Wanted: The Best Model for Board Governance

Transcription

1 Wanted: The Best Model for Board Governance By Caroline Oliver The hunt is on, and has been on for some while we want to find the best model for the work of a board. The problem is that in order to find the best model we would have to be able to recognize it when we found it, and I am not sure we actually would. What is a Governance Model? As a consultant specializing in helping boards to implement the Policy Governance ¹ model, I am frequently asked about what other models exist and how they compare. The first part of my answer is that if we define a governance model as anything that has ever been labeled a governance model we have a long list of alternatives. My current list includes the following: Terms used to Describe Governance Models ² Administrative Four-Squared Principles Based Peter Drucker s Adolescent Fundraising Philanthropic Advisory Good Governance Policy Board-dominant High Impact Political Bystander Hybrid Principles Based Canadian Comprehensive Auditing Foundation (CCAF) Canadian Institute of Chartered Accountants (CICA) Infant Institutional Reform Relationship Coherent IT Representative Collective Junior Results-Based Committee Knowledge Based Strategic Governance Rope Community Last Resort School Board Effectiveness Community Driven Lifecycle Shared Complementary Management Sociocratic 1

2 Constituency Representative Market/Stewardship Staff-dominant Contingency Mature Stakeholder Corporate Membership Stewardship Cultural Trustees Handbook Mission Based Strategic Cupped Hands New Work Traditional Dynamic One Tier Two Tier Effective Old Work Volunteer Emergent Cellular Operational Working Established Participatory Zoning Commission Executive Founding Partnership Patron The fact is that most of the above would have to be taken off the list if, like John Carver we were to define a governance model as an integrated set of concepts and principles that describes the job of any governing board. 3 (My italics). And the list would also become all but non-existent, if we were to define a governance model like Mel Gill who, in attempting to compare different forms of governance, initially talked about governance models which he defined as: a distinctive cluster or cluster of governance structure, responsibilities (functions) and practices (processes) that are logically consistent with one another, have a high degree of internal coherence and are bound together by values or by assumptions about good governance practices. 4 but quickly found himself having to revert to board types (my italics) a completely different notion. What is a Successful Governance Model? Continuing our hunt for the best board governance model, we can perhaps leave aside quibbling about the meaning of the word model and just agree that if we include anything that has been called a model by anyone at any time, a good number of candidates can be found. 2

3 What is still missing, however, is the basis for examining the merits of these and any possible future candidates in comparison with each other. What criteria could we use? We could simply list the various features of each governance model but that wouldn t get us far. Knowing that a banana has yellow skin and an apple has green skin and that one is long and one is round is interesting but in order to know which is best, we have to have some idea of what the best would be. We could have a preference for a particular colour or shape but we could also consider the best fruit to be the one with the best taste, the most nutritional value or the one which was the most versatile. Or maybe we might put most value on whichever fruit was the quickest to cook, or the easiest to grow in a particular climate, or had any one of any number of other possible attributes that might matter to us more than colour and shape. In other words, we have to know what we want from a governance model before we can compare the merits of one possible model against another. So what do we want from a governance model? It seems, superficially at least, fairly obvious. We want a governance model to produce excellent boards and excellent boards are not boards with pretty features but ones that produce organisational success. Our theory being that the purpose of good governance is ultimately to ensure that organisations are successful and so organisations with boards that are using the best governance models should presumably be the most successful in accomplishing their purposes. Thus being able to recognize a successful governance model when we see it requires us to be able to recognize a successful organization when we see it, and, indeed, current comparative research into the effectiveness of governance models is clearly based on assumptions about what a successful organization look like. These assumptions are typically some combination of the following: Typical Assumptions about Successful Organizations 5 More Successful Organizations have: More wealth More action 3

4 Happier/more satisfied board members Happier/more satisfied staff Happier/more satisfied regulators Happier/more satisfied customers Yet notice that none of these things necessarily tells us that the organization is really accomplishing what it is for. Does organization A exist to be wealthy? And, even if it does, how is wealth to be defined and over what timescale? Does organization B really exist to be busy? Are the happy board members and happy staff at organization C benefitting the right people in the right way with the right cost efficiency? Does any organization exist in order to have a perfect regulatory compliance record? How do we know that today s happy customers are the right customers for the organization to be serving? Also notice that comparing organizational success requires treating them as if they can all be judged according to the same criteria when really they all need to be judged on their own terms. It doesn t matter what the rest of us think any given organization is there to achieve - what really matters is what each organization is actually trying to achieve and that that purpose has been legitimately derived from the proper source or sources. Finally, given that success is only ever a moment in time, how can we know that today s success will not prove to be the cause of tomorrow s downfall and vice versa? In other words, I am suggesting that we are not, and will not be, in a position to compare the success of different governance models until we have a legitimate basis for comparing the success of different organizations. Getting to this legitimate basis is not going to be easy for it requires agreement on some fundamental theory of what boards and organizations are for - something which we simply do not currently have. From my own theory base, that of Policy Governance which I hope to be talking more about in a future issue of this journal, here is the basis for judging board and organizational effectiveness (and therefore the effectiveness of any given board governance model) that I would suggest: 4

