The Global Network of Director Institutes brings together membership organisations from around the world with the aim of sharing governance expertise and furthering professional director development. Earlier this year, the institute released a joint policy paper that highlighted the significant and positive impact a diverse board can have on organisational outcomes.
Why is it important to have a diverse not-for-profit (NFP) board?
NFP directors are subject to the same duties and responsibilities as their counterparts in the for-profit sector and are facing increasingly complex organisations, regulatory environments and funding pressures.
An effective board of directors is crucial to the success of any organisation. Ensuring that a board contains an appropriate mix of skills, experience and background, is crucial for maximising board performance and an essential part of good corporate governance.
What attributes should NFP board members have in common?
There is no set formula for determining the effective composition of a board. Each board is different and much will depend on a range of factors including the organisation’s size and its stage of development.
The board or its nomination committee should consider implementing a plan for identifying, assessing and enhancing director competencies. Competencies for board members can be broken into job-related skills and personal qualities necessary to perform their role as a director. It’s important to acknowledge that not all directors will possess each necessary skill or quality, but the board as a whole must seek to possess them.
While it will vary greatly between organisations, the common job-related competencies sought on boards include:
Different directors will bring different technical skills and knowledge to a board. Nevertheless there are certain personal qualities desirable in all directors:
What does a skills gap analysis entail?
There are some general skills that every board member should possess, and other specialised skills that only one or two members need to possess if the board is to be properly functional.
An evaluation of the range of skills, experience and expertise that exist on the board is important when considering new candidates for nomination or appointment. Such an evaluation requires identification of the particular skills that will best increase board effectiveness.
In short, this evaluation should include:
What can NFP boards do to ensure ongoing board diversity?
Boards should adopt a range of measures for achieving greater diversity, which are tailored to the needs of the organisation. It’s not only good social policy but it makes good sense that our boards and NFP organisations benefit from all the talent that is available to them.
This may include:
Third Sector acknowledges the traditional custodians of the lands where we live, learn and work. We pay our respects to Elders past, present and emerging.