The Board Member Role in Your Organization

For your board to serve your organization well it is important to have clarity about the roles of the board and the board members. When prospective board members and the nominating committee can discuss expectations during the recruiting process, new board members can be set up for success. Let’s explore some of the roles of non-profit board members by considering three ways the role can be defined.

We often describe three different categories of boards. Each positions board members for very different roles. On working boards the board members make senior level decisions for the organization and do a notable amount of the day-to-day work of the organization. On governing boards the board members make senior level decisions for the organization and delegate all the day-to-day responsibilities to the staff and operational volunteers. Some governing board members choose to also serve in an operational volunteer capacity, but that is not expected of them as board members. The third category of board is the advisory board. Since the third type does not have any decision making authority, we suggest that it be called an advisory council to reduce role confusion. Advisory councils share their insights so that the staff or official board can make more informed decisions.

Why People Serve on Boards

Sometimes non-profit leaders wonder why individuals who were clambering to join their board are not turning out to be effective board members. Often this happens when the motivation for the new board members to join the board was not what others assumed it to be.

There are diverse reasons people join non-profit boards. Six common reasons are summarized below.

1. To give back to the community in some way.

2. To contribute time and talents to a cause about which they are passionate.

3. To get more deeply connected or move up the organizational chart with an organization with which they have had rewarding volunteer service experiences.

4. To satisfy an employer’s expectation that they be involved in the community as part of the company’s community engagement strategy.

5. To build their resume by serving in respected volunteer positions in the community.

6. To enhance their skills so they can move on to more diverse, interesting, and challenging opportunities in life.

When everyone isn’t on the same page, the new board members, the experienced board members, and the senior staff are all disenchanted with the relationship. Prepare up front for mutually beneficial experiences by asking prospective board members why they wish to join the board and only nominating those whose motivation serves the organization’s needs.

Generative Governance

In “Governance as Leadership”, Chait et al state that Type III governance is generative governance. This entails the board searching for new meaning in the organization’s and the community’s reality. The board looks to the future and considers what the organization might achieve and how it can respond in new ways to the changing environment in which it works. Board members believe that they can add value to the organization. They are not just there to rubber stamp CEO recommendations.

If boards really want to lead an organization, if they want to make a notable impact for the community or the shareholders, they will prove the maxim “two heads are better than one”. The diverse group of competent individuals will add great value to the organization by sharing insights, innovations, and wisdom. All board members will wear their thinking caps and generate and express valuable thoughts. The CEO can then determine the best way to incorporate the board’s ideas and direction for optimal organizational results.

This concept of generative governance is also seen in the “direct”, “reflect”, and “respect” disciplines in Strive!’s Governance Excellence Model (GEM). For boards to truly be leaders of their organizations they must fully engage in charting new ground that raises the organization to new heights.

Generative boards proactively position the organization to greet the future with notable success.

Strategic Governance

In “Governance as Leadership”, Chait et al state that Type II governance is strategic governance.
This refers to the board being active in the organization’s strategic decision making. This includes the full board being engaged in the strategic planning process to determine high level priorities that guide the organization for meaningful impact. It also involves monitoring operational progress to ensure appropriate progress towards the stated measurable goals. In strategic governance the board directs the organization and expects management to implement strategy that achieves the goals. This concept of strategic governance might be compared to the “direct” and “expect” disciplines in Strive!’s Governance Excellence Model (GEM). If boards wish to be seen as organizational leaders they need to engage in the leadership activities that are encompassed in strategic governance.

Fiduciary Governance

In “Governance as Leadership”, Chait et al state that Type I governance is fiduciary governance. This is a basic requirement of all boards with official decision-making authority for the organization. Fiduciary governance refers to the board’s role to provide oversight to the organization’s activities. The board ensures that resources are used to serve the organization’s mandate or purpose and that it operates in a legal and ethical manner. This concept of fiduciary governance might be compared to the “protect” discipline in Strive!’s Governance Excellence Model (GEM). It is a fundamental responsibility of the board to protect the organization’s resources and its owners’ interests. This fiduciary responsibility is the board’s responsibility. It cannot legitimately be delegated to anyone else.

