Overcoming The Greatest Challenges To Board Effectiveness

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Governance Effectiveness
Workshop
Sunday July 29th, 2012
Yvonne D. Harrison, PhD
“IN THEORY, THERE IS NO DIFFERENCE BETWEEN
THEORY AND PRACTICE; IN PRACTICE, THERE IS”
YOGI BERRA
“BOARD CHECK-UP”
HELPING NONPROFIT BOARDS BRIDGE THE GAP
BETWEEN THE IDEAL AND REALITY IN THE GOVERANCE
OF NONPROFIT ORGANIZATIONS
Overview
• Gap between theory and reality in board
effectiveness
• Paradoxes facing boards
• Self-assessment tool to bridge them
• Practicing self-assessment
• Effectiveness of boards that have participated
in the research
In theory…
•
•
•
•
The board represents the owners of the organization
The board is the ultimate governing authority of the
organization and is legally liable for its actions
The board exercises duties of diligence, care and loyalty in the
governance of the organization
The board may delegate day-to-day management to a Chief
Executive Officer however it remains responsible for setting
the strategic direction and broad policies within which the
CEO must manage
The reality of governance…
• It’s not always clear who the “owners” are
• Boards often lack time and resources for closely monitoring
owners’ wishes
• The views of stakeholders are not always uniform
• Many board members lack expertise in the organization’s
“business” so find it difficult to establish strategic directions
with confidence
• Due diligence too often tends to stop at finances
• Too little time is actually spent on discussion of strategic
issues and assessing performance
Paradoxes facing Boards
•
•
•
More information and tools are available on how to improve board performance
(Murray, 2004; Lichenstein & Lutz, 2012)
Many boards recognize the need to assess board performance (BoardSource,
2010).
Empirical research shows a link between the practice of self-evaluation and
improved performance (Herman and Renz, 2004).
YET
• Improving governance is one of the biggest challenges facing nonprofits
(Murray, 2004; Bell et al, 2006)
• Many boards lack the time, financial resources, and technical expertise to
conduct performance assessments (BoardSource, 2010; Holland, 1991)
• There is a lack of theory that explains why and how boards become
effective (Harrison and Murray, 2011)
WHAT’S THE SOLUTION TO BRIDGE THESE PARADOXES?
Free Theory-Based
Board Self-Assessment
Research and Development Tool
www.boardcheckup.com
Board Check-Up
• Diagnostic
– Elements of the governance process
– Factors that influence the governance process
• Method
– Critical assessment process
• Information System
– Self-assessment tools
– Reports
• Governance Effectiveness Research Project
– Descriptive—identifying the most challenging governance issues
– Analytical—determining the significance of relationships between GE
and OE
– Theoretical—why do boards become ineffective? To what extent does
the practice of BSA increase GE? What is the impact of BSA on nonprofit
boards and organizations?
Board Check-Up
Board
Check-Up
Information
System
BIA
(BCU-IS)
Board SelfAssessment
(BSA):
Outputs
Information in
Two Reports
BSA
BCUIS
FU
BSA
BIA
Board Impact
Assessment
(BIA):
Change in
Governance
Effectiveness
CONCEPTUAL FRAMEWORK for RESEARCH PROJECT
Influences
Governance Process
Effectiveness
5. Structures
& Processes
6. Meetings
7. Composition
and Development
8. Culture
Roles and
Responsibilities:
1. Fiduciary
2. Planning
3. Performance
Assessment
4. Fundraising
State of Board
Effectiveness
9. Leadership
CEO/
Board Chair
WHO and HOW
WHAT
WHY
Nonprofit
Organization
Effectiveness
Method
• Examination is similar to a medical check-up
– Symptoms. Understanding the issues that
challenge boards. Check-Up helps boards define
issues clearly and confidentially.
– Diagnosis. Effort is made to understand the
causes of issues through discussion and further
examination.
– Treatment. Once the issue has been properly
diagnosed, a treatment program to remedy the
situation should begin.
Your Turn to Practice the Governance
Self-Assessment Process
• Guidelines include statements of issues and a
framework for assessing them in nine dimensions
• Turn to your neighbour to discuss issues that
challenge your board’s effectiveness.
• Use the guidebook to frame your discussion:
– Discuss the symptoms as you see them in your
organization.
– What are the causes (diagnosis)?
– Report out on any treatment you will consider
introducing to your organization.
Large Group Discussion
– What were the Symptoms?
• What are the issues? How significant are they in your
organization?
– What was the Diagnosis?
• Why do they exist/persist in your board and
organization (i.e. what are the causes)?
– Any Treatment?
• What strategies might resolve the issues? How would
you go about implementing them?
1. How effective are nonprofit boards?
Three measures:
1. Computed BE Score (272 Max Score)—M =195.79, SD = 34.01
2. Levels of BE
Severely Challenged
Moderately Challenged
Moderately Effective
Highly Effective
Total
Frequency
15
106
229
137
487
3. Overall Perception of BE (4 point scale)
• Good (M = 3.0, SD = .71)
www.boardcheckup.com
Percent
3.1
21.8
47.0
28.1
100.0
Board Effectiveness Total Scores
www.boardcheckup.com
2. What issues are the most problematic?
Survey Items
N
Mean
SD
1.
