As we near the end of the calendar year, we often take stock of performance: ours, those accountable to us, and our investments. Shouldn’t your board evaluate its own performance too, since it is accountable for your organization’s performance to whomever “owns” your organization?
Most boards aspire to see the organizations they serve make a real difference in people’s lives. Yet, does your board understand how to govern accountably, strategically, and with a future focus? If so, what holds it back from doing so more effectively?
Your board will find it constructive to regularly evaluate how well it is directing and protecting your organization by answering the following questions. These twelve questions (one for each of the twelve days of Christmas!) can serve as an opportunity for your board to determine governance performance gaps and to develop plans to improve how well it governs:
- Does your board clearly know for whom it holds the organization in trust, a group we shall call your “owners,” and can your board distinguish among owners, stakeholders, and customers? Your owners may include legal members and may also include those who have a long-term interest in the common good of those being served by your organization. Owners are the people on whose behalf the board determines what benefits the organization should produce, who should receive those benefits, and how much those benefits are worth to produce, the three components of what we will call “Ends.”
- Has your board developed an intentional and constructive method of connecting with owners to obtain representative input regarding owners’ values about the Ends? If not, why not? If so, does your board systematically collect the information and regularly review the Ends in light of that information? Since your board is accountable to the owners, it makes sense to ensure that those owners’ values are translated into the organization’s strategic direction.
- On behalf of the owners, has your board clearly defined in written policy the Ends: the benefits it expects the organization to produce, those intended to receive those benefits, and what it is worth to produce those benefits for those recipients? If not, the board is failing to set strategic direction and may be involving itself instead in strategic planning, not differentiating between the two functions. Setting strategic direction is a governance function rightly belonging to the board and strategic planning is a management function rightly belonging to the CEO. The CEO is the person accountable to the board, regardless of actual title, if the organization has such a position.
- Has your board clearly delineated in written policy the means it would consider imprudent or unethical, even if those means helped to achieve the Ends, and has the board placed those unacceptable means “off-limits” to the CEO? Proscribing unacceptable activities and circumstances is a more powerful method of delegating than prescribing those activities and circumstances which are acceptable.
- Has your board developed its policies within a framework of “larger to smaller” concepts? Has the board stopped itself from writing a lower level policy when the board can accept any reasonable interpretation of the current policy level?
- Does your board only give instructions to the CEO with “one voice,” through written policy, so that the CEO has clear instructions provided by the entire board? Or does your board improperly allow individual board members, such as the Board Chair, to give direction to the CEO?
- Does your board give instruction (through policy) regarding operational issues only to the CEO? Doing so helps the board clearly and accountably delegate to the CEO.
- Does your board only have committees that help the board do its governance work? Or does the board improperly have committees or officers that “help” or “advise” the CEO or staff in operational areas that the board has delegated to the CEO? If you have the latter, your board has severed the link of true accountability.
- Does your board allow the CEO to make any reasonable interpretation of the policies that instruct the CEO? Doing so incorporates fairness into a rigorously accountable system.
- Does your board regularly monitor organization performance, by ensuring the CEO provides evidence of achievement of the Ends (not just a description of actual or planned activities)? Does your board regularly monitor evidence of compliance within the limits the board has placed on the CEO’s authority? If not, your board most likely is not effectively or efficiently fulfilling its role as a fiduciary. Too often, boards are content to “receive” a “CEO’s Report” which merely lists what activities consumed the CEO’s time. This is clearly not monitoring organization performance; it sets an incredibly low standard of performance, exhibits low board expectations, and assumes “busyness” equates to effective performance.
- Does your board (and NOT the CEO or a staff member) develop its own agenda focused on its governance job outputs, AND does your board spend most of its meeting time on the future rather than the present or past? If not, most likely your board is acting as management one-step-up rather than ownership one-step-down and your board runs the danger of neglecting its governing role.
- Does your board regularly evaluate its own function and behavior to ensure it is governing effectively? Well, if you as a board are using this blog as a starting point in self-evaluation, you are off to a great start in identifying areas for improvement!
Where do you go from here? Check out our practical resources and constructive advice regarding how to help your board to govern accountably, strategically, and with a future focus. And make that New Year’s resolution to improve your organization’s impact on people’s lives as your board improves its ability to govern effectively on behalf of your owners!