Transcript "A good board is a victory, not a gift." Cyril O

Harnessing the Power of Your Board
Campus Compact
Minneapolis, MN
June 22-23, 2011
Facilitated by Susan S. Meier, BoardSource
© 2011. Not to be distributed or reproduced
without the express permission of BoardSource.
BoardSource
• Advances the public good by building exceptional
nonprofit boards and inspiring board service
• Supports and promotes excellence in nonprofit
board service
• Is the premier source of cutting-edge thinking and
resources related to boards
• Engages and develops the next generation of
board leaders
Susan Meier
• Vice President, Consulting & Training at
BoardSource
• Former Vice President of Chapter Services
for national federated nonprofit
• Corporate experience
• National and local board member and officer
experience
Learning
Objectives
•
•
•
•
To gain a clearer understanding of key nonprofit board roles &
responsibilities
To learn more about governance promising practices
To learn how to reframe the work of the board in the fiduciary, strategic
and generative modes
To understand the core components in building a Constructive
Partnership between the board and chief executive
Agenda – June 22
• Introductions
• Silent Start
• Three Roles of Nonprofit Boards
– 10 Basic Board Responsibilities
• Lunch
• Case Study
• Individual Board Member Responsibilities
• Effective Board Meetings
• Closing Thoughts for the Day
Introductions
• Name/state
• How long have you served as State Director?
• Affiliate Stats
– Status (501©(3), etc)
– Budget
– Primary program
– Board size & composition
– Frequency of board meetings
• Mode of transportation that best describes board
• One thing you want from this training
Guidelines for Today
Please turn off cell phones, pagers & PDA’s…
Please return from breaks & lunch on time…
Your participation is vital to our collective
success…
Practice “Active Listening”…
Be present in the moment…
Setting the Context
•
•
•
•
•
•
•
•
Increasing community needs
Increased scrutiny
Increased regulation
Changing demographics
Generational issues
Decreasing resources
Blurring of the sectors
Advances in technology
What is Governance?
To govern is to steer, to control, and to
influence from a position of authority.
Silent Start
Our Goal –
More Effective Boards
Exceptional
Responsible
Functional
Dysfunctional
Unconscious
Conscious
Enlightened
A General Direction…
Good
Great
Success
Significance
Stewardship
Exceptional
Leadership
Board Roles and Responsibilities
Exercise
• In small groups, identify and list the 10
primary responsibilities of a nonprofit
board.
Primary Board Responsibilities
1. Set Organizational Direction
• Determine mission and purpose
• Ensure effective planning
2. Ensure the Necessary
Resources
• Ensure adequate financial
resources
• Select the chief executive
• Build a competent board
• Enhance the organization’s public
standing
3. Provide Oversight
• Monitor and strengthen
programs and services
• Protect assets and
provide financial
oversight
• Ensure legal and ethical
integrity
• Support and evaluate the
chief executive
3 Overarching Board Roles
1. Set organizational direction
2. Ensure necessary resources
3. Provide oversight
Board Role 1: Set Organizational
Direction
• Developing and maintaining a focus on mission, e.g:
– What is our mission? Our vision?
– What are our values?
– What issues must we confront in order to carry out our
mission?
– Where should we be in five years?
• Visioning and strategic planning
• Understanding board’s role in fulfilling the plan
Definitions
• Mission: why we exist
• Vision: what the world would look like if
we achieved our mission (aspirational)
• Values: the principles that guide us in
our work
Strategic Planning
• Strategic planning vs operational
planning
• Environmental scan
• Mission, vision, values
• Strategies, goals, tasks, timeline,
responsible parties
• Develop a thoughtful process
• Scenario planning
Tips
• Revisit your mission periodically. Is it still
relevant? Easy to remember? Taps into your
passion?
• The strategic planning process is as
important as the outcomes.
• When making decisions, ask: Is this in
alignment with our mission & values?
• Focus on that which is most important.
Board Role 2: Ensure Resources
•
Identify resources
needed:
1.
2.
3.
4.