The board has problems engaging in actual fundraising activities.
(Board Resource Development)
406
2.35
1.03
2.
The board has not approved an overall strategy for fundraising.
(Board Resource Development)
405
2.50
1.06
3.
The board seems confused about its role in fund raising for the
organization. (Resource Development)
425
2.52
1.08
4.
Finding high quality new board members is a problem for us. (Board
Composition and Development.)
456
2.53
1.07
5.
There is not enough ongoing development and training for regular
board members (Board Composition and Development)
460
2.54
.92
6.
The board does not regularly and systematically assess its own
performance and change itself if it thinks it can improve. (Board
Culture)
444
2.62
1.00
7.
Some committees have members who contribute very little or don’t
have enough experience to be of much help. (Board Structure)
411
2.62
1.04
8.
The board rarely holds creative thinking sessions aimed at trying to
find new ways the organization could develop. (Board Planning)
468
2.63
1.02
9.
The board does little to learn about innovations tried by others that
might help the organization. (Board Planning)
455
2.74
.95
10. Some board committees are unclear about their responsibilities
and/or authority (Board Structure).
421
2.75
1.04
www.boardcheckup.com
2. What issues are the least problematic?
1.
As far as I know the relationship between the CEO and the board
chair is quite formal; they don’t talk much off the record.
(Leadership)
2. There seems to be a lack of trust between the CEO and the board.
(Leadership)
3. The board seems too large and cumbersome to enable it to act as an
effective decision-making body. (Board structure)
4. The board does not do a very good job of ensuring that the
organizational finances are being managed soundly. (Organization
performance assessment.)
5. Meetings stick too much to formal rules of order so that thorough
probing discussions are discouraged. (Meeting quality)
6. The board chair seems to have her/his own agenda, which is not
always shared by others. (Leadership)
7. The CEO seems to be trying to dominate or control the board too
much. (Leadership)
8. The board chair tends to be too passive. (Leadership)
9. There is too much unconstructive arguing among some members
during meetings. (Meeting quality)
10. The board chair tends to be overly controlling. (Leadership)
www.boardcheckup.com
N
378
Std.
Mean Deviation
3.68
.65
444
3.66
.65
479
3.62
.69
465
3.61
.68
475
3.61
.62
466
3.59
.75
439
3.57
.78
467
471
3.56
3.56
.73
.74
470
3.54
.81
2. What issues challenge boards the most/least?
Scale 1-4
1. Board leadership quality
2. Board meeting quality
3. Board’s role in assessing organizational
performance
4. Board structures and processes
5. Clarity of board’s basic responsibilities
6. Board’s informal culture
7. Board’s responsibilities for planning
8. Board composition and development
9. Board’s role in fundraising
www.boardcheckup.com
N
482
485
486
Mean
3.48
3.29
3.16
Std.
Deviation
.53
.55
.65
486
485
481
487
486
429
3.138
3.134
3.01
2.94
2.74
2.47
.61
.66
.64
.70
.77
.93
3. What is the relationship between board and organizational
effectiveness?
r
Significance
Composition and Development and OE
Planning and OE
Performance Assessment and OE
Structures and Operating Processes and OE
Meetings and OE
Culture and OE
Clarity of basic Responsibilities and OE
Leadership and OE
Fundraising and OE
.474
.456
.455
.440
.407
.403
.353
.338
.328
p<.001
p <.001
p <.001
p <.001
p <.001
p <.001
p <.001
p <.001
p <.001
Overall board effectiveness (computed) and OE
Single item measure of BE and OE
.496
.535
p <.001
p <.001
Variables (N = 466)
www.boardcheckup.com
4. To what extent do perceptions of board effectiveness vary?
Board Chair and Executive
Committee and Committee
Chair Roles
Frequency
Percent
Severely Challenged
2
1.1
Moderately Challenged
41
21.8
Moderately Effective
94
50.0
Highly Effective
51
27.1
188
100.0
Severely Challenged
1
1.9
Moderately Challenged
15
28.3
Moderately Effective
28
52.8
Highly Effective
9
17.0
Total
53
100.0
Severely Challenged
9
4
Moderately Challenged
44
19.6
Moderately Effective
97
43.3
Highly Effective
74
33.0
224
100.0
Total
ED and Management Team
Roles
Board Member (No
Committee Responsibility)
Role
Total
www.boardcheckup.com
4. To what extent do perceptions of board effectiveness vary?
Issues
Fundraising
Planning
Composition and
Development
Culture
Basic Responsibilities
Performance Assessment
Structures and Processes
Meetings
Leadership
Chair
ED
N=46
1
3
2
5
7
6
4
8
9
Board
Member
N=224
1
3
2
Other
N=35
1
3
2
Board
Officer
N=142
1
3
2
4
6
7
5
8
9
4
5
7
6
8
9
4
5
7
6
8
9
4
5
6
7
8
9
www.boardcheckup.com
N=36
1
3
2
Summary
• The reality is that bridging governance paradoxes
is difficult.
• Board Check-Up is a tool to increase board
capacity to conduct reliable and valid selfassessments.
• To return value, boards need to use the tool and
critically consider the information generated from
it.
• Discussion should acknowledge strengths and
spotlight challenges
• Consider best practices that match the situation.
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