Leadership at the Board Level

This past week I had the opportunity to be engaged with executives and board members of several different organizations.  Those conversations highlighted once again the critical role that boards of directors play in the success - or failure - of their organizations.  Some might believe the challenge of establishing and sustaining a high performing board is more acute in those circumstances where directors are unpaid as in the not-for-profit sector.  Alternatively, one might also hold to a belief that being unencumbered by financial motivations that the quality of commitment to governance duties might be at their best.  The reality that I have been exposed to is that good governance is the purview of neither the public or private sector and we have just as many examples of (spectacular) failures in one as in the other.

I last wrote about the impact and effect that the quality of leadership has on the success of an organization almost 2 years ago.  It struck me as a bit more than ironic and coincidental that this subject should be drawn to my attention in this past week.  But clearly some of the lessons to be learned remain relatively eternal.

Perhaps not surprisingly, many of us don't appreciate the role that boards of directors play in setting direction for large organizations and helping it achieve those objectives.  In most circumstances public and media focus falls on a leader - a President, a CEO or other top executive.  Collectively, we usually attribute great success or great failure at the feet of this one iconic or tragic figure.  Ultimately, however, a well functioning board is fundamental to the success of an organization through their decisions - not the least of which is their selection of the senior operational leader.  The quality of their decision making and their commitment to their governance task can have wide-ranging impact.

I have worked with a variety of boards in my 25+ year career.  I have worked with good boards and not so good boards.  I have seen them lose their way in a variety of circumstances including being burdened with an ineffective Chair, a disruptive board member, uncommitted board members, boards that get too involved in operations, and boards that simply perform a rubber stamp role for what senior leadership wants to get done.  Ineffective governance can severely compromise and inhibit the ability of an organization to succeed and fulfill its mandate.

Sometimes it's the case that boards don't even understand what their key responsibilities are.  This lack of understanding or confusion can often arise from the process by which a person is recruited to the board or the quality of the orientation they receive upon becoming a member.  Too often board members can be selected on criteria that may have nothing to do with kinds of skills that a board requires to fulfill its functions - they are part of the same personal network as existing board members, they are prominent community members, they are politically connected, they are major donors, and so on and so forth.  None of these factors necessarily make for a good board member.  Compounding a potentially poor selection process, too often inadequate attention is paid to orientation of new (and old) board members to their role as individual board members and as a comprehensive governing entity.  In that circumstance, an individual board member has to either rely on the skills they bring to the table from their life outside of the board room, the examples set by their fellow board members (for good or bad), or what they may be left to take in guidance from senior leadership of the organization.  Not the ideal recipe for success.

So what's the starting point for good governance?  The first task is clearly understanding what the roles of the board are.  First and foremost a board needs to focus on setting direction - making clear choices on an organization's vision, mission and strategic directions.  Failure to fully engage in this first are of major responsibility means that an organization can easily drift from its fundamental purposes.  And as "environmental" circumstances change so too does the organization move from objective to objective, without any clear plan and with major implications for public confidence and deteriorating staff morale.  Moreover, if there is no consensus amongst the Board as to vision, mission and strategic directions how can senior operational leadership be effectively guided or held accountable for performance? 

Second, a board is required to exercise oversight on organizational performance.  It is important here to distinguish oversight for organizational performance from managing the organization.  Neither the board as a whole nor individual board members (including the Chair) should get involved in managing their organization.  The temptation to direct operations is intense, especially for those board members who lead and manage significant entities outside of the organization for which they are a board member. The board needs to remember that they have engaged operational leaders - the CEO in particular - to manage operational matters.  Ostensibly, they have utilized a robust process for recruitment and selection, have followed up with appropriate performance reviews and feedback, and have trust in the CEO and other management personnel to achieve the Board-established strategic directions.  If the Board lacks such confidence then it has erred in selection, has erred in communicating expectations, or perhaps has not been engaged in managing performance at all.  Ultimately, if that confidence erodes the choice of the Board is to more clearly communicate its expectations or remove the CEO.  The choices available to the Board does not include becoming more engaged in operational decision-making.

That being said, a Board MUST exercise appropriate oversight.  It must be clear on its expectations and establish robust and objective mechanisms by which to evaluate CEO performance on achievement of the organization's vision and strategic directions.  Moreover, a Board would do well to evaluate not only outcomes but also evaluate - at a high level - how those outcomes were achieved.  The Board has a key role in ensuring that the values of the organization are fostered and upheld.  Every effort should be made to ensure that objective, quantifiable reports on performance are made available to the Board on a regular basis.  In this regard, the Board should avail itself of a variety of forms of feedback to evaluate performance and success in achieving objectives. 

A Board should manage its direction setting accountability, its oversight responsibility, and its own functions by establishing policy.  These policies must clearly distinguish Board function from management function.  Just as important, they must describe and detail how the Board itself shall function - role of Chair and other officers of the Board, how decisions will be made, what committee structures if any will be utilized, and so forth. 

Finally, individual board members and Boards as a whole must be as diligent and committed to their own self-evaluation as what they demand from their CEO and operational teams.  Too often, my experience is that this accountability is given short shrift, is downplayed in the spirit of maintaining a "comfortable" working environment for the board members, or quite simply dismissed lest the process of evaluation unduly offend the voluntary or professional commitment of board members.  None of these excuses carry water and if board members expect results from its CEO, operational leaders and the organization as a whole, they must lead by example and professionally and diligently evaluate individual board member performance and overall board functioning on a regular basis.  Moreover, they must be prepared to actually deal with poor performance as well up to and including board member dismissal.

As can be imagined, it is easy for Boards to become involved in non-Board activities and tasks.  Board members can easily neglect the very real work that is required to ensure proper Board functioning.   If this high-level, strategic work is not done or is done poorly, there will be little or no foundation for success for the organization as a whole. 

Boards have very real responsibilities.  The tasks they are engaged in cannot be minimized or trivialized.  We have seen too many organizational failures in recent years which can be traced back to governance failures.  Complacency about board performance is not an option.  However, effective governance does not mean becoming more engaged in operational leadership.  Nor is it to establish ever more controls and bureaucracy.  Boards need to do very real work in understanding their roles and responsibilities, establish proper structures to do their work, recruit and retain good members, and set the tone for the values and ethics that will guide the organization.

To achieve operational excellence there must be a foundation of governance excellence.  Good leadership requires good governance.
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Greg Hadubiak, MHSA, FACHE, CEC, PCC
TEC Canada Chair/Executive Coach/Senior Consultant
hadubiak@wmc.ca

Helping leaders realize their strengths and enabling organizations to achieve their potential through the application of my leadership experience and coaching skills. I act as a point of leverage for my clients. I AM their Force Multiplier.