CRITICAL ISSUES IN STRENGTHENING YOUR BOARD OF DIRECTORS

By

Barry McLeish

International Vice President

McConkey/Johnston International

3890 Oak Park Road

Deerfield, Wisconsin 53531

(719) 331-0584

Introduction

Governance is an increasingly important issue as nonprofit organizations face scrutiny and attention from the media and the government. What’s more, in an era of nonprofit organizations becoming commodities as many undertake similar missions, boards of directors are often the most important marketing advantage many organizations enjoy.

Trustees exist to govern the organization – to monitor quality and to see to it that the organization fulfills its mission. Unfortunately, many boards of directors do not govern. They get bogged down in operating details, matters that are best left to staff while ignoring the very issues that could determine the enterprise’s success or failure. It would seem that in my experience, intelligent individuals and astute businesspeople often toss aside the principles of good management and sometimes even common sense when they put on their trustee hats.

I. The Price Of Managing And Not Governing

What’s the harm if trustees are involved in the day-to-day operations instead of governing, especially if the administration is coping and the organization is flourishing? Over time, some issues typically do occur:

A.  The loss of perspective. Lay boards exist in order to ensure that non-profit

organizations do not become captives of interest groups within the organization. Yet too often well-intentioned trustees become immersed in the operations, as opposed to the overall goals of a particular program.

B. The loss of talent. Some trustees thrive on involvement in operational affairs. But is such behavior really the best use of a board’s time and talent? Trustees who believe a Board of Directors’ primary concern is the organization’s long-term welfare will avoid getting involved in trivial, day-to-day matters. These can be the most talented board members and arguably the people the organization needs to cultivate most diligently. Often, however, such trustees don’t speak up when the board strays from governing; they just stop coming to meetings and beg off committee assignments.

Likewise, when trustees regularly intrude in administrative matters, the most competent administrators feel undermined and discouraged.

C. The loss of institutional vitality. The biggest cost to the institution is enervation. While the organization may not experience severe or immediate erosion in quality because of an administration-oriented board, over a trustee’s life, if his or her time is frittered away on operations, it cannot be spent on policy and strategy.

II. Why Do Some Govern And Others Administer?

I think there are five reasons:

  1. Some trustees have specialized knowledge. Because of this, smaller nonprofits with limited resources often tend to seek out trustee involvement in daily operations. Often agencies choose board members because of their specialized knowledge and expect them to advise them and help the organization in their area of expertise. This becomes an open door for these individuals to almost become “line” supervisors. In these instances a board member needs to alert the board as to their involvement and the timeline that it will occur as well as the manner in which it will occur.

2. Trustees may also have a special area of interest. It is normal to find in many institutions, trustees who are immersing themselves in programs and endeavors. Many institutions regard such relationships as carrying more benefits than detriments, even though trustees are compromising their detached perspectives. Both board members and directors need to listen to each other more than they do, particularly in the areas of given advice.

3. Some trustees would rather act than delegate. Many trustees are accustomed to making decisions and taking action. Such trustees are often reluctant to delegate authority to administrators, even when capable management and effective traditions of self-regulation exist. You have to learn when to act and how to move an organization along.

4. Trustees tend to manage during an internal transition or crisis. The more a board trusts the CEO’s judgments and abilities, the less likely Trustees will feel a need to intrude on management’s prerogatives. Boards tend to fill management voids. If management is weak in an aspect of its operation, a strong board will move in and take over.

5. Trustees may manage in periods of external turbulence and crisis. As conditions in an organization’s external environment shift from normal to turbulent and then to acute, the board will almost certainly become more involved in administrative operations.

III. What Policies Should A Board Be Involved In?

Some thoughts:

A.  I am of the opinion that instead of doing more, boards should demand that they

see more. When knowledge is least complete, board action should be the greatest. When the inverse is true, that is when the knowledge is great board action should be the least. Most organizations provide trustees with management information and not governance information (you of course have to make sure the dollars are counted; however, do you know the trends in young pregnant women or incarcerated young people in your area?). The more management information a board member gets, the more they delve into management issues.

B. Some have suggested that there are six levels of policy in a nonprofit organization that boards and the administration have to deal with in some level (or not):

  1. Major policies. These would be fundamental issues of mission or business definition, typically involving questions of institutional priorities.
  1. Secondary policies. Questions of primary clientele, types of services, delivery systems, which may focus on the relationship between programs and departments to the overall mission.
  1. Functional policies. Concerns of major functional operations such as planning, budgeting, fiscal issues, marketing and personnel.
  1. Minor policies. Decisions that govern day-to-day activities.
  1. Standard operating procedures. Mechanisms and transactions that handle routine transactions and normal operations.
  1. Rules. Regulations that guide or prescribe everyday conduct.

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