A Board was reflecting on its work at the end of the year and was contemplating what it could do better in the next year. When a Board member reflected that the Board could do a better job governing rather than spending most of its time helping the Executive Director manage operations, another Board member responded by asserting that given the small size of the organization it would be impossible to get entirely away from managing. How many of you would agree with this statement?
It does lead us to ask what is the Board’s unique role and why does the Board have that role? Many Boards of smaller organizations routinely spend the majority, if not the entirety, of their meetings discussing operational issues like vendor selection, budgets, operational expense management, income stream improvements, personnel issues, etc.. In fact, a Board’s involvement in these operational management details can be a very inefficient and ineffective way for the Board to fulfill its fiduciary duty of care, but one that nonetheless allows Board members to feel like they have helped the organization fulfill its mission. Often, a Board that manages is called a “working Board,” a term that leads to the wrong impression that any other types of Board contributions do not require hard “work” and are of less value to the organization. So what is the alternative?
I would recommend the Board take the following four practical action steps to determine what the Board’s unique role should be in the organization:
1) Consider the Board’s position in the organization when determining the role it should take. The Board is the link between the operational staff and what John Carver, a renowned expert on governance, calls “owners.” For example, a not-for-profit community organization’s owners may be members of the local community, while a membership organization like a trade organization or Chamber of Commerce would have a set of legal owners (the members) and maybe an additional set of what Carver calls “moral” owners, those in the community who are “invested” in the organization’s mission. Boards do not exist for themselves, but instead are accountable to those owners for the results achieved by the organization and the means by which the organization achieves those results.
2) Learn what governance is. If you ask many Board members to give a definition of governance, you will probably observe a lot of blank stares. To paraphrase Carver, governance occurs
- when a small group of people (the Board),
- acting as a group (rather than as individuals or as a committee),
- on behalf of the organization’s owners (not for themselves),
- causes the organization to achieve what it should achieve (targeted benefits for targeted recipients at a worth that justifies the cost, that is, what Carver calls “Ends”), and
- avoids what is unacceptable (unlawful, unethical, and imprudent means of achieving Ends).
In nautical terms, the Board’s governance role is that of “steering” rather than “rowing” the ship.
3) Separate the functions of governing and managing:
- The Board should focus on governing well.
- The CEO/Executive Director/Lead Pastor is free to establish operating committees to help in fundraising, volunteer coordination and staffing issues, and financial operations, activities that Boards often focus upon during their meetings. In fact, the CEO is free to recruit successful community members who care deeply about the organization’s mission in order to fill these operating committees. This can be a very effective way to deepen the organization’s connection with the community it serves while simultaneously providing immense management help to an often cash-strapped organization and time-limited CEO!
Understanding what good governance entails and that it is the Board’s unique role to govern leads Boards to take two essential steps to govern well:
1) Intentionally recruit Board members who have skills sets that support effective governance. Many Boards recruit people who are successful in their respective professions or who are community opinion leaders, but who may not have the essential qualities to govern well. The qualities of Board members who can govern effectively may differ from those of people who are most effective to help execute the mission operationally. Governance requires Board members with an ability to see the big picture, discern the underlying values of the owners and translate those values into written Board governing policies, and to think in terms of systems rather than get bogged down in discreet operational details.
2) Focus on achieving the Board’s unique contributions that stem from its unique role:
- Connect with the owners in order to get a sense of their values regarding who is to receive what benefits from the organization and what the worth of those results is (the Ends). This is not what is commonly called a “community assessment”. Community assessments are really part of a broader environmental scan that a CEO may provide the Board. An ownership linkage plan is rooted in gaining a better understanding of the owners’ values regarding the Ends. Such a plan will include the clarifying questions to be asked certain segments of ownership as well as the methodology used to obtain the answers.
- Develop and maintain written governing policies that establish the Ends to be achieved by the CEO along with the Limitations regarding which means used by the CEO are unacceptable even if they worked to achieve the Ends. These written policies also establish the Board’s own governance processes and the manner in which the achievement of the Ends will be delegated to the CEO and how the CEO’s compliance with the Board’s policies will be monitored.
- Assure through a structured monitoring process that the organization achieves the Ends and avoids those means that are unacceptable because they are unlawful, unethical or imprudent.
So, if you serve a smaller organization, make sure your Board knows what governance is and what it is not, that the Board’s unique role is to govern and that to do so well requires unique Board contributions and Board members with the necessary governing skill sets. These actions will help ensure your Board is providing real strategic leadership to the organization. Governing, not managing, is how the Board provides real strategic leadership!