This is an excerpt of Steinecke Maciura LeBlanc’s “Governance for Regulators” handbook. To view additional sections of the handbook, click here.
a. Purpose of Roles
One of the most challenging aspects of governance is reaching consensus on who does what. Where individuals and groups within the organization lay claim to making the same decision, confusion and conflict can result. For example, where an urgent legal proceeding against the regulator is served simultaneously upon multiple Board members and senior staff, and all of them believe they have the authority to retain legal counsel for the regulator, enormous and expensive confusion can occur.
Similar problems can ensue where individuals and groups feel it is within their role to make public statements on behalf of the regulator. For example, where the media approach the President, the CEO and individual Board members seeking comment as to whether practitioners should be re-posting client endorsements containing unverifiable claims on social media, inconsistent responses can easily result.
Equally serious is where individuals and groups think that someone else will make a decision and no one acts. Take the urgent legal proceedings example, above. If no one retains legal counsel in time to appear for the urgent court appearance, a serious adverse result becomes likely.
While there are commonly accepted approaches to who does what amongst regulators, those approaches are not universal. In addition, the approaches generally taken by regulators are often different than the approaches taken by other types of organizations. For example, a Board member whose only exposure to not-for-profit governance is through their own condominium may be surprised at how different the roles are for a regulator. For example, in a regulatory body, Board members who happen to know the personalities involved just do not intervene in a dispute (e.g., a complaint) to try to find a resolution.
Purpose of Roles Scenario
The professional association is quite concerned about the proposal to increase the liability insurance required by practitioners by 25%. The association Executive Director approaches the CEO of the regulator asking that the increase be delayed to allow the professional association to make further submissions on it. The CEO, after consulting with the President, says the decision is final. The Executive Director then approaches the President who, obviously, says the same thing. The Executive Director knows Ernie Eager, who is one of its past-presidents, and asks Ernie. Ernie promises to make best efforts to seek a delay. Before Ernie can act, the Executive Director of the association sends out an email blast to the entire association membership stating that Ernie has agreed that a deferral of the insurance requirement is sensible and will raise that issue at the next Board meeting.
This scenario illustrates how important it is that all participants have a clear sense of their roles, and the limits to them.
The following sections describe the most common approaches to the roles of the various components of a regulator.