•
Funds
Leadership (executive
and board)
Reputation
Facilities/Technology
Establish policies
for how these
resources will be
acquired
1.
2.
Financial resources
Public relations
• Determine how
board members will
participate in
resource
development
1. Fundraising
2. Board member
recruitment
3. Spreading the word
Adequate Financial Resources
• The full board can participate in various ways,
e.g.:
– Board members contribute financially
– Board members help develop a fundraising plan
– Board members support the chief executive’s
solicitation efforts
– Board members actually solicit
• It is always the board’s responsibility to ensure
adequate resources for the organization to
remain financially viable
Break!
Capable Staff Leadership
• Selection of State Director, e.g.:
– Single most important decision of any board
– Succession planning
• Support of State Director, e.g.:
– Set expectations clearly
– Provide training
– Assist State Director when Board members
overstep/misunderstand roles
• Evaluating State Director, e.g.,:
– Frequent and constructive feedback
Board Diversity
The Board Building Cycle
Identify
Rotate
Evaluate
Cultivate
Celebrate!
Recruit
Orient
Educate
Involve
Formal Board Orientation
To the organization:
• Mission & History
• Programs
• Finances & key funding sources
• Structure (organization chart)
To the culture:
• What kind of culture do we
have?
• What are our organizational
values?
• How are decisions made?
• How do our board members
communicate with one another?
To the board:
• List of board members & officers
• Committee structure
• Bylaws
• Key policies (eg, conflict of interest)
• Board meeting dates
• Key strategic issues
To governance:
• How does this board manage itself?
• Role of board vs staff
• Board member responsibilities
• Importance of fiduciary &strategic
work
• Federal and state filings
Orientation Tips and Tools
Tips
Tools
• Be honest, but don’t
• Orientation meeting
overwhelm
• Board handbook
• Include staff & board
• Site visit/facilities tour
members
• Make room for team
building
• Follow up with individuals
• Use a “buddy” system
Board Committee Structure
•
•
•
•
•
•
•
Keep it simple and flexible
Be strategic
Fewer, not more, committees
Ensure clear committee charters
Create an Audit Committee, if needed
Use Executive Committees thoughtfully
Create a Governance Committee
Governance Committee
– Promotes and provides education about the
organization, field, and governance
– Assesses the organization’s governance
needs
– Identifies, nominates, and orients new
members
– Develops leadership/nominates officers
– Conducts board self assessment
– Organizes the annual board retreat
Positive Public Image
• Board members serve as ambassadors
• An accurate image and positive
reputation will influence organizational
resources
• Success of most organizations depends
on external relations
• Board needs to ensure that
stakeholders are kept informed
Tips
• Recruit a strategically composed board to the
degree you can.
• Ensure diverse funding streams.
• Ensure the right leadership is in place at the
right time.
• Discuss & develop board member job
description.
• Develop a strategic committee structure.
• Use task forces to help minimize the number
of standing committees.
Board Role 3: Provide Oversight
• Program -- plan, monitor and evaluate impact
• Financial -- establish budget guidelines,
oversee financial management, secure auditor
• Risk management
• Evaluation of State Director
• Legal and moral oversight -- manage
compliance, values, conflicts of interest, and
accountability
Graphic
Dashboard
Source: Lawrence M. Butler author of The Nonprofit Dashboard: A Tool for Tracking Progress (BoardSource,
2007).
Questions
1. How might your board seek to evaluate the
quality of your organization’s programs?
2. How can your board ensure that all board
members have a clear picture of your
organization’s financial health?
3. Is your board evaluating you and the board
itself?
Is Your Board Asleep at the Wheel?
1. What are areas of potential risk and liability for
boards of directors/trustee?
2. What is SOX and does it apply to nonprofits?
3. What are the three duties of board members?
4. Does everyone know how much the chief
executive makes?
5. What governing bodies have authority or
power over tax-exempt organizations?
Definitions
BusinessDictionary.com
•Risk Management – Policies, procedures and
practices involved in identification, analysis,
assessment, control and avoidance, minimization or
elimination of unacceptable risks.
