NONPROFIT GOVERNANCE:
The Next Generation –
evolution of structure and function
Prepared for:
FEDERATED PRESS
Ruth R. Armstrong
MBA
management services
Toronto, Ontario
416-691-7302
66 Glen Davis Crescent Toronto ON M4E 1X5
November 6, 1998
NONPROFIT GOVERNANCE:
The Next Generation –
evolution of structure and function
This paper recognizes that governance has been an important aspect of our
nonprofit organizations for over a century. In the recent past as the environment
has changed dramatically and governance has become a focus of study, an
evolution is occurring.
There is no agreement in the field on the best way to structure a board for
effectiveness. There is instead an evolution of diversity of thinking about
governance models, structures and functions.
Four governance models are described within a framework and analyzed to
suggest that choosing a hybrid model to suit an organization’s specific
characteristics has merit.
The conflict between theory and practice further reinforces the inadequacy of
theoretical constructs which cannot withstand the reality of human nature,
organizational features and environmental pressures. This conflict is explored
against key success/failure factors for boards.
Whatever hybrid model is chosen, structural forms such as committees,
information, agendas and board meetings must be in alignment with the board’s
function, culture and strategy. A discussion of these structural forms suggests a
variety of options to consider.
Table of Contents
Acknowledgements ................................................................... Page 1
Introduction ............................................................................... Page 2
Models of Governance .............................................................. Page 4
1.
Policy Governance Model .................................... Page 5
2.
Constituency Model ............................................. Page 6
3.
Corporate Model ................................................... Page 8
4.
Emergent Cellular Model...................................... Page 9
Tension between Theory and Practice ..................................... Page 11
Key Success/Failure Factors ......................................... Page 12
1.
Leadership........................................................... Page 12
2.
Legitimacy and Power ........................................ Page 12
3.
Job Definition ..................................................... Page 16
4.
Culture ................................................................ Page 17
5.
Competence ........................................................ Page 18
6.
Management of Board Process ........................... Page 18
Structure .................................................................................. Page 19
Committees ................................................................... Page 19
Information.................................................................... Page 19
Agendas......................................................................... Page 20
Board Meetings ............................................................. Page 21
Conclusion ............................................................................... Page 22
References ............................................................................... Page 23
NONPROFIT GOVERNANCE:
The Next Generation — evolution of structure and function
ACKNOWLEDGEMENTS
I wrote this paper after many stimulating conversations where my assumptions were
challenged and new insights formed.
I would like to thank:
Michael Armstrong
Marilyn Dumaresq
Leslie Wright
for their insightful contributions to the thinking behind this paper.
The four models of governance were developed within a dynamic working group charged
with the task of creating a new governance model for a Health Canada project.
I would like to thank:
Pat Bradshaw
Bryan Hayday
Liz Rykert
for the creativity that flowed from our sessions.
Ruth Armstrong, VISION Management Services
1
NONPROFIT GOVERNANCE:
The Next Generation — evolution of structure and function
INTRODUCTION
Seven years ago only two people registered for a York University sponsored workshop on
Board Development. Today, workshops on governance are oversubscribed, consultants are
being hired at a furious rate to work with boards, and publications about governance are
proliferating.
Nonprofit organizations and their boards have been part of the Canadian landscape for over a
century. The focus on governance as a field of study however is recent. As all our systems
are undergoing radical change, nonprofit governance too is evolving.
This paper explores four models of governance, tension between the theory and practice of
governance, and the structures that support governance.
Understanding boards has evolved from exploring grassroots citizen participation in the
nonprofit board room to studying more sophisticated governance roles.
The last few decades have seen management boards fulfilling dual governance and
management roles as nonprofit organizations have become established. The board’s focus
has been to build the organization’s foundation and strength. Often management skills were
not available or affordable to a growing organization. In these situations, board members
also offered their volunteer skills in a management capacity. Board members did double
duty.
Organizations (staff and budgets) have grown and management skills have been hired.
Boards often became (and some still are) working boards offering skills (accounting,
personnel, program) to supplement limited staff resources. At the same time, boards fulfilled
their governance role by developing policies at all levels. Policies and issues however were
usually brought to the board by the chief executive officer.
Boards and chief executive officers worked together according to agendas driven by the chief
executive officer. Agendas were generally concerned with the health, function and growth of
the organization. An internal focus to ensure the continuation and survival of the
organization was paramount.
This internal organizational orientation began to shift and expand to include an external focus
in response to a drastically changing nonprofit environment. When author John Carver
published his book Boards that make a difference in 1990, boards of directors were receptive
to a new view of their roles and responsibilities. This new view was timely because of the
external pressures nonprofit organizations were facing. The policy governance model has
become a dominant model of governance in the 1990s.
cont’d...
Ruth Armstrong, VISION Management Services
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NONPROFIT GOVERNANCE:
The Next Generation — evolution of structure and function
...cont’d
The policy governance roles of a nonprofit board include:








Establishing the vision, mission and strategic directions;
Providing fiscal and legal oversight (accountability);
Selecting, evaluating and terminating (if necessary) the chief executive officer;
Linking to the external community through a variety of stakeholders;
Developing and generating necessary resources;
Ensuring appropriate management systems;
Attending to board self-management through continuous evaluation and
improvement;
Advocating on behalf of the organization and its mission.
In order for a board to undertake this impressive array of expectations, a policy governance
board understands that its policy-making role is at a strategic, not operational, level.
Furthermore the board must develop and publish a comprehensive set of policies to ensure
continuity. The written record of a board’s policies serves to provide consistent direction for
the organization’s values and work as well as clear limitations to the chief executive officer’s
authority.
The inventory of roles noted above are at times an overwhelming challenge. Board members
as volunteers generally have limited time for and understanding of the organization, are
diverse in their skills and perspectives, and are continually coming and going. They often
struggle to fulfill their roles. Chief executive officers wonder if this concept of governance is
practical as they invest much of their time in helping their boards carry out their
responsibilities.
Many sectors and disciplines are re-defining themselves. Boards face a similar challenge.
Fortunately, the nonprofit sector has been known for its ability to innovate.
This paper explores the evolution in governance models, structure and function. It highlights
the tension between theory and practice. The paper also suggests various structural vehicles
to support governance.
Ruth Armstrong, VISION Management Services
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NONPROFIT GOVERNANCE:
The Next Generation — evolution of structure and function
MODELS OF GOVERNANCE
A framework of four models of governance (see Figure 1) was developed by the Governance
Working Group1 charged with recommending a model of governance to fit a newly created
multi-stakeholder network organization.
The group’s exploration of the literature and their own breadth of experience in the nonprofit
field support the assumption that there is no one best way of designing governance. Indeed a
hybrid approach (Armstrong, 1996) offers the flexibility and adaptability needed in today’s
turbulent environment.
The four governance models presented below are positioned along two dimensions outlining
key features in our nonprofit organizations. One dimension identifies stability and
innovation as an orientation. This orientation is often dependent on an organization’s life
cycle stage, culture and environment.
The second dimension accounts for the unitary or pluralistic reality of a single organization in
contrast to an organization comprised of a network of stakeholders and/or organizations.
Each of these models is described in more detail below.
Figure 1: Four Models of Nonprofit Governance
Unitary Vision
Policy
Governance
Corporate
Model
Model
Stability
Innovation
Constituency
Emergent
Model
1
Cellular
Governance Working Group – Co-Authors:
Ruth Armstrong, Vision Management Services
Pat Bradshaw, York University
Bryan Hayday, InnovAction
Liz Rykert, Building Effective Electronic Strategies
Ruth Armstrong, VISION Management Services
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NONPROFIT GOVERNANCE:
The Next Generation — evolution of structure and function
Model
Pluralistic Vision
Ruth Armstrong, VISION Management Services
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NONPROFIT GOVERNANCE:
The Next Generation — evolution of structure and function
1.
Policy Governance Model
The Policy Governance Model clearly distinguishes between the leadership roles of
board and chief executive officer (CEO). The board role is one of stewardship on
behalf of its communities. In order to fulfil this role, the board focuses on the vision,
mission, values and strategic priorities of the organization, ensures a responsiveness
to community stakeholders and empowers staff to carry out the mission within
established limitations. The CEO provides operational leadership in managing the
organization in fulfilling its mission. The board monitors and evaluates CEO
performance according to its policies.
The board governs the organization by articulating and documenting broad policies in
four areas:
1.
Ends — The focus is on outcomes and results rather than on means (a staff
responsibility). Ends include the organization's vision, mission, values and
strategic objectives.
2.
Executive Limitations — The board establishes parameters or boundaries
within which the CEO has unlimited freedom. These boundaries include
attention to prudence and ethics in areas such as financial health, staff
treatment and communication to board.
3.
Board-CEO Relationship — These policies outline the delegation of power
from the board to CEO as well as the manner in which the board monitors the
performance of the CEO and the organization.
4.
Governing Process — This area ensures that the board is attending to its own
processes and structures. These policies include expectations of board
members, committee structures and the principle of speaking with one voice.
The positive features of this model when it is working effectively are:





There is increased clarity of roles and responsibilities, vision and
accountability.
The focus on outcomes and results leads to increased accountability.
An external focus connects the board with other boards and
stakeholders.
The leadership role of the board can be satisfying for board
members.
This model liberates, empowers and supports the chief executive
officer.
cont’d...
Ruth Armstrong, VISION Management Services
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NONPROFIT GOVERNANCE:
The Next Generation — evolution of structure and function
...cont’d


The board engages in systems activities by scanning the
environment, becoming familiar with “big picture” issues as well as
major internal trends and entering into partnerships with other
stakeholders.
The board takes on the responsibility of ensuring adequate resources
are available to accomplish the mission (fund raising).
This model meets external legal requirements and has become a familiar and
comfortable framework for many nonprofit organizations in Canada over the last few
years.
The down sides of the Policy Governance Model are becoming more evident as
organizations are experimenting with this model:




Board and staff relations are vulnerable and disconnected because of
the emphasis on separate and distinct roles. This can interfere with
developing a productive board/staff partnership.
The board often feels disconnected from programs and operations—
operational information is less relevant in this model.
Staff often mistrust the board's ability to govern because of a perception
that the board does not understand the organization's operations. Links
between policies, operations and outcomes are often tenuous.
Board or chief executive officer may exercise their power in overriding
the other’s role. Power is concentrated in the hands of a few.
This model can be self-limiting in its ability to embrace evolution and change because
it assumes one vision (to be articulated and achieved) and it solidifies/perpetuates the
status quo through its policy framework.
2.
Constituency Model
In this model there is a direct and clear link between the organization’s board and its
constituents. The constituents are represented on the governing board and participate
in policy development and planning. This participation benefits the constituents by
offering them control over policy decisions through their board representative.
This board ranges in size from about fifteen to over forty members. Strict policies
govern the composition and election/appointment of board members representing
specific constituents.
cont’d...
Ruth Armstrong, VISION Management Services
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NONPROFIT GOVERNANCE:
The Next Generation — evolution of structure and function
...cont’d
This model features centralized decision-making with decentralized input. The time
consuming quality of full consultation on major decisions ensures stability and status
quo protection.
The board’s relationship to the CEO is not always clearly defined and is vulnerable to
changing expectations with changing representatives on the board. Within the larger
size board, the board/CEO relationship tends to be similar to the policy governance
model, i.e. the board empowers the CEO to manage the operations of the organization
within the limitations set by the board.
At times the roles and responsibilities of board and constituents are outlined in written
documents of agreement.
The positive features of this model when it is working effectively are:






There is a broad base of participation and power is decentralized.
This model allows a vision to emerge that is inclusive of
constituents’ perspectives.
Constituent energy and participation is generally decentralized into
committees which are action oriented.
Communication is emphasized because of the need to involve large
numbers of diverse stakeholders.
The board tends to have a pulse on “big picture” issues as a result of
the broad based input by constituents.
The challenge of dealing with multiple interests and the resulting
conflicts is recognized and addressed in a variety of ways (some
ways are more successful than others).
The down sides of the Constituency Model are at the opposite ends of some of the
model’s positive features:


Because communication is a key cornerstone for this model, there
are pressures and demands for communication to be timely,
adequate, consistent, clear, accessible, etc. These pressures often
create difficulties in meeting high constituent expectations.
Energy can be dispersed throughout a large number of committees
and activities and therefore become unproductive.
cont’d...
Ruth Armstrong, VISION Management Services
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NONPROFIT GOVERNANCE:
The Next Generation — evolution of structure and function
...cont’d




