“Where was the board? This has been a familiar refrain in corporate governance. Good governance is often aspired to, but not always achieved. Often It is sought after a crisis, or in response to a scandal.
Good governance is essential for a good reputation. It creates trust with funders; builds bonds with the public and attracts high calibre staff. The converse is also true, poor governance causes reputational damage that can result in terminal decline
Yet good board governance cannot be switched off and on. Highly functioning organisations have a strong board governance culture that is based on factors that are applied consistently and thoroughly. It also recognises that good governance takes time, attention and commitment from all parties on the board to make it happen. Good governance is both a principle and process. It gets better by its use.
Let me give you an example from my own experience working with a client. I was approached by a CEO of a financial organisation to support her with her board. She was concerned about the effectiveness of the board and the Chair, and that it was beginning to have an impact upon organisational performance. The Board audit committee was not consistently adhering to procedures on “risky” loans and that had an negative impact of the cash flow of the organisation. In particular she was concerned that some board members were disengaged, and in light of new and stringent tests of competence for board members set by the financial regulator; that some board members might not pass that test thus bringing their continued membership of the board into question.
The CEO was also concerned that the Chair had become disengaged, and had allowed the board to “drift”. This observation had become a source of dispute between CEO and Chair who had both been in post for a long time, and the CEO was considering her future in the organisation.
So what did I do?
Firstly I needed to deal with the relationship between the CEO and the Chair which was at the heart of the problem. It was important that I was not seen to be taking sides- the advantage was that I was known to both individuals on a professional basis for many years.
My first step was to meet with them and identify what were the key issues. In discussion it became clear that the boundaries between their roles had become blurred, and that specific frustrations about the others performance/behaviours that had not been aired/ resolved. For example, the chairs reluctance to get board to agree actions and timeframes
From that I devised a mentoring approach that focussed on rebuilding trust between the CEO and Chair. This involved joint and separate mentoring sessions, establishing a shared way of working and using conflict resolution approaches – in essence “the way we do things here”. Over the next 9 months I worked with the CEO and Chair and was successful in helping them to set a new leadership tone and behaviour that could be shared with the board. The outcome was better board meetings, clearer decision making and a tightening of rules and procedures.
Concurrently I also worked with the board. I observed board meetings where I identified mission creep, some disengagement, too much attention to detail and poor chairing. This provided the basis for a series of actions.
I designed a series of away days to enable the board to redefine the mission statement of the organisation; assisted board members to shift their balance towards strategic direction; and did a series of 1-2-1sessions to improve chairing skills of Chair. I got board members to self assess their performance. As a result of that process, three long established board members resigned.
In total over a 12 month period I helped the CEO and Chair re-establish a strong working relationship that resulted in the CEO deciding to stay with the organisation. Through the mentoring Board meetings are now well chaired and the and the appointment of fresh blood has re-energised the board. Above all the mission of the organisation is now clear, and board members have a clear sense of purpose. It is performing well and is in a better place
From that experience and others, I believe that good governance, and by that I mean what goes on around the board table, is predicated on what I term are five critical factors. So when I begin to work with an organisation on board development this my starting place to begin to assess effectiveness or otherwise
The Mission – a clear and compelling purpose that unites and motivates the board and staff to achieve results. It provides the basis for all decisions on development and direction. It is the organisational “North Star”
Leadership of Board and Organisation – a highly performing organisation is led by a Board Chair and Ceo with a good working and constructive relationship. This relationship is built on a shared understanding of roles, mission and values of the organisation. It is based on mutual respect and should be an exemplar of leadership behaviour.
The board sets the tone and behaviours of the organisation. It is the “keeper of flame” with regard to the mission and purpose. Board members understand their responsibilities stretch beyond the “board and committee meeting”
The Composition of the Board and Staff- Getting the right people in the right position, both board members and staff in concert with the mission and purpose of the organisaton. Respecting roles and recognising differing responsibilities. Whilst need to understand how the organisation operates, it is not their job to interfere in operational matters, but to set the processes, and policies to ensure effective oversight of performance and risk
Strategic Planning – a clear planning process that lays out the future course for the organisation. It should shape the board structures, and ensure that committee activities are aligned with the strategic objectives of the organisation.
Board Meetings – focussed, well planned agendas that enable clear and effective decision making. The formal place where the board acts on its authority, sets the direction and tone of behaviours, performance and actions. It well balanced between the need to look back, ie scrutiny role, and projecting forward, ie strategy role.
Getting them all operating in concert takes time, energy and focus. It requires the whole board exercising leadership -working “in” the board and working “on” the board. I am passionate about mentoring boards and their organisations to make a difference. Getting your board to focus on these 5 factors will improve your board.
So why not do this exercise for yourself with your board? Call me for a free consultation to run this for your board