•Risk (General): Probability or threat of a damage,
injury, liability, loss, or other negative occurrence,
caused by external or internal vulnerabilities, and
which may be neutralized through pre-mediated
action.
How Does Your Board Manage Risks?
1. Informed board members
2. Written records and policies
3. Adequate insurance
4. Audits
5. Supervision
6. Conflict of interest enforcement
7. Whistle blower protection
8. Timely filings
9. Oversight & protection of assets
10. Due diligence
Legal and Moral Oversight
• Ensure compliance with legal requirements
• Act in accordance with bylaws and review them
every 3 years (or as needed)
• Adopt appropriate policies (document retention
& destruction; whistleblower; conflict of interest)
• Articulate and safeguard organizational values
• Avoid or, if necessary, manage conflicts of
interest
• Ensure accountability by all parties
Tips
• Adopt a conflict of interest policy.
– Have all board members and executive staff sign the
conflict of interest policy annually, disclosing conflicts.
– Ensure that board members recuse themselves from board
discussions and votes appropriately.
• Develop a dashboard to facilitate oversight.
• Ensure the board meets in executive session with the
auditor.
• Formally evaluate the chief executive annually.
• Conduct a board self assessment every 2-3 years.
Lunch!
Exercise
Roles and Responsibilities
Small Group Deliberations
Discuss one board responsibility that is a
priority for your board to address.
•Identify challenges
•Identify 2-3 tools/strategies to overcome
each challenge
Individual Board Member
Roles and Responsibilities
Board Member Responsibilities
• Actively Participate
–
–
–
–
Provide time, talent, and treasure
Attend all meetings and specified events
Serve on committees, carry out assignments
Help raise money
• Be Informed
– About mission, programs
– Prepare for meetings
– Stay current with related issues and organizations
• Be Independent-Minded
Board Member Responsibilities (cont’d)
• Ask Good Questions
• Promote the Organization
– Spread the word
– Recruit board members and other volunteers
• Safeguard Legal Standards, Ethics and Values
– Follow conflict-of-interest and confidentiality
policies
– Refrain from asking special favors from staff
– Fulfill legal obligations
Governing Board Member’s Legal
Obligations
• Duty of Care
– Using your best judgment
– Actively participating, paying attention
– Asking pertinent questions
• Duty of Loyalty
– Avoiding conflicts of interest
– Putting aside personal and professional interests
• Duty of Obedience
– Staying true to the organization’s mission
– Obeying the law, both public and organizational
Duty of Care
• A board member must exercise the same
care that an ordinary, prudent person would
exercise in a like position or under similar
circumstances.
– Using your best judgment
– Actively participating, paying attention
– Asking pertinent questions
– Attend board meetings (no proxy)
Duty of Loyalty
• Act in good faith, be faithful to the organization,
and pursue its best interests (e.g., put the
interests of the organization above selfinterest).
– Avoiding conflicts of interest
– Putting aside personal and professional
interests
– Respecting confidentiality
Conflict of Interest: Definition
A conflict of interest arises whenever the
financial or personal interests of a board
member, officer or management employee
are, or appear to be, in conflict or at odds with
the interests of the organization, such that he
or she may be influenced by this personal
interest when making a decision for the
organization.
How to Deal with Conflicts of Interest
• Be thoughtful and intentional
• Develop a sound policy that clearly articulates:
• Who does the policy apply to?
• What is the definition of a conflict of interest?
• What is the process for disclosure, review, recusal
and voting?
• How will the action be recorded?
• Is the policy signed annually by board members
and key staff?
• Create a culture in the boardroom where real and
perceived conflicts are actively discussed
Duty of Obedience
• Act in accordance with the organization’s
rules and policies, and in furtherance of its
goals as stated in the mission statement,
articles of incorporation and bylaws
• Comply with state and federal laws
• Not act outside the scope of corporate
powers
– Staying true to the organization’s mission
– Obeying the law, both public and
organizational
Enhanced Board Engagement via
Effective Meetings
Optimize your
limited time together
by designing board
meetings to be
productive,
engaging and
focused on
substantive issues.
