We nonprofit types tend not to look in the direction of corporate governance for advice, which is terribly short-sighted on our part. As governance guru Richard Leblanc illustrates in a hot-off-the-printer white paper, despite obvious differences in the raison d’être of the sectors, there’s cross-over wisdom aplenty. Good board work is good board work – regardless the profit motivation.
Leblanc addresses wide-spread concern that company boards are too focused on compliance-related responsibilities and only inadequately addressing value creation and company performance, are thought to be not sufficiently independent from company management, and often lack industry knowledge and relevant experience.
Swap out “organization” for “company” and Leblanc’s summary of corporate governance woes mirrors short-comings I regularly encounter within the nonprofit sector.
Granted, not all forty of Leblanc’s proposals for strengthening the board of director’s role in value creation are a one-for-one fit in nonprofit settings. But there’s more than enough in his paper to make it worth your read. Until you get there, here are my top 10 picks from the longer play list.
GOOD GOVERNANCE HIT PARADE
1. Limit director overboardness. Leblanc advocates for a three-board-membership at a time limit. I’m inclined to ratchet that number back to no more than two. Based on my own board experience, stretching time and financial resources in three directions is tough.
2. Limit chair of the board overboardness. I’m with Leblanc in advising that chairing be limited to one board at a time. Having recently rotated out of the chair’s chair on a ministry board, I can’t imagine anyone – regardless how competent, organized, and brilliant – doing justice to two boards. Chairing three is beyond my comprehension.
3. Focus the majority of the board’s time on value creation and company [organization] performance. Enough with endless staff reporting. Board members can read. And amen to Leblanc’s suggestion that at least 50 percent of every meeting’s agenda should focus on issues related to value creation and company [organization]performance.
4. Require active investing in the company by directors. In nonprofit speak, this translates t0 requiring (or if that seems harsh, strongly encouraging) active giving to the organization by all board members. 100 percent participation is the gold standard.
5. Select directors who can contribute directly to value creation. There may have been a time when filling seats was the definition of board building, but no more. New members should be recruited for a specific purpose and every board member should know why he or she is there.
6. Revise the board’s committee structure to address value creation. Or as I urge, re-vision board committees as learning communities focused on issues of strategic importance to the organization. Once educated, committee members become the educators, sharing what they’ve learned with the rest of the board.
7. Hold management to account. Boards of faith-based nonprofits have a tough time with this one. Organizational effectiveness is frequently the victim of dysfunctional civility between boards and the CEO.
8. Limit board homogeneity and group think. Leblanc urges each board to set its own targets and rationale for achieving diversity. But set targets each board must. Without Intentionality, you’re end up with more of the same old, same old around the board table.
9. Implement integrated, longer-term reporting focused on sustained value creation that includes non-financial performance and investment. As Leblanc reminds us, the board sets the bar for organizational performance and value creation via the metrics it chooses to track. Simple, straight-forward, and unambiguous are best – for the board and the CEO.
10. Develop an ethic of personal responsibility. Leblanc challenges board members to assume accountability for outcomes, be receptive to change when change is warranted, recognize when it is time to resign, not act out of self-interest, engage with and listen to Shareholders [donors]; honor promises; hold management accountable; maintain the highest ethical standards of integrity and credibility; and put Directors and their personal interests aside for the ultimate good of the Company [organization and its mission.] Wow! Imagine if the majority of boards of faith-based nonprofits acted in this way. Kingdom causes would soar.
There’s a lot more thought-provoking advice waiting in Leblanc’s paper, but the ten proposals I’ve pulled from his list are enough to keep most boards busy – and productive. Profit or nonprofit organizations alike – the impact of a value-adding board is amazing.
Every time. Every place. Every bottom line.
For more on strengthening the board’s contribution to organizational effectiveness, see:
Thisi s an excellent article and I intend to share it with my Trustee Leadership Committee and Senior Leadership. Thank you!
So glad you found the article helpful, Carol. Let me know how your team responds.
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