I’ve been thinking lately about a particular feature of board performance that I see all too often. It’s a feature that has troubled me for some time now, but I think I’m beginning to understand why it happens and how to avoid it.
Governance is a system. One of the most famous definitions of governance is found in what is commonly called the ‘Cadbury Report,’ a report published by a committee investigating the state of corporate governance in Britain way back in the early 1990s. The report defined governance as “the system by which companies are directed and controlled.” This definition has become something of a standard in corporate governance literature.
More recently, the British Standards Institution has defined governance as the “system by which the whole organisation is directed, controlled and held accountable to achieve its purpose over the long term.”
My preferred definition of governance is “the system for ensuring, on behalf of an identified group of owners, that an organisation makes the difference it is supposed to make, within the limits of reasonableness, ethics, prudence and legality.”
Whichever definition you prefer, they all reinforce the point that governance is a system: a set of things working together, a group of interrelated parts forming a unified whole. When its governance system is working well, an organisation prospers.
Trouble is, all systems have a tendency to be affected by something called entropy.
Entropy is the idea that everything in the universe eventually moves from order to disorder. It’s a measure of the disorder in a system. Although it’s actually a complex phenomenon from the science of physics, entropy also has a common meaning:
- the performance of a system tends to degrade over time
- the wheels tend to fall off even well-designed systems eventually.
I see this common meaning of entropy at work in boards all the time. Although boards often start off with a roar—especially after the board has just been elected, or after an inspiring session on strategic foresight—it generally doesn’t take long for the rot to set in and for the system to come apart to some degree. Meetings become unfocused, important policies are ignored or glossed over, proper procedures are short-circuited, undesirable personal characteristics emerge unchecked around the board table, the board’s attention to compliance fades, board members become jaded—these are all manifestations of the entropy that tends to creep in to board performance.
What, then, is the solution to this slow degradation of board performance?
From what I have observed, the best antidote to entropy is purpose – clear, meaningful purpose.
Human beings are meaning-seekers and meaning-makers. It’s just the way we’re wired. We’re energised by the pursuit of meaningful purpose. It’s what gets us out of bed in the morning.
Most of you will know the story of the person who, walking past a construction site, observed two workers, both doing the same work but with strikingly different demeanours. When the passer-by asked the first worker, who had a sullen and downcast demeanour, what he was doing, the worker replied curtly, “I’m laying bricks.” When the passer-by asked the second worker, who was whistling a tune, what he was doing, the worker replied cheerfully, “I’m building a cathedral.”
The story often ends there, but (and I owe this version to Dick Brunton, former CEO of Colmar Brunton Research) there might also have been a third worker who, with glowing demeanour, answered the same question, “I’m building a cathedral where God will be glorified and His people blessed.”
Guess which worker is most likely to put in a sustained performance for the duration of the job?
Meaning energises us. It sustains us over the long haul. It motivates us to overcome obstacles and achieve great things. It keeps us going when the drudgery of everyday life threatens to overwhelm us.
In my observation, meaning and purpose are also an important part of what sustains boards.
There can be plenty of drudgery in board work. The weight of responsibility can threaten to overwhelm board members, the nasty side of board dynamics can be very debilitating, and the sheer volume of work can be oppressive. But it has been my consistent observation that those boards which have a clearly-articulated, meaning-filled purpose are much less likely to succumb to the pattern of declining performance. It’s not a magic bullet but it’s a powerful antidote to entropy.
One of the most compelling features of the Policy Governance® model is its insistence that boards do the hard work of spelling out the purpose of the organisation—of crafting meaningful statements of why the organisation exists, of what difference the board aspires to make for those whom it serves. Among the many benefits of such statements is their power to energise the board and to sustain the efforts of board members over the long haul, counteracting the inherent tendency of all systems towards entropy.
If your board hasn’t taken the time to spell out the purpose of your organisation in this way, then you’re missing out on a potential source of meaning and motivation, not just for the board but for everyone with an interest in the success of the organisation. In Policy Governance language, these statements are called Ends policies. You’ll find plenty of guidance on this Governance Coach website about how to tackle the task of writing good Ends policies, and our team is ready to help if you need us.
Systems. Entropy. Purpose. It’s been my observation over 20 years of working with boards that these elements are linked, and that the best way to avoid the pitfall of a degrading system is to invest time and effort into developing a meaningful set of Ends policies. You’ll be pleasantly surprised by the impact of such policies on the performance of your board.