Thoughtfully Crafted Agenda
Careful Framing of Questions
Built-In Educational Time
Consent Agenda
Dashboards
Annual Calendar of Meetings
Board Retreats
Focused Pre-Readings/Board
Books
Expert Guests/Facilitators
Executive Sessions
Points to Ponder
• Do we have the right leaders in place to lead us into
tomorrow?
• Do we understand our roles and responsibilities as a
board?
• Do we have a governance structure in place that
allows our board to function effectively?
• What is the greatest contribution our board can
potentially make to the organization?
Closing Thoughts on the Day
Harnessing the Power of Your Board
Campus Compact
Minneapolis, MN
June 23, 2011
Facilitated by Susan S. Meier, BoardSource
© 2011. Not to be distributed or reproduced
without the express permission of BoardSource.
Agenda – June 23
• Snapshot of Wednesday’s Work
• Constructive Partnership
• Reframing the Work of the Board
– The Fiduciary Mode
– The Strategic Mode
– The Generative Mode
• The Triple Helix
• Lunch
• Bringing Governance as Leadership into the Board
Room
• What Else Is On Your Mind?
• Closing Thoughts
Snapshot of Wednesday’s Work
• 10 Basic Roles & Responsibilities of
Boards
– Setting Organizational Direction
– Ensuring Necessary Resources
– Providing Appropriate Oversight
• Individual Board Member Responsibilities
• Focusing on that Which is Most Important
Silent Start
• Envision a High Performing Board…
High Performing Boards
“The difference between responsible and
exceptional boards lies in
thoughtfulness and intentionality,
action and engagement,
knowledge and communication.”
--The Source:
Twelve Principles of Governance
That Power Exceptional Boards
Tell Me What You See
Constructive Partnership
“Exceptional boards govern in constructive
partnership with the chief executive,
recognizing that the effectiveness of the
board and chief executive are
interdependent.”
-The Source: Twelve Principles of Governance
That Power Exceptional Boards
Constructive Partnership (cont’d)
• Key relationship with inherent tension, even
when it’s a positive relationship, since:
– Intersection of governance and management
– Board must balance its roles of oversight and
support of the chief executive
– Chief executive serves at the pleasure of the
board
Constructive Partnership (cont’d)
• Requires respect for differences
• Requires clarity of roles and mutual
expectations
• Requires regular communications
• Benefits from mutual assessments
CEO Engagement
Ensure CEO & Board Engagement
CEO
CEO
→ Is Displacing Board
→ Is In Constructive
Partnership with Board
GOVERNANCE AS
OBSERVATION
GOVERNANCE AS
LEADERSHIP
CEO
CEO
→ Is Going Through the
Motions with Board
→ Is Displaced by Board
GOVERNANCE AS
ATTENDANCE
GOVERNANCE AS
MICROMANAGEMENT
Board Engagement
Source: Richard Chair, et.al, “Governance as Leadership”
Exercise: Governance versus
Management
• Using the handout:
– If the responsibility is primarily the board’s
responsibility, indicate that by writing “B” in
the space provided.
– If the responsibility is primarily management’s,
indicate that by writing “M” in the space
provided.
– If the responsibility could be considered both
board and management, indicate that by
writing “B/M” in the space provided.
Increasing Board
Engagement
Governance as Leadership
reframes the work of the board in
the fiduciary, strategic and
generative modes.
What’s the Problem?
Diagnosis Problem of performance
Classical Response Codify board’s role, clarify tasks.
Objective
Do the work better.
Diagnosis Problem of purpose.
Reframe
Response Enrich the job, engage the board.
Objective
Do better work.
The Governance Triangle
Fiduciary
Strategic
Governance
as
Leadership
Generative
Core Concepts
Work is best done in constructive partnership
Board must think and work in three different modes.
Each mode emphasizes a different aspect of
governance.
All three modes are important.
The value added by a board will increase as the
board:
Becomes more proficient in more modes;
Does more work in the third mode;
Chooses the appropriate mode/s of work.
Modes of Governance
• I. Fiduciary. Stewardship of tangible assets. Oversee
operations; deploy resources wisely; ensure legal and financial
integrity; monitor results.