5 a) Does the organization have a clear statement of what outcomes it seeks to produce, for whom with what level of cost-efficiency? b) Is this statement clearly derived from the best interests of the organization s owners as determined by the whole board? c) Is the organization able to demonstrate that all its activities and processes are aligned towards achieving those outcomes? d) Is the organization able to account for where it is currently positioned in relation to those outcomes? A Further Challenge Judging the effectiveness of different board governance models also clearly requires being certain that boards purporting to use any given model really are using it in accordance with clearly defined and objectively applied criteria. Much current research on governance models is flawed not only by lack of definition of a governance model but also by lack of a credible process for determining whether or not a given model is actually in use. So Is Our Quest Hopeless? I believe we must not give up. Good models are really helpful in focusing our efforts for better performance and of course they can continue to be improved upon if we put the time and effort into testing them out and learning from our experiences. However governance models cannot be judged and compared until and unless we have a common theory as to what we want them to achieve. And the sooner we all recognize that we currently have no board governance theory and that we need one, the better it will be for owners, boards and organizations everywhere. References: 1 Policy Governance is an internationally registered service mark of John Carver. Registration is only to ensure accurate description of the model rather than for financial gain. The model is available free to all with no royalties or licence fees for its use. The authoritative website for Policy Governance is ² See for example: 5

6 BoardSource/Guide to the Literature on Nonprofit Governance Part III Governance Models Models of governance and management, National Council for Voluntary Organisations, Policy Governance: Yes, but does it work? by Alan Hough and Myles McGregor-Lowndes, and Christine Ryan, Keeping Good Companies, 56(4). pp Governance as Leadership by Caroline Oliver, Board Leadership, Volume 2006 Issue 84, Page 4 Published Online: 14 Mar 2007 The Black Holes in Research on Governance and Governance Models by Caroline Oliver, March 30, 2006,Nonprofit Boards and Governance Review, Charity Channel, March 30, 2006 Governance as Leadership: Reframing the Work on Nonprofit Boards by Richard P. Chait, William P. Ryan, and Barbara E.Taylor published by John Wiley & Sons Inc Armstrong, Ruth R. Nonprofit Governance: The Next Generation Evolution of Structure and Function, paper presented at the Non-Profit Governance Conference, Toronto, Nov , Block, Stephen R. Perfect Nonprofit Boards: Myths, Paradoxes, and Paradigms. New York: Simon & Schuster, Bradshaw, Pat with Bettylynn Stoops, Brian Hayday, Ruth Armstrong, and Liz Rykert. Nonprofit Governance Models: Problems and Prospects. Paper presented at the 27th annual ARNOVA Conference, Seattle, Nov. 5-7, Brown, William A. Understanding Organizational Configurations and Models of Board Governance in Nonprofit Organizations. Paper presented at the 29th annual ARNOVA Conference, New Orleans, Nov , Burns, Michael. Avoid Pigeonholing Your Board into Traditional Models. New England Nonprofit Quarterly, Summer Burns, Michael. Board Structures Should Reflect the Organization, Not Textbook Models. Canadian Fundraiser, July 16, Carver, John. Boards That Make a Difference. San Francisco: Jossey-Bass, 2 nd Edition, Drucker, Peter F. Nonprofit Governance: Lessons for Success. In Peter F. Drucker, Managing for the Future. New York: Plume, Drucker, Peter F. Lessons for Successful Nonprofit Governance, Nonprofit Management and Leadership, 1990, 1,

7 Fletcher, Kathleen. Review of Perfect Nonprofit Boards: Myths, Paradoxes, and Paradigms, by Stephen R. Block. Nonprofit Management and Leadership, 1999, 9, Gill, Mel. Governance Dos and Don ts: Lessons from Case Studies on Twenty Canadian Nonprofits, Final Report. Institute on Governance, Ottawa. Apr. 23, Garber, Nathan. Governance Models: What s Right for Your Board Hayday, Brian Survival to Sustainability: Innovations in Governance: Sustainability Through Diversity. Presentation to the Community Learning Network Ontario Working Forum 2001, Mar. 30, Herman, Robert D. and Richard D. Heimovics, Executive Leadership in Nonprofit Organizations. San Francisco: Jossey-Bass, Leet, Rebecca. Understanding Board Life Cycles. In Strategic Governance. JUNE 1995, 1(1), PAGES 1-2. Gaithersburg, Md.: Aspen. Oliver, Caroline, General Editor. The Policy Governance Fieldbook. Jossey-Bass, 1999 Mathiasen, Karl, III. Board Passages: Three Key Stages in a Nonprofit Board s Life Cycle. Washington, D.C.: BoardSource (National Center for Nonprofit Boards), [ Ryan, William P. Is That All There Is? Searching for More Useful Governance Strategies Beyond the Boardroom. New England Nonprofit Quarterly, Summer Stahlke, Les. Board Chair/CEO Relationship, 2000 [ Les Stahlke, The Relationship Model, 2001 [ Tecker, Glenn United Way of Canada, Board Basics Manual (Ottawa: United Way of Canada, 1995), p to Wallace, Patricia. Regional Governance: A Resource Guide for Trustees. Ottawa: Canadian Healthcare Association Press, Governing for Results by Mel Gill, Trafford Publishing, 2005, pp 31 5 See for example: Measuring the Success of Social Movement Organizations Mitchell Brown Department of Government and Politics University of Maryland College, Paper prepared for the Midwest Political Science Association Meeting Chicago, IL April 7-10, 2005 About the Author: 7

8 Caroline Oliver is a UK based specialist in efficient board governance who has been working with boards in Canada, the USA and the UK for almost 15 years. Today, she brings all she has learned not only to her consulting work but also to her writing which encompasses three books and contributions on governance issues to journals and magazines around the world. Her 2009 book Getting Started with Policy Governance: Bringing Purpose, Integrity and Efficiency to Your Board s Work is published by Jossey-Bass/Wiley and can be ordered through Amazon and other leading booksellers. Caroline is also the founding Chair of both the International Policy Governance Association ( ) and the UK Policy Governance Association (2006 to present) as well as being the Chief Executive of the international consulting firm Good to Govern Limited, and founder of The Governance Corporation Network Caroline Oliver