But I’m a board member! Avoiding governance confusion in associations and NFP’s

20121021-133406.jpgMany association and NFP boards that I’ve interacted with have a degree of confusion around their governance. In this post, I’d like to address just one of the causes of confusion (we’ll talk about others later) which is the significant blurring that occurs when organisations rely on their board to be governors as well as an expert functional workforce. You can’t afford to be a muppet in today’s governance environment.

This phenomenon is more pronounced in small associations but I’ve seen and heard examples of it in larger organisations as well. It occurs more frequently in associations as the members have skills and knowledge that are invaluable to the association, and we get great outcomes when we work together. The problem is that the board are often the most accessible, willing and engaged members so they will frequently agree to do things on the fly. This includes functional tasks like:
– providing copy for consumer promotions
– writing guidelines and manuals
– chairing conferences and events
– chairing ad hoc working committees (as distinct from oversight committees)

However before long we can find that updates start appearing in Board meetings. Progress against interesting but operational matters creep into the board room and the function of governance becomes diluted or at worst is sidelined for more interesting professional issues. In the worst cases, the CEO is emancipated as the board becomes involved in the daily operations at a deep cultural level leaving the CEO with nothing other than vague influence on success against the KPI’s.

One of the fatal flaws in thinking is that if something is “important” then the board must be involved. This is true but the board has a distinct function in the important things that happen in the organisation. The board’s role is to ‘govern’ through oversight, policy and delegation. If a board member has stepped beyond that function, make no mistake that they are ‘in the business’.

So I guess the big question is how do we avoid this problem? I’ve provided some tips on where to start:

1. Wherever possible, don’t use board members for functional work. Keeping a hard line between governance and functional work helps to keep roles clear. Let the Board focus on governance.
2. Don’t assume the board are the only (or the best) members willing to engage in functional work.
3. Ask the members broadly to engage in short term projects. Young members are more likely to engage short term rather than join a committee.
4. If board members have to do the work, gain agreement that the work has been delegated to the CEO and thus the reporting line is to the CEO.
5. Obtain agreement that functional work “updates” do not belong in the boardroom unless they come through the CEO as part of the usual management reporting.
6. Obtain agreement that non governance committees are not governance. Functional working committees are still functional committees even when chaired by a board member. See point 5.
7. Aim for agreement that governance is a specific job that does not include the statement “any other duties as determined by the board or the individual director”.
8. In organisations where the president or a board member has some functional responsibilities (eg. Part time Executive Officer), put them in a separate ‘functional’ position description, outline reporting lines and ideally make them time limited.
9. Have a board charter that specifically talks about these issues. It helps new board members and reminds current board members of their governance function.
10. Build a good governance culture! Get the board governance trained and properly inducted. The better people understand and buy into contemporary governance practice, the less likely they will be to cross over into management.

My final words on the matter are that governance is a critical job for NFP’s. We have seen so many good organisations fail because of a failure to properly govern. For a board, governance is the job and I’d urge NFP board members to focus on the job rather than a variety of other distractions that may be interesting but ultimately are outside the boards job description.

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