Know What Type of Board of Directors You Serve
Is your board heavily involved in the organization’s day-to-day operation? Does it provide oversight via policy-making? Or is your organization in a position where you need to make big changes? You need to identify which situation best describes yours, and govern accordingly.
Familiarize Yourself With ISO 37000 Guidance
ISO 37000, the international benchmark for board governance, spells out the activities each board should undertake. Boards should use these standards as a guide for how best to approach governance. They include concepts as simple as purpose and as complex as risk anticipation and tolerance.
Be Mindful of Other Best Governance Practices
Don’t rely solely on ISO guidance. Consider other factors that drive good governance. These include, but are not limited to, digital communication, proper use of executive sessions, boardroom layout, evaluating meetings after they’re complete, and social time to learn more about fellow directors.
The board of directors plays an essential role in the success of an organization. But often, boards aren’t as effective as they could be.
In fact, OnBoard’s 2024 Boardroom Insights Survey found that 17% of board members are ineffective in their roles. If a typical nonprofit board has between 16-17 members, that means at least two to three members are ineffective.
James C. Galvin, President of Galvin & Associates and Author of Maximizing Board Effectiveness (among other titles) thinks the problem is even larger than the numbers indicate.
“Not many people would say the board is achieving its full potential,” he said. “There are always board members who aren’t harming the organization, but they’re also not adding value.”
How can a board overcome challenges and maximize the effectiveness of its directors? Recently, Galvin joined us for discussion on how to confidently steer your board toward maximizing its contribution to the organization. He shared practical guidance to help directors:
Identify and eliminate board dysfunction
Here, we share some of the top takeaways from this compelling session.
There’s A Lot of Confusion Around Governance
People think they know what it means to be asked to join a board of directors. But the reality is, there’s a lot of confusion around governance.
“A lot of the literature on governance is contradictory,” Galvin said. “Some say boards should be policy-based. Some say there’s a lot more to governance than writing policies.”
There’s also a lot of confusion about when boards should take action – or stay out of the way.
“It’s hard for board members to know how to add value without getting in the way,” Gavlin said. “As a board, if you don’t want to ruin your own organization, you have to know when to stay out of the way, which hopefully, is most of the time.”
This lack of clarity often stands in the way of a board being as effective as it could be.
It’s Important to Know Your Board Type
According to Galvin, there are 3 types of boards. It’s important for directors to identify which type of board they currently have – and which type their organization actually needs.
The 3 types of boards he explored are:
1. Managing Boards
Managing boards are involved in the day-to-day management of an organization. “They open the lid on the black box and look inside at everything that’s happening and offer suggestions for improvement or – worse – stick their hand in the box and start moving things around,” explained Galvin.
“You have to be a managing board if you have a leader who can’t handle it,” said Gavlin. “50% of nonprofits – especially smaller ones – ought to be managing boards because they don’t have a leader that can make a governing board work.”
Managing boards are responsible for making decisions. However, they must avoid micromanagement.
2. Governing boards
Rather than becoming involved in day-to-day operations, governing boards provide oversight – often, by developing policies. “Policies are like frozen decisions,” Galvin explained.
Galvin gave an example of an independent hospital board. “The only qualification they have is that they’ve been to the doctor,” he said. “Their job is to develop a hospital manual…not get involved in operations. They don’t have the qualifications to do this.”
Governing boards are also responsible for looking at resources and results to determine if the organization is adding value to people’s lives.
Galvin cautions that governing boards should avoid “microgoverning.” “It’s either not doing anything, not paying attention, or it’s getting so fixated on the policies that you become policy nerds,” he explained. “Your policies aren’t as important as the performance of the organization.”
3. Navigating boards
When an organization is not going to survive – or if it’s becoming ineffective, changes need to happen. According to Galvin, a navigating board is responsible for “changing the organization to adapt to the changes you’re facing.”
“You need to transform the organization in some way by making changes or changing the context in which you operate.”
Galvin gave an example of an orphanage in the 1950s that was receiving a lot of support. When the state made the switch from institutionalizing children to foster care, the navigating board was responsible for helping the organization adapt.
Galvin cautions that “navigating mode done poorly is status quo governance.” “You can’t try to keep everything the same in a changing context,” he said.
Governance Standards Provide Guidance to Boards
There is a lot of confusion about governance. But today, “there’s an international standard for that.” ISO 37000 – finalized in 2021 – provides standards for board governance.
ISO 37000 spells out the activities of the board, which include:
These activities comprise good governance. With good governance, boards can maximize impact. “The outputs of good governance are responsible stewardship, effective performance, and ethical behavior,” said Galvin.
Best Practices Can Increase Board Effectiveness
Galvin advised directors to “rob, pillage, and steal best practices from other boards.” Adopting best practices can help improve the effectiveness of your own board. Galvin shared several best practices during the session, including the following:
The business world is evolving at breakneck speed. Are you looking to develop agile leaders, boards, and organizations that are ready to navigate constant change? Then save your spot for Change Management for Boards & Their Directors on May 30, featuring Debbie McCarthy, Vice President of Advisory Services at Prosci.
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