This is an excerpt of Steinecke Maciura LeBlanc’s “Governance for Regulators” handbook. To view additional sections of the handbook, click here.
g. CEO Role
Depending on the enabling legislation, the CEO may have two roles. Under many enabling Acts the CEO has specific statutory functions such as processing applicants for registration, receiving complaints, appointing investigators or inspectors and operating the public register. Where the CEO has statutory functions, the CEO has exclusive authority to perform them. The Board cannot interfere in those activities and would only evaluate the CEO’s overall performance in these areas. The type of oversight for these functions would be analogous to the type of oversight by the Board of statutory committee actions.
The CEO’s second role is to run the day-to-day operations of the regulator and support the Board and the committees. This role would include:
- Ensuring staff administer the activities of the regulator such as processing applications for registration, handling complaints, supporting discipline and incapacity proceedings, administering the quality improvement and professional development programs, and maintaining the regulator’s website and public register;
- Ensuring staff perform the necessary operational functions of the regulator such as managing its physical premises, communications systems, human resources activities, and bookkeeping and finances;
- Ensuring compliance with the requirements of the enabling statute and other legislation such as employment standards, occupational health and safety, and human rights along with performing risk management of hazard, operational, financial and some strategic risks;
- Supporting the Board and committees including organizing meetings, preparing information briefs and reports, and implementing the strategic plan and policy directions;
- Fostering relationships with the government, professional associations, other regulators, consumer organizations and the public generally and, together with the President, conducting external communications; and
- Performing other functions assigned by the Board such as special projects and initiatives.
The CEO is required to act within the public interest mandate of the regulator. This can result in the CEO providing advice to the Board or a committee where the CEO is concerned that a potential policy or decision does not fully take into account the public interest.
It is sometimes said that the CEO is the sole employee of the Board. This expression means that the Board works through the CEO and does not involve itself in the management and direction of other staff. It is the CEO that assigns responsibilities to staff and reviews their performance.
That expression does not necessarily mean that the CEO should be treated as an employee. A key component to the successful governance of the organization is that there be a shared view of the relationship between the Board and the CEO. For example, a common perspective is that the CEO and the Board are partners working together to fulfill the regulator’s mandate. However, another perspective is that the CEO is the servant of the Board, performing assigned tasks as directed. One can imagine the issues that can arise if some components of the organization took the partnership approach and others followed the servant model. The approach taken, even if it is consistently shared, also has a significant impact on what type of person will accept, or remain as the CEO of the organization.
The Board typically conducts an annual performance review. There is a wide variety of approaches taken to this review by regulators. For some regulators, it is really a review of the performance of the regulator as a whole and is based upon the priorities set out in its strategic plan. For other regulators, the focus is on the performance of the individual CEO. The processes vary from simply collecting the impressions of Board members to a formal review process conducted with the assistance of an external consultant. The nature and process of the performance review is affected by the organization’s view of the relationship between the Board and the CEO.
Role of CEO Scenario
Ernie Eager proposes the requirement for practitioners to have $2,000,000 in professional liability insurance be replaced with a requirement that practitioners disclose to clients during the initial retainer process what amount of insurance, if any, the practitioner carried. Ernie argues that the cost of carrying such insurance is excessive and ultimately results in higher fees being charged to clients. No one at the Board seems engaged in the issue and it looks like the proposal will pass. The CEO speaks to the matter reminding the Board that, before the professional liability insurance requirement was enacted, a number of clients were left without financial recourse when mistakes were made. At that time the regulator faced pressure from clients, the media and government to do something. Ernie objects to the CEO speaking on the issue because the CEO is not a member of the Board and is there to implement whatever decision the Board makes.
This scenario illustrates the public interest duty of the CEO and how different views of the role of the CEO can have a material impact on the decisions (and repercussions) for the regulator. Most regulators do value the CEO providing relevant background information to the Board so that decisions made are fully informed.