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The best thinking on boardroom effectiveness
A selection of the most popular articles from our Good Governance archives and our governance thought leadership.
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Role of the board
For an organisation to operate effectively, we regularly remind client boards that the ‘the board must do its job first.’
This is because, in most cases, a board has the constitutional authority to govern and manage the organisation. [1] In the constitutional documents (Articles, Rules, Trust Deeds, etc) or empowering legislation of most organisations, there is nothing that grants authority to a board’s chief executive. So, for a chief executive to be able to make decisions and conduct the day-to-day business of the organisation, the board must first define and delegate the necessary authority.
In ‘Does Your Nonprofit Board Need a CGO?’,[1] Paul Jansen and Helen Hatch refer to a recent survey of non-profit sector chief executives that suggests board performance is of middling quality at best. Noting that non-profit governance is getting progressively tougher, they pose the question ‘Would designating one board member to serve as a Chief Governance Officer (CGO) improve non-profit governance?’
Strategy and Planning
In our governance evaluation work we look closely at strategic plans and their utility—or otherwise—as a board’s guiding document. On rare occasions we pick up something and go, “Yes, they nailed it!” But all too often we find that the document has little or no governance contribution to make and is also unlikely to be helpful to management.
Role of the board
Before they can begin to consider other aspects of their responsibilities, many governing boards must be certain they have tight control over their organisation’s financial situation. This is understandable. Funding is commonly in short supply and even remaining solvent can be a continuing challenge. For boards with these anxieties, their primary focus is usually on budget control.
Performance and Reporting
Some business practices are, apparently, so obvious and above reproach that they become entrenched and taken for granted. This appears to be the case with performance measurement. The adage that ‘what gets measured gets done’ is repeated so often that it practically has the status of holy writ.
Chair
Subtitled ‘Simple tips to help organisations become more collectively intelligent’, this publication by the UK-based Nesta organisation is a treasure trove for any board interested in how it might improve the quality of its decision-making.
Role of the board
There was a time when boards would have had little interest in specifying organisational values. A generation or two ago this would have been seen as a matter for the chief executive, if indeed it was worth paying any attention to at all. However, society and its expectations have changed markedly in recent years. Inquiries into corporate failure of various kinds increasingly point to boards that paid insufficient regard to organisational culture. Google, Volkswagen, and Boeing are frequently referred to in this light. The Financial Services Royal Commission in Australia found numerous practices that were also adverse to the interests of stakeholders.
Role of the board
We occasionally meet boards greatly distracted by the troublesome behaviour of one member. For some reason, something is going on with that director that is not helpful to the board’s functioning.
Board CEO Relationship
We increasingly hear about chief executives being replaced prematurely because they have failed to meet their board’s expectations. Unfortunately, probably at least as many, if not more, chief executives are let down by their boards.
Covid19, Role of the board
Many accounts of how boards have responded to the COVID-19 pandemic highlight a closer than usual collaboration between boards and their management teams. The nature of the crisis has required ‘all hands to the pumps’ in many organisations and has forced the usually accepted division of labour to be set aside in the short-term interests of survival. This has seen many board members rolling up their sleeves and becoming a de facto part of the management team.
The survival instincts of many chief executives have sustained them as they have battled to keep their organisations functioning and viable in the 15 months since the arrival of COVID-19.
Risk
Many boards are little more than passive recipients of a risk register. It is as if the mere appearance in the board meeting pack of the largely management-created risk register is assurance to the board that it can tick the risk management ‘box’.
Strategy and Planning
In almost every board evaluation we have done in the past 25 years, we have heard the refrain that ‘our board needs to be more strategic’. For many, this remains wishful thinking even if board members are capable of and motivated towards strategic thinking. Too many boards hope to be more strategic but do not organise themselves to do the necessary work.
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