Part 2 of this series was a continuation of the conversation with Tom and his role as a board director. That conversation included a discussion on the the distinction between management and governance and a link to some thought provoking questions for a board director to consider.
In this third installment, I will describe some observations I have made after a number of governance audits I have had the privilege of conducting. For example, in the UK many charities / not for profits are taking a renewed interest in their governance practices given the recent high profile liquidation of Keeping Kids Company.
The challenge is that volunteers who become directors / trustees are often selected for their industry or business expertise. An insurance board needs insurance people, a college of health practitioners requires that professional, an organization that delivers homeless services requires people from that sector. And so they arrive at a board meeting, often with a cursory orientation, and begin attending meetings to offer their expertise and provide oversight.
But often times there is no clear governance model in place, within which to conduct the organizations’ business. There is no structure in place to govern rather than manage. Ask the CEO if they receive clear guidance and instruction from the board. The CEO who can answer yes will likely tell you that the board provides oversight of course, but also foresight and insight.
These latter two notions are really what provide value to the organization. Board conversations that help the CEO step away from the daily challenges and offer insights and foresight are helpful in a few ways. They offer the CEO a new perspective on the purpose of the organization. They challenge the CEO to consider new risks or new external developments that may be opportunities. The conversation can help the CEO explain the challenges and even ask for more resources to deliver against its purpose.