Three Ways to be Governing Leaders

I encourage organizational leaders who strive for excellence in governance to read “Governance as Leadership” by Richard Chait, William Ryan, and Barbara Taylor. This Board Source book does an excellent job of “reframing the work of nonprofit boards”. It addresses some simple principles of great governance.

The authors suggest that board members can serve the organization with three types of work: fiduciary, strategic, and generative. The first board role is to fulfill its fiduciary duty; to oversee operations, ensuring that the organization conforms to legal requirements. The second role is to devote time to developing strategies that guide the organization to effective and efficient performance, thus furthering its mission. Some boards also fulfill the third role which requires working at even higher levels; they generate new ideas and concepts that enable the organization to move into the future with innovative and creative products, services, and solutions.

Developing Measurable Strategic Goals

A governing board is responsible for the organization’s strategic planning process, including measurable strategic goals. Great goals are SMART goals. They are specific, measurable, achievable, reach requiring, and time-bound. Three common reasons that boards don’t develop measurable strategic goals are that the task requires hard mental work, board members often don’t know what to measure, and the board isn’t sure what level of achievement is reasonable.

Executive Director Ineffectiveness is a Board Problem

So many times in the past month board members have told me that there are no problems with their board. Then they proceed to tell me that the biggest problem in the organization is that the Executive Director is not moving the organization froward or achieving the organization’s goals. My immediate thoughts are “Your board has a big problem!”

The most important role of the board is often considered to be ensuring that the organization has an appropriate senior staff person. To this end the board is responsible to hire an individual with the attitude, skills, and knowledge to move the organization forward by achieving its goals. That is just the first element in the board’s job regarding the senior staff person. The board is also responsible for ensuring that there is a current strategic plan with appropriate, measurable and time-specific objectives. The board ensures that resources and training are made available so the operational side of the organization is equipped to achieve the goals. Then the board asks for specific monthly or quarterly reports from the senior staff person to monitor progress towards the goals. The board gives feedback on the progress, praising work that is on track and asking for improvement regarding goals that aren’t being met. An effective board holds the senior staff person accountable by insisting on seeing corrective action plans quickly after noticing underachievement of a goal and by monitoring progress more frequently in underperforming areas that are critical to the organization’s future. If the business environment has changed so that the goals are no longer appropriate, the board changes the goals to provide redirection. If the senior staff person is not able to lead operations to achieve the current goals, then he is the wrong person for the job. Now the board is responsible to remove him from the position and start the hiring process again.

Encouraging an Engaged Workplace Culture

Yesterday, when I shared with a former employee of a large corporation that I am a governance consultant, she had an immediate heartfelt response. “Boards don’t care about employees”, she declared. “They make decisions without any regard to how they will impact the employees’ work life.” Unfortunately that may be a common employee opinion. When the workplace culture drains energy rather than generating energy, the organization achieves less and has weak financial results. This should be of grave concern to the board.

One of the board’s key roles is to direct the organization in the interests of the owners. Directing includes developing the strategic plan and involves stating clear organizational values. Some boards identify the concept of employee engagement – a proactive, mission-focused staff team – as a value. This tells the senior executive that he is expected to create and maintain a positive, rewarding workplace culture. It also sets the expectation that the board will set policies and make decisions that enable a fulfilling employee experience.

Another key role of the board is to protect the interests of the owners.

Monitoring Financial Results

The board’s responsibility to protect the interests of the organization’s owners includes monitoring financial performance. Many boards request financial reports on a monthly basis. Others might review finances every quarter. Some CEOs provide the board with a sparse one-page financial report that provides inadequate information. Others compile an inch thick package in which the board-relevant numbers are buried.

Many boards simply ask for a financial report and leave it up to the CEO and CFO to determine what to include. However, a proactive board is very specific in its request. It might ask for a one-page balance sheet showing this year’s figures to-date and last year’s figures at the same date; a two-page income and expense statement with this year’s and last year’s year-to-date figures as well as this year’s budget year-to-date; and a report explaining every line on the income and expense statement that varies from budget by more than 5%. Some boards ask for a cash flow report monthly, others ask annually. This statement allows the board to review the organization’s ability to meet its financial obligations. The board might also ask for some key financial ratios such as profit as a percentage of gross income. The report should include the numbers that quickly allow the board to determine if the budget parameters are being met.