The true role of the board: how governance has been hijacked

Why is the term ‘governance’ used so often as a descriptor for all things that have gone wrong in an organisation? Problems are due to ‘a break down in governance’ or ‘not enough governance oversight’.

On the other hand, good governance is seen primarily as having the right sort of processes, procedures, charters and policies. This notion of governance focuses on governance as a system, a series of checks and balances in an organisation, the fiduciary oversight of assets on behalf of the organisation’s owners and stakeholders. To me, this is a hijacking of the possibility and promise that governance can give to an organisation and its stakeholders.

What if governance was a lot simpler than most people believe it to be? What if all the governance processes and policies were just tools to assist the board ‘to make the choices that create the future for the communities they serve’?

The implications of this simple description of governance are profound.

1. Make the choices

Most people mistake ‘making a decision’ for ‘making a choice’. A decision is typically seen as something that is final and unchangeable.

If a board regards decision making as finding the ‘right answer’, then once they have found this, they typically stop questioning whether that ‘decision’ is actually working for them. If a board is looking for the answer, then the information they search for will typically be constructed and filtered to show how right the answer is. There is little questioning around alternatives and options.

What if we did all the required analyses, and then made a choice from amongst the various available options, and also reserved the right to change that choice if other things changed?

Practical application

• Ensure that all board members understand that making a choice is about choosing from options.
• Insist on at least two options for any board issue; the board’s role is to discuss, question, test and choose from the available options.
• Provide at least two strategic questions for the board to consider that will open discussion on the choices that could be made.
• Constantly review the strategic environment for anything that might impact your choice, and be prepared to make another choice if circumstances change.

2. …that create the future

The role of the board is to make the choices that create the future for the communities they serve.

Creating the future is about being aware of what is happening in the strategic environment, focusing on the things that are likely to affect your organisation and then choosing what needs to be modified, created or stopped.

The definition of being strategic is exactly that: constantly ask what’s happening out there, what it means to me, and what I need to do about it.

Practical application

• Facilitate the board to be more strategic by recasting its agenda to reflect the key strategies from your strategic plan.
• Add the vision statement to the board agenda – this can focus the discussion on what is really important to the organisation.
• Ensure that staff reports or proposals indicate how they are achieving the strategic directions and where they fit in the strategic plan.
• Every second board meeting, arrange for someone to provide the board with strategic insight into the environment surrounding their decisions, and the implications of these insights for the organisation.
• Ask a staff member to make presentations to the board at every second meeting, regarding the strategic issues that that person faces in their area of responsibility. Encourage the board to ask questions about those strategic issues.
• Develop a section of the agenda where the board can bring to attention any changes or insight that may affect the assumptions of the organisation’s strategic plan.

3. ….for the communities they serve

The purpose of your organisation is to make a difference in the communities you serve. These communities will occasionally change as demographics and strategic focus shifts, and need to be continually monitored for the impact your organisation is having.

Stakeholder engagement should focus on the following questions:

• Who are our stakeholders this year?
• Has this changed or is likely to change next year?
• What do our stakeholders perceive as our impact on these communities?
• How do we engage with our stakeholders to facilitate greater change?

By focusing on the communities you serve you maximise the possibility of the board being strategic, and minimise the possibility of being self-perpetuating and self-interested.

The discussions that this leads to are fascinating, interesting and can truly lead to change in our world – which is why our organisations exist in the first place.

Practical application

• At least once a year have a formal board discussion about your communities and these questions of stakeholder engagement. Map this against current strategic plan initiatives to see if anything needs to change.
• Involve key stakeholders in your strategic planning team – the optimum team planning size is 15–20 people, usually consisting of the board, senior staff and key stakeholders.
• Involve key stakeholders in your risk identification process, as they will perceive your organisation from a different point of view, which may unlock some potential risks you had not considered.
• Develop performance measures that identify the changes in your communities from the strategies and programs you are undertaking. Some of the simplest yet most profound methods are measuring communities’ perceptions of the changes created by your existence. This will keep the board grounded in their reason for existence.

About Steven

Steven Bowman is a director of Conscious Governance.com online resources, based in Melbourne, Australia. He is sought after by not-for-profits (NFPs) globally as an expert adviser on conscious leadership, governance, strategic innovation, and awakening the power of strategic awareness. Visit www.conscious-governance.com or email him on steven@conscious-governance.com

Steven Bowman

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