• II. Strategic. Partner with senior staff to scan internal &
external environments; design & modify strategic plans;
strengthen comparative advantage.
• III. Generative. Source of leadership to discern, frame, and
confront challenges rooted in values, traditions, and beliefs;
engage in sense-making, meaning-making, and problem
framing.
Type I: Fiduciary Mode
Board’s core work:
Oversee operations
Ensure efficient & effective use of resources
Ensure legal compliance & fiscal accountability
Select & evaluate CEO
Monitor results
Value-Added Fiduciary Work
Oversight
Inquiry
Due diligence?
Scandal free?
In compliance?
Can we afford it?
Clean audit?
Budget balanced?
Do we manage risk?
New program meets market?
Is it legal?
Hold what in trust for whom?
Safeguards in place?
Voluntary measures to earn trust?
What’s the opportunity cost?
Insights from audit?
Budget matches priorities?
Do we take sensible risks?
New program serves mission?
Is it ethical?
Value-Added Fiduciary
Questions for Troubled Times
Oversight
Inquiry
Days in cash?
Need to cut costs?
Are we diversified?
Cash reserves truly liquid?
Viable contingency plan?
Reliability of revenue
streams affected?
Why not function just as a fiduciary board?
Type II: Strategic Mode
Board’s core work:
Scan internal & external environments.
Review & modify strategic plan.
Monitor performance accountability via critical success
factors, benchmarks, and competitive position.
Value-Added Strategic Work
Planning
Thinking
Money, space, personnel?
Resource generation?
Compensation plan?
Size of market?
What is? (Extrapolation)
Valid assumptions?
Traditional competitors?
Internal preferences?
Management must do what?
Business model viable?
Social entrepreneurship?
Great place to work?
New markets?
What could be? (BHAGs)
Make new rules?
Nontraditional competitors?
Customer value propositions?
Board must do what?
Strategic Questions for Troubled
Times
What would be the benefits and the
drawbacks of merging (or forming a strategic
partnership) with another organization vs
remaining independent?
How is demand for our programs changing as
a result of the troubled economy?
What are likely to be the long term effects of
the current climate on our institution?
Why not function just as a fiduciary/strategic board?
Type III: Generative Thinking
Places current challenges in new light.
Perceives and frames “better” problems and
opportunities.
Recognizes organizations are not always rational.
Discovers strategies, priorities, & “realities.”
Suspends the rules of logic to tap intuition and
intellectual playfulness.
Encourages robust discourse not quick consensus.
The Triple Helix
Boston Museum of Fine
Arts
Generative Thinking in Organizations
Generative
Generative
Thinking
Thinking
Sensemaking
Cues & Clues
Frames
?
Familiar Processes
Implementation
Policy making
Strategic planning
Problem solving
Management
New Practices
Familiar Practices
Work at boundary
Think retrospectively
Deliberate differently
“SWOT”
Needs assessments
Cost-benefit analysis
Trial & Error
Service
delivery
Evaluation
What’s On Your Mind?
10 Ways To Improve Your
Board’s Ability to Govern
1.
2.
3.
4.
5.
Actively foster an intentional dialogue about
governance in the boardroom.
Conduct a “Board or Governance Assessment.”
Make sure board members know their
responsibilities: ethical, legal, governance,
regulatory & financial.
Use proven governance tools & practices, e.g.,
consent agenda, dashboard, executive sessions.
Sign a conflict of interest policy annually, disclosing
conflicts and recusing yourself as appropriate.
10 Ways To Improve Your
Board’s Ability to Govern
6.
7.
8.
Evaluate CEO and board leadership annually.
Identify your core values and live by them.
Create a Governance Committee and charge it with
improving governance throughout your organization.
9. Provide constant education concerning your
community, mission focus, governance issues and
trends (much is changing!)
10. Don’t just “do governance” – actively think about it
and improve it at every opportunity!
BoardSource
750 9th St NW, Ste 650
Washington, DC 20001
Phone: 202-349-2500
Fax: 202-349-2599
www.boardsource.org