of the new DG. In a normal year this is about one half of one per cent of the total budget and, while reasonable, this should be seen in context. The total of the discretionary budgets of all Group Directors is of the same order. This is therefore a considerable expense and use of unrestricted funding. It is therefore very important to make effective use of the Board. At the present time there is little ongoing interaction between professional staff and Board members - who barring the FAO appointee sit in their personal professional capacity - except at the time of Board meetings and associated field visits. Nevertheless it is important to emphasise here that the Panel is not proposing that the Board concern itself with the day-to-day management of the Institute. What is being proposed is a sufficiently great degree of engagement to ensure that IPGRI gets full value from the Board and that it fulfils its oversight responsibilities for an increasingly complex and decentralized Institute.

7.4.1. Meeting Schedule

The meeting schedule is set well in advance and Board meetings are well attended. In addition all Board members, except two (one because of sickness and the other because of Cabinet duties), attended the weeklong interview and selection process in January 2003 for the new DG. However all Board members professed to a very busy schedule, most being in full time employment and therefore unable to commit more than two to three weeks a year to IPGRI. There are at least two members who never go on field trips and therefore miss learning more about some of the practical issues faced by IPGRI, as well as forgoing the bonding exercise with colleagues and staff. The former is a particularly important learning experience because IPGRI is committing substantial resources to understanding the role diversity plays at the farm level in setting its research agenda.

7.5. Governance Issues

There is a clear and appropriate set of procedures and policies set out for the Board in a manual dated August 1998. This followed a review by the Board of its own policies and the Manual was further updated in 2000. The rules are followed to a reasonable and practical degree. Although the annual rotation of the Leader of each of the Task Groups is recommended, that of the FITG, in practice, is not. Given the few members with financial expertise (see Table 7.1) this is sensible.

The FITG meets with the external auditors without staff present and reviews the reports of the internal auditor. This is good practice. In addition, because the Board operates in an open manner and because members rotate between the three key Task Groups, the Panel believes that the oversight function of the Board is carried out well and transparently and that it fulfils its governance role credibly.

However it is not clear that the POTG is sufficiently conversant with the Centre’s scientific programme. Although the Leader is on the Executive Committee (EXCO) and therefore approves the annual Budget, the Leader does not attend the weeklong project review process in November and therefore has little opportunity to question the details of the programme in general and individual activities. For example, while the POTG has addressed the issue of development projects in general, it has not reviewed the specifics of the Bolivian project and its associated risks (see Section 8.2.2). Part of the problem is that the leader rotates too often.

7.5.1. Financial Oversight

The Financial Issues Task Group is charged with interacting on a continual basis with the Finance Department. In practice there has only been interaction at the semi-annual Board meeting. This is not sufficient. The traditional role of the head of a commercial Board’s audit committee involves a continual though not intensive interaction. In a situation when IPGRI’s budget is expanding fast; where the balance between unrestricted and restricted funding is changing; and the general environment of funding bodies is deteriorating, there should be more regular contact between the Leader and the DFA to ensure the oversight of the FITG. There has recently been change in the leadership of FITG and it is understood that the new Leader envisages such a relationship.

7.5.2. Use of CCERs

CCERs are used by IPGRI management as a routine external evaluation tool. Senior management and the Board aim to evaluate all aspects of IPGRI’s work through a CCER at least once every five years. The details of the schedule are based on IPGRI’s capacity to manage and pay for one or two a year. Apart from this regular process, if there is a particular concern on past performance or the future of a programme or, higher order strategic issues that might, for example, engage an EPMR, the Board may initiate additional reviews or request management to prepare discussion papers. Examples are ‘People, plants and DNA’ and ‘Resource mobilization’. This instrument might be used more frequently.

7.6. Recommendation

10. The Panel recommends that a more formal relationship between the Board and the Institute’s management is required to ensure that the Board’s governance role as overseer is effectively exercised. To this end there should be:

(a) a regular monthly interaction between the Chair and the DG;

(b) the agenda and minutes of the MEC made available to the Chair on a timely basis;

(c) Board approval of a schedule of issues and expenditure levels on which management has to inform and seek approval from the Board;

(d) a discretionary annual imprest account of, say, US$50 000 for the Chair;

(e) an Executive Committee-MEC conference call at least once between scheduled Board meetings;

(f) an invitation to the Leader of POTG to the November project review meeting;

(g) more regular interaction between the Leader of the FITG and the DFA;

(h) a strengthening of the financial and economic oversight by the Board through appropriate selection of the next three Board members; and

(i) a review of the Board procedures, particularly as they relate to the composition of Board quorums and the voting rights of the DG.