Strategic Objective #1: Do not lose governance mojo.
One of my clients has recently lost its governance mojo, and what is ordinarily an enduring and industrious relationship between the Board and the Executive has faltered because of misunderstandings around the strategic plan.
The association is led by a confident and capable Chief Executive (as are most of my clients, I hasten to add!): he is professional, yet personable; has a considered strategic focus; and has a naturally positive and creative approach to business development. It is a successful international membership body with a global reach across 30+ countries. The Chief Executive has a positive and constructive relationship with his Board of Directors, which operates as a high-performing team, with decision-making informed by trust-based dynamics, and performance which is centred around honesty-based governance. I enjoy working with them and am always motivated by their energy, commitment and enthusiasm for enhancing the performance, interests and influence of their association and its members.
Sounds too good to be true, doesn’t it?! Surely this is some kind of utopian fantasy; an association Shangri-La, where governance is beyond reproach, members are always happy, and the Chief Executive is celebrated for every [undoubtedly good] decision that he makes…!
Alas, as is the case for every professional association, governance is not always a straightforward prospect for this client. Indeed, the Chief Executive called me recently to discuss a problem with strategic planning: despite his Board’s ambitions and high levels of engagement, he was frustrated and confused by their evident reluctance to contribute to the development of the organisation’s new strategic plan. Moreover, he was worried that despite his best efforts, they would fail to approve this necessary document and, worryingly, fail to agree the future direction of the association.
Was I surprised? Probably. It did seem out of character for this Board, particularly as I’ve witnessed their cohesive and productive relationship with the Chief Executive and the management team. I read the draft strategic plan, and whilst you can present strategy in a variety of ways, what was proposed was recognisable as a robust and ambitious but realistic plan and, if I were a director, I would have no qualms in approving its implementation. So why are they seemingly so dubious of the plan and wary of agreeing its objectives?
As we delved into the detail and reviewed the Board’s discussions surrounding their indecision, a common complaint was that Directors didn’t know what they were being asked to consider: was their input required on operational detail, or were they simply to approve top-level objectives? Were they being asked to identify specific performance measures or just to agree the proposed target metrics? Was their opinion sought on business development, or were they just rubber-stamping the senior management team’s vision for the next five years? Despite the Chief Executive’s repeated representations, the Board was still unsure of his expectations.
These Directors are experienced professionals and have demonstrated strategic talent. They understand strategy, which they can easily differentiate from operations, and so their questions are a stark contrast to their generally positive style, which points to an obvious conclusion: The Board has not agreed its formal governance model. They understand and adhere to the principles of governing behaviour (responsive, efficient, transparent, accountable, participatory, etc); they have had formal induction and had their responsibilities as company directors explained; but whilst they were told to “be strategic”, within the context of the association’s governance structures, they have not agreed on what “be[ing] strategic” actually looks like, not least in relation to the role of the Chief Executive and the senior management team, but also in terms of the broader governing culture of the organisation. They cannot make decisions because they don’t know the parameters of the strategic decision-making process.
Research shows that adopting and adhering to a clear basis for how a Board operates (a model of governance) leads to improved practice. There are several models available and it is important that Boards adopt a model that is relevant to them, enhances the values of the association, clarifies expectations of the Board, and explains operating protocol, such as what it means to “be strategic”. Using one of the models, or developing a hybrid of the models and implementing a bespoke approach, will help an organisation to be governed well, and ensure there is less confusion between the role of the Board and that of the Executive.
For those associations registered, the Charity Governance Code is an obvious starting point, and for all organisations there are the Management, Results-based, Relationship and Policy Governance models to consider, to name a few. Personally, I favour the Governance as Leadership model, which provides a powerful framework for working between the Board and staff, i.e. more macro-governance in exchange for less micro-management, which I believe can only be a good thing for everyone involved in leading, managing and running the organisation. The model outlines three modes of governance which Boards should use at appropriate junctures during their annual business cycle, each serving important purposes, and together adding up to governance as leadership:
Fiduciary: the Board’s central purpose is the stewardship of tangible assets and its principle role is to guard these. It oversees operations and ensures efficient and appropriate use of resources, legal compliance and fiscal accountability.
Strategic: the Board’s central purpose is to ensure a winning strategy for the organisation, and its principal role is to be a strategic partner to senior management. Its core work includes setting priorities, reviewing and modifying strategic plans, and monitoring performance against plans.
Generative: the Board’s central purpose is to be a source of leadership for the organisation, and its principal role is as a “sense maker.” The Board “decides what to decide”; discerns challenges and opportunities; and probes assumptions, logic and the values behind strategies. Generative thinking is a cognitive process for deciding what to pay attention to, what it means, and what to do about it.
Most boards find it easier to undertake fiduciary responsibilities rather than strategic and generative responsibility, and whilst ensuring legal and regulatory compliance is critical, boards that spend all of their time focusing on compliance and not also on association development, are not performing adequately.
I will advise my client accordingly and we will work together to define the association’s governing model. There’s no need to dwell on previous shortcomings, and rather than be downhearted by any flaws in the governance structure, I’ll suggest we embrace the exercise as an opportunity to recapture our governance mojo and to enhance the Board and the association’s performance. I’ve no doubt doing so will prove beneficial, not only as a means of agreeing the strategic plan, but more fundamentally as a way of ensuring the association’s approach to governance promotes attitudes and a culture where everything and everyone works toward fulfilling the association’s vision, mission and values.
If your association would like advice on identifying, understanding or reviewing your governance model, then please contact me to discuss.