3.
The vision often loses focus and commitment by the board as board
members turn over and other constituency interests come in.
Conflict which is a natural and common feature of a multi-interest
group does not always get resolved and can damage board
relationships.
With representative interests and positions, there is a tendency to
pursue self-preservation rather than shared interests which slows
down any change to the status quo.
The model generally requires some form of memorandum of
understanding that must be renewed regularly to keep it in force.
Corporate Model
The Corporate Model is often referred to as the business model of governance.
Within this framework, there is a particular emphasis on efficiency and effectiveness
measures which focus the organization to achieve a maximum return on its
investments. In this model, there is an explicit recognition of stakeholders selfinterest. Rewards are clear and there is a dominant culture which expects the survival
of the fittest.
The Corporate Model maintains a constant market orientation to find opportunities
and competitive advantage. More often than not, long-term corporate plans are driven
by an annual focus which emphasizes a short time horizon and a relative immediacy
of return, versus a longer-term perspective and vision. Innovation is recognized as an
opportunity to leverage proprietary gains. Market share and niche dominance are
highly valued.
Investors in the organization are proportionately represented in its governance through
a shareholder structure which elects the board of directors. The chair of the board of
directors often acts as the chief executive officer of the organization, and it is
common to find the board working at the levels of ends, means and limitations
policies as a focus for the work of the board and its subsequent direction to the
organization.
The positive features of this model when it is working effectively are:

Participants’ efforts are clearly focused on the business of the
organization.
cont’d...
Ruth Armstrong, VISION Management Services
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NONPROFIT GOVERNANCE:
The Next Generation — evolution of structure and function
...cont’d



The organizational culture explicitly emphasizes efficient and
effective work processes.
There is a widespread sensitivity to any business-related changes in
the marketplace.
Leadership and resources are allocated to recognize and readily
adopt best practices.
The down sides of this model, particularly for nonprofit organizations, are:





4.
A disproportionate focus on bottom-line returns to one organization
does not ensure focused attention on common marketplace interests
or changing social conditions.
The consideration and quality of inter-organizational partnerships are
measured by returns to specific investors and not to the collective
benefit generated for consumers.
Broad-based societal needs are often discounted.
Systemic social and community changes do not lend themselves to
short time horizons for organizational business plans.
There is no particular incentive for innovation on behalf of public
gain.
Emergent Cellular Model
The Emergent Cellular Model is characterized by continuous, efficient innovation.
This model is evolving from the network form which allows for flexibility and
responsiveness to information, but does not explicitly support adaptions in
organizational form to support the creation and sharing of knowledge resulting from
new information.
Cellular organizations are made up of cells (self-managing terms, autonomous
business units) that can operate alone and can also interact with other cells to produce
a more potent and competent business mechanism. It is this combination of
independence and interdependence that allows the cellular organizational form to
generate and share the know-how that produces continuous innovation (from Miles, et
al, 1997). Understanding chaordic organizations and self-organization provide more
information on key characteristics of this new model.
cont’d...
Ruth Armstrong, VISION Management Services
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NONPROFIT GOVERNANCE:
The Next Generation — evolution of structure and function
...cont’d
The positive features of this model when it is working effectively are:







In an increasingly knowledge-based economy, the organizational
form itself seeks to be knowledge and relationship based.
Organizational structures are highly adaptable to the work which
needs to be performed and supportive of innovation.
A minimal amount of structure is required as a condition of enabling
productive work.
By nature, this model is organic, adapting to the complexity and
unpredictability of its environment as needed.
Entrepreneurial energy and activity, both internal to and external to
the organization, are each nurtured in this environment.
Interdependent relationships and self-organizing practices are each
enabled and supported.
Pluralistic visions are both possible and sustainable.
The down sides of this model are:






The relative newness of this emergent model means that there is no
significant literature regarding its effectiveness.
The model is based on some naive assumptions about human nature
and the capacity for changeability and negotiated roles.
Significant negotiation may be required to address differences in
relative power among the participants.
The presence of multiple organizational foci may be problematic for
those who require specific and predictable parameters over time.
Accountability and resource allocation is distributed, therefore not
readily predictable.
Certain people may be excluded from full participation in this
organizational model because of the dynamics and expectations of
participation.
Ruth Armstrong, VISION Management Services
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NONPROFIT GOVERNANCE:
The Next Generation — evolution of structure and function
TENSION BETWEEN THEORY AND PRACTICE
Have we set the bar so high in our expectations of board function that we invite failure? Can
we insist on high standards of accountability without prescribing a specific set of roles and
structures?
There is no best way to structure a board or organization. The predominant notion that
certain governance functions must be performed may suggest that it matters less who
performs them. The fulfilment of these functions may be negotiated between board and staff
(Harris, 1993) and may shift over time with new boards and management. This negotiated
approach is flexible and takes advantage of changing skills and people.
Accountability has now become an expectation by government public, clients, funders and
other stakeholders. Accountability can be described as a standard which fulfills three core
elements (Kearns, 1996):



