Tuesday, June 09, 2009

Core Strategy #2 Build an Exceptional Board

In my last post, I listed 10 key strategies that need attention in the strategic plans of nonprofit organizations. The first strategy described in that post was “Embed capacity building into the fabric of your nonprofit".

The second strategy is to build an exceptional board.

There are a dizzying number of governance models that have emerged over the last several years and an equally dizzying number of valiant efforts to categorize and sort out the main models. At the same time there is broad emerging agreement about the core qualities of effective boards. Here is a quote from Mel Gill, president of Synergy Associates:

There is a growing convergence of expert opinion that the most effective boards, regardless of the size, complexity or mandate of their organizations, concentrate their attention on those matters that are crucial to success or survival; that they focus on measurable results within defined timetables; that they engage in regular monitoring of the manner in which business is conducted, the efficient use of resources and the achievement of objectives; that their decision-making is transparent, and that they provide proper accounting to key stakeholders.

Effective boards focus their attention on "the critical few, rather than the trivial many", regardless of whether these are operational, management, or governance (strategic or fiduciary) issues.

The most successful boards, within this framework, develop a collaborative partnership with senior management; seek agreement between key stakeholders on vision, values, goals and expectations (tempered by the reality of available resources); ensure clarity with respect to roles and responsibilities; establish constructive processes for resolution of conflicts and conflict of interest; and cultivate an organizational culture characterized by trust, teamwork, mutual respect, flexibility, adaptability, and responsiveness in the face of the ever-changing realities, resources and needs of consumers.

Gill also talks about "dynamic hybrids” -- increasingly boards are developing dynamic hybrids of several board types, adapting concepts and practices that best fit their particular circumstances.

In response to this "dizzying array" of models and approaches, I propose that we draw on the following three resources as we think about exceptional board governance. The three governance frameworks that stand out for me are:

First, the Dynamic Board Model developed by McKinsey & Co. The source document is The Dynamic Board: Lessons from High-Performing Nonprofits. This monograph summarizes the best practices identified through McKinsey’s interviews with the directors or board chairs of 32 highly-regarded nonprofits. The report also provides a valuable self-assessment tool for nonprofits available in 5, 15 and 30 minute completion time versions. (Free registration may be required to access this article) Go to: http://www.mckinsey.com. Scroll down to “The Dynamic Board” and Assessment Tool links.

Second, the 12 Governance Principles That Power Exceptional Boards from BoardSource. This framework describes twelve common traits and actions that distinguish “exceptional” boards from “responsible” boards. Taken together, they describe an empowered board that is a strategic asset to be leveraged. For a fuller description of the 12 principles go to: http://www.ctp.uk.com.

And third, Governance as Leadership Framework from the book Governance as Leadership authored by Chait, Ryan and Taylor. They describe three types of governance: fiduciary, strategic and generative
• Fiduciary mode: key question -- "How are we doing?"
• Strategic mode: key questions -- "What are we doing?" "Where are we going?" and
• Generative mode: key questions -- "Why are we doing this?" "What are the possibilities?"

For an excellent description, go to: “Rethinking the Board’s Central Purposes.” A Review of Governance as Leadership http://www.intrust.org.