CHA s Rural Health Care Symposium Governance as Leadership: Reframing the Work of the Board April 8, 2016 Presented by: Susan S. Meier, Senior Governance Consultant 2016. Not to be distributed or reproduced without the express permission of BoardSource. 1 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 www.boardsource.org 2 1
Susan Meier Senior Governance Consultant at BoardSource Principal: Meier and Associates Former Vice President for national nonprofits 28 years of experience in the nonprofit sector National and local board member and officer experience 3 Our Objectives Better understand the three different modes of a board s work: the fiduciary, the strategic, and the generative Focus on what generative thinking is and the value it brings to a board s work Explore how to better engage your board in generative thinking 4 2
Hypothetical # 1 The 30-yr-old roof of your clinic is leaking. The repair job will be costly and is not in the budget, but it needs to be done. How will your board respond? 5 A. Identify the costs, find the money, and proceed to fix the roof. A. Make a temporary fix and let s then discuss alternatives. A. What would it mean to be a hospital without walls? 6 3
Hypothetical # 2 You sit on the board of St. Paul s Cathedral in Paterson, NJ. An art collector has offered the church $2 million for 11 of the stained glass windows. Nine were designed by Tiffany and two by LaFarge. The church has done its due diligence and the offer is fair. The offer includes removal of current windows and the installation of replacement windows. How will your board respond? 7 A. Take the money and run! B. How will our congregants respond? C. What will we do, or not do, if the price is right? 8 4
The main thing is figuring out the main thing. - Richard Chait 9 Blockbuster Netflix CVS CVS Health Encyclopedia Britannica Wikipedia NES Nintendo Apple Macintosh i6 10 5
Silent Start 11 What s the Problem? Classical Reframe Diagnosis Response Objective Diagnosis Response Objective Problem of performance Codify board s role, clarify tasks Do the work better Problem of purpose Enrich the job, engage the board Do better work 12 6
The Governance Triangle Fiduciary Governance as Leadership Generative Strategic 13 Core Concepts 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 increases as the board: Becomes more proficient in more modes Does more work in the third mode Chooses the appropriate mode/s of work This work is best done in Constructive Partnership 14 7
Constructive Partnership* The board is a powerful force supporting the organization The CEO sees the board as a strategic asset The success of the CEO and the success of the board are interdependent upon one another *The Source: Twelve Principles of Governance that Power Exceptional Boards 15 Key Components of an Effective Board/Chief Executive Relationship An understanding that this is a partnership, not a competition. We re on the same team Mutual respect for distinctive roles and responsibilities A commitment to learning and evaluation at all levels The ability to manage leadership transitions well Trust is seen as an on going priority rather than as a one time event 16 8
The Constructive Partnership EFFECTIVE BOARDS: Hire talented chief executives Understand that they must both support the CEO and provide oversight Respect the distinction between governance and operations, and stay on the governance side of the road EFFECTIVE CEOS: Keep their boards informed Share the bad news as well as the good Build relationships with each individual board member Engage their boards in meaningful and consequential work 17 Relationship Dynamics The Vital Role of the CEO and The Board CEO Engagement CEO Is Displacing Board GOVERNANCE AS OBSERVATION CEO Is Going through the Motions with Board CEO Is In Constructive Partnership with Board GOVERNANCE AS LEADERSHIP CEO Is Displaced by Board GOVERNANCE AS ATTENDANCE GOVERNANCE AS MICROMANAGEMENT Board Engagement 18 9
The Three Modes of Governance I. Fiduciary. Stewardship of tangible assets. Oversee operations; deploy resources wisely; select and evaluate chief executive; ensure legal and financial accountability; monitor results II. Strategic. Partner with senior staff to scan internal and external environments; design, review and modify strategic plan; monitor performance accountability via critical success factors, benchmarks, and 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 19 Value-Added Fiduciary Work Oversight 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? Inquiry 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? 20 10
Value-Added Strategic Work Planning Money, space, personnel? Resource generation? Compensation plan? Size of market? What is? (Extrapolation) Valid assumptions? Traditional competitors? Internal preferences? Management must do what? Thinking Business model viable? Social entrepreneurialism? Great place to work? New markets? What could be? (BHAGs) Make new rules? Nontraditional competitors? Customer value propositions? Board must do what? 21 Value-Added Generative Work Places current challenges in new light Perceives and frames better problems and opportunities Recognizes organizations are not always rational Discovers strategies, priorities and realities Suspends the rules of logic to tap intuition and intellectual playfulness Encourages robust discourse, not quick consensus 22 11
The Triple Helix You serve on the board of the Boston Museum of Fine Arts (MFA). Your CEO walks into the boardroom and says his buddy, Steve Wynn, has approached him with an offer for the MFA to loan the Bellagio Casino 21 Monet masterpieces in exchange for a substantial amount of money. Identify the questions you wish to ask as a board in order to make this decision. Be sure to identify questions in all 3 modes. 23 Why Is Generative Work So Important? Brings deeper meaning to our work Deepens our understanding of why something matters Challenges us to go beyond what is presented and get to the real issue Is the most underutilized aspect of a board s work so it offers great possibilities to most boards Leads to discovery and breakthroughs Informs our strategic and fiduciary work 24 12
Generative Thinking in Organizations Generative Thinking Sensemaking Cues & Clues Frames? New Practices Work at boundary Think retrospectively Deliberate differently Spotting embedded issues Familiar Processes Policy making Strategic planning Problem solving Familiar Practices SWOT Needs assessments Cost-benefit analysis Trial and error Implementation Management Service delivery Evaluation 25 Catalytic Questions On what list do we want to rank #1? If we could absorb another nonprofit, who would it be and why? What is our greatest hope for how our organization will be in ten years? What if our reserves quadrupled tomorrow? What would we do differently? What would the board spend its time on? What are our three greatest assets? Name two hidden assets. What is distinctive about our hospital? Is that quality/service becoming more or less valuable in the world in which we work? How must our board operate differently in order to provide leadership during these changing times? What are we most resistant to, and why? 26 13
Generative Opportunities Disguised as Business Decisions Embedded issues often lead to missed opportunities. A local social service agency Stated problem: voluntary turnover of staff A food bank: Stated problem: increased community need An art museum: Stated problem: opportunity to purchase a prized and expensive work of art 27 Where Do We Find Generative Opportunities? As we start New strategic planning process/direction Chief executive search process Capital campaign Mission reassessment Considering a merger or acquisition Assessing our relevancy 28 14
Exercise Identify a significant challenge or opportunity facing your organization Identify what the real issue is. Reframe the challenge, if needed Identify 2-4 questions you can pose to your board to engage them in a different kind of discussion 29 Governance as Leadership Cautions Do not overuse any one mode Do not be formulaic about working in three modes Do not find generative work everywhere Do not mount the generative curve after the staff or committee work has been done Do not underestimate the costs of the status quo 30 15
The Payoff Empowers the board Governance as Leadership Engages the collective mind Exploits board s talents Enriches board s work Enhances performance of board and organization 31 Discovery consists of seeing what everybody else has seen and thinking what nobody else has thought. -Albert Szent-Gyorgi, 1937 Nobel Prize for Medicine 32 16
Questions? Thank You! Susan Meier Senior Governance Consultant BoardSource susan@meierandassociates.net 17