The Path to Becoming an Engaged Board
All boards of directors are not created equal. In fact, boards have different personality types based on a variety of traits. Knowing your board type is critical because it is possible to evolve boards to more advanced, productive types.
According to Mark Thorsby, CAE, the majority of association boards fall into one of five types – including fiduciary, representative, traditional, enlightened and engaged.
Thorsby developed these categories based on the work of Harvard professor and governance expert Ram Charan, who authored the book, “Boards That Deliver.” Charan analyzed the traits of corporate boards and came up with five different types. Thorsby came up with his own version to reflect boards in the association world.
While each type can be effective under certain circumstances, there is one that most associations should strive become — an engaged board. However, only very few – about 10 percent, according to Thorsby – have done so. Thorsby explained the traits of each and why an engaged board is optimal.
A fiduciary board functions at the discretion of the CEO. “Often, this is the board that emerges with a brand new start-up organization,” Thorsby said. “The board has relatively limited activity and accountability because those responsibilities primarily lie with the CEO or executive director. This group ratifies whatever the CEO's preferences are.” Fiduciary boards tend not to be very strategic but are fairly efficient and focused. Fiduciary boards represent about 15 percent of all non-profit boards.
Representative boards have members who are loyal to specific constituencies within the organization. “You will see these more often in individual membership organizations, like professional societies,” Thorsby said. He cited the U.S. Olympic Committee as an example. It encompasses multiple sports federations, many of which are represented on the board.
“With these groups, democracy and transparency are paramount, but there are as many voices as there are members of the board.” In addition, individual board members are not necessarily entirely loyal to the organization; they are more loyal to their constituencies.
As a result, it is difficult to get the board to speak with one voice. In many ways, representative boards function – or do not function – similarly to how the U.S. Congress is now operating. They are often large, dysfunctional and have difficulty achieving consensus. In these groups, board members routinely chair committees, both operating and governing. This can contribute to role confusion. These boards are also frequently seen in associations where some kind of licensure is a key component (e.g., a medical or law licenses), or in government-related nonprofits.
Representative boards make up about 15 percent of association boards.
“These types of boards were prevalent when I got into the association management world 40 years ago, and they are still popular today,” Thorsby said. He estimates that they make up about 30 percent of association boards.
Traditional boards are charged with setting policy and overseeing management. “They are very focused on process, not outcomes,” he said. While these boards have collaborative discussions, the true “voice” of this group tends to be a subgroup within the overall board, usually the executive committee. Indeed, the executive committee often has the same decision-making authority as the entire board. In part this is a relic of the past. Before email and tele- and video-conferencing, a subgroup was given the authority to make decisions because it was difficult to convene the entire board. But many boards still operate this way today.
Traditional boards make up about 30 percent of association boards.
The fiduciary board is best in a start-up situation, while the representative board occurs in the next phase in which democratic principles take hold and additional voices are heard. The traditional board is more mature and a lot of boards just stay in that phase. The enlightened board seeks to break from the traditional board model, but is still in a transitional phase. “It knows that there is a better way to govern,” Thorsby said. “There is a real passion for the cause, for the mission, but what I have observed is they sometimes confuse passion with good governance. You have to be committed to be a good board member, but you do not have to be passionate. In fact, passion can sometimes get in the way of good board governance.”
The enlightened board knows that data is important. It asks a lot of questions, requests a lot of information and is interested in metrics and measurement. “But there sometimes is a lack of clarity with these boards on who is accountable for the outcome and who has decision-making authority – the board or the CEO,” he said. These boards want to delegate accountability to the CEO but not decision-making authority, and that can contribute to its dysfunction. “This group is trying to be better and is seeking a new way to govern but is afraid it is going to get criticized if it does not work out,” Thorsby said. “It is almost like it is trying too hard.”
Unlike traditional boards, enlightened boards are not concerned with process, only outcomes. They do not seek to oversee management, but they are interested in setting the strategic direction of the organization. At the same time, in their quest for knowledge and information, they tend to present challenges to association paid staff because different board members request information at various frequencies and formats.
About 30 percent of association boards are enlightened, but it is not a stage that a board should stay in. It is a transition phase. “If you cannot get to engaged, then go back to traditional,” Thorsby said.
An engaged board is the Holy Grail of board governance, Thorsby said. Like enlightened boards, engaged boards are focused on outcomes, not process. They also set policy and give management flexibility to achieve the desired outcome. Unlike enlightened boards, engaged boards work in sync with management. “We use the bicycle analogy: the front wheel is direction, the back wheel is power; the front wheel is governance, the back wheel is management; the front wheel is the board, the back wheel is the staff.” Engaged boards are very clear on what the board is accountable for and what management is accountable for.
“They view the relationship between the board and management as an absolute text book definition of partnership,” he said. It is not a superior-subordinate relationship – the two parties have separate functions that are complimentary. “It is doing the right things really well,” he said.
Furthermore, engaged boards do not get bogged down in minutiae. They are focused on the larger issues. “It is a streamlined machine designed to set direction and establish priorities and goals,” Thorsby said. The engaged board also knows that after vigorous debate, it must come together with one voice for the good of the organization. Only about 10 percent of associations have engaged boards.
Evolving from one board type to another requires a change of thinking, risk taking and some thick skin to absorb criticism from those who do not embrace the change. Best practices to help manage such a transition include:
In Thorsby's experience working with boards, he has found that organizations with engaged boards tend to achieve greater long-term success. “The journey to the engaged board type is not perfect. You are going to hit some pot holes along the way, and you are going to make some mistakes,” said Thorsby. “But ultimately, it is a trip well worth taking and one that will help ensure the long-term success of an association.”
- Set goals for what needs to change to become an engaged board. It may require altering the size or structure of the board.
- Get training for the board to carry out these goals. The board may find that it does not have the right competencies or resources to effectively make the changes. If that is the case, the board should develop those skills or seek out new members.
- Dedicate time for evaluation. Get regular feedback from board members on the process to make sure it is being implemented as planned.
- Consider engaging someone from outside the organization to help initiate the change if current board members are unable to make it happen themselves. The board could also try to develop those skills or seek out new members.
JULY/AUGUST 2014 EDITION
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