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| Board Governance Styles - Part I By Dan Mirgon, CFRE
Introduction
Ministry boards we look at tend to fit into
one of five styles of governance.
In this months enewsletter and next we will look at the following Board Styles:
•Advisory Board, •Patron Board, •Co-operative Board, •Management Team, and •Policy Board.
Advisory Board This model emphasizes the supportive role of the Board and frequently occurs where the CEO is the founder of the organization. The Board's role is primarily that of helper/advisor to the CEO. Board members are recruited for three main reasons:
Individual board members may be quite active in performing these functions and consequently feel that they are making a valuable contribution to the organization. Board meetings tend to be informal and task-oriented, the agenda being developed by the CEO.
An Advisory Board can work well for a short time in many organizations but it exposes the board members to significant liability in that it fails to provide the accountability that is required of boards of directors. Legally, the board is obligated to manage the affairs of the organization and can be held accountable for certain actions of employees and committees. It must therefore maintain a superior position to the CEO. Although the board is permitted to delegate many of its responsibilities to staff or committees, it cannot make itself subordinate to them.
Patron Board Similar to an Advisory Board, the Patron Board has even less influence over the organization. Composed of wealthy and influential individuals with a commitment to the mission of the ministry, the Patron Board serves primarily as a figurehead for fund raising purposes. Such boards meet infrequently because their real work is done outside board meetings. Writing checks and getting their friends to write checks is their primary contribution to the organization.
Many organizations maintain a Patron Board in addition to their governing boards. For capital campaigns and to establish credibility of a newly formed organizations, Patron Boards can be especially helpful. Unfortunately they cannot be relied upon for tasks such as vision development, organizational planning, or program planning.
Co-operative Board For a number of reasons, some organizations try to avoid hierarchical structures altogether. Decision-making authority in these organizations is typically labeled "peer management" or "collective management". All responsibility is shared and there is no Chief Executive Officer. Decision-making is normally by consensus and no one individual has power over another. It’s almost as though if it were legal, they wouldn’t have a board of directors at all.
The organization therefore strives to fit the board of directors into its organizational philosophy by creating a single managing/governing body composed of official board members, staff members, volunteers, and sometimes clients.
While perceived as democratic, it is the most difficult of all models to maintain, requiring among other things, a shared sense of purpose, an exceptional level of commitment by all group members, a willingness to accept personal responsibility for the work of others, and an ability to compromise. When it works, the organization gains the involvement of front-line workers in decision-making and the synergy and camaraderie created by the interaction of board and staff.
There are two areas of concern with this model, however.
The first is that although the ability to compromise is an essential element in the successful functioning of this model, cooperatives often arise out of a strong ideological or philosophical commitment that can be inimical to compromise.
The second concern is the difficulty of holding people accountable. When this model is implemented, there is usually a high degree of motivation in the organization which reduces the desire to install accountability mechanisms. As personnel changes take place, though, the sense of personal commitment to the group as a whole may be lost.
In the co-operative model, there is no effective way to ensure that accountability for individual actions is maintained.
Management Team Model For many years, most nonprofit organizations have been run by boards which operate according to the model of a Management Team, organizing their committees and activities along functional lines. In larger organizations, the structure of the board and its committees usually mirrors the structure of the organization's administration. Just as staff is responsible for human resources, fund-raising, finance, planning, and programs, the board creates committees with responsibility for these areas.
Where there is no paid staff, the board's committee structure becomes the organization's administrative structure and the board members are also the managers and delivers of programs and services. Individually or in committees, board members take on all governance, management and operational tasks including strategic planning, bookkeeping, fund-raising, newsletter, and program planning and implementation.
The widespread adoption of the Management Team model comes from modern ideas about team management and democratic fairness in the workplace. It also fits well with the widely held view of nonprofits as volunteer-driven or at least nonprofessional organizations. This model fits well with the experience of many people as volunteers in community groups like service clubs, Home and School groups, scouts and guides, and hobby groups. It also mirrors the processes involved in the creation of a new organization or service. It is no wonder then, that most books and articles written between 1970 and 1990 (and many written more recently) define this model as the ideal.
Management Team boards are characterized by a high degree of involvement in the operational and administrative activities of the organization. In organizations with professional management this usually means highly levels of supervision of the CEO and staff at all levels of the organization. Structurally, there may be many committees and subcommittees. Decision-making extends to fine details about programs, services, and administrative practices.
When working well, two criteria tend to be used in the selection of members: their knowledge and experience in a specific field, such as business or accounting; or because they are members of a special interest group or sector that the board considers to be stakeholders.
While this model works well for all-volunteer organizations, it has proven to be less suited to organizations that already have professional management and full-time employees. Indeed, the deficiencies of this model have led to the current thinking in the field which differentiates "governance" (the practices of boards of directors) from "management" (the practices of employees) and the deluge of research, articles, and manuals on this topic.
The most important shortcoming is that all too frequently, it degenerates into what I call the Micro-Management Team Model in which board members refuse to delegate authority, believing that their role requires them to make all operational decisions, leaving only the implementation to paid staff. The result is invariably a lack of consistency in decisions, dissatisfied board members, resentful staff and a dangerous lack of attention to planning and accountability matters.
Policy Board The need to differentiate the board's role from the manager's role arose from the failure of many organizations to maintain proper accountability at the highest levels and the dissatisfaction of many board members over their inability to comply with the expectations of their role. They began to ask why they felt ineffective and frustrated as board members, when they were such competent and accomplished individuals.
This led to an examination of the role of the board, the relationship between the board and the CEO, and the relationship between the board and the community.
The originator and most influential proponent of the Policy Board Model is John Carver, whose book, Boards that Make a Difference, has had a great effect on thousands of nonprofit organizations. All Policy Boards share the view that the job of the board is: to establish the guiding principles and policies for the organization; to delegate responsibility and authority to those who are responsible for enacting the principles and policies; to monitor compliance with those guiding principles and policies; to ensure that staff, and board alike are held accountable for their performance.
Where the models diverge is the way these jobs are done and the extent to which strategic planning and fundraising as are seen as board jobs.
Boards operating under the Policy Board are characterized by a high level of trust and confidence in the CEO. There are relatively few standing committees, resulting in more meetings of the full board. Board development is given a high priority in order to ensure that new members are able to function effectively, and recruitment is an ongoing process. Members are recruited for their demonstrated commitment to the values and mission of the organization.
Next month we will ask the question; “Which Model is the Right One?
Stay tuned!
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Each
approach emphasizes different aspects of the roles and responsibilities of
boards and each arises out of a different relationship between the board and
staff.