Answerability – to a higher authority (government, the law, the public);
Responsibility – to implement and measure;
Responsiveness – to collect feedback and correct accordingly.
Although the board may be charged with holding the CEO and organization accountable,
who holds the board accountable? Current accountability vehicles are underdeveloped.
Organizations are attempting to establish total quality management protocols, evaluation and
information systems and feedback relationships with stakeholders.
A variety of approaches might be considered in strengthening a board’s ability to hold
itself accountable.




The independent audit team – providing an auditing function for boards and
organizations (evaluates the CEO, audits services);
Self-regulating bodies (umbrella associations providing accreditation to
boards);
Government (monitoring board functions through the Office of the Public
Trustee);
Establishment of citizen boards to hold organizations accountable (the
National Trust Model in Britain is an example).
Ruth Armstrong, VISION Management Services
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NONPROFIT GOVERNANCE:
The Next Generation — evolution of structure and function
Following the accountability path, six key factors are considered in a board’s success or
failure (Leighton/Thain, 1998). The tension between theory and practices continues to be
evident.
Key Success/Failure Factors
1.
2.
3.
4.
5.
6.
1.
(Leighton/Thain)
Leadership – independent from management which requires vision and
commitment.
Legitimacy and Power – active support of stakeholders and the recognition of
legal and moral authority.
Job Definition – purpose, functions and tasks.
Culture – shared beliefs and norms.
Competence – knowledge, skills, attitudes.
Management of Board Process – planning and implementation of functions and
processes for board effectiveness.
Leadership
The importance of a strong board leader cannot be overemphasized. There are exceptional
board chairs who have vision and commitment and lead the board team in fulfilling its
governance functions. These leaders share leadership and work in a productive partnership
with the CEO. Interpersonal skills are well developed.
In other boards, the board chair is sometimes weak with poor meeting management skills.
This situation often invites the CEO to step into the breach and drive the board’s agenda and
work. Some boards have difficulty attracting and maintaining competent leaders for a variety
of reasons (poor board functioning, low organizational profile, poor leadership at board
and/or CEO level).
2.
Legitimacy and Power
Broad based support of stakeholders is pursued more vigorously by some organizations than
others. Depending on the values and mission of the organization, the board may be very
inclusive in its board election processes (i.e. inviting nominations from a broad based
membership), open in its communications, and extensive in its consultation before adopting
any new policies. Constituency and Emergent Cellular Models of Governance (see above)
are likely to pursue a strategy of broad based stakeholder support to ensure legitimacy and
power.
cont’d...
Ruth Armstrong, VISION Management Services
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NONPROFIT GOVERNANCE:
The Next Generation — evolution of structure and function
...cont’d
This strategic direction has its tensions. These tensions are outlined as paradoxes that have
been successfully addressed by a number of constituency based organizations (often called
associations).
Paradox: owners and customers
The members of a golf club who were generally older and retired were against
making a capital investment to improve their club facilities for families. A capital
investment would translate into higher membership fees. The board on the other
hand knew that as current membership numbers dwindled, the club would need to
attract and retain an incoming group of club members who had young families.
Members of an association are both the owners of the association and its customers. As
owners they govern the organization through the board and participate directly in policy
development and planning. As customers, members are most concerned with quality and
value of services. This "double-vision" often creates conflict between the board's long term
perspective and a member's immediate concerns.
Paradox: centralized decision-making and decentralized input
A national health association with a provincial and local branch structure has lost
its ability to make decisions quickly in response to a fast paced environment. The
board has a cumbersome consultation process to ensure fairness and equity in
decision-making. All levels of the organization have opportunities to review and
modify any policies and major decisions. Unfortunately, this decision-making
process takes at least two months to be completed.
The board and its chief executive officer (CEO) undertake responsibilities on behalf of the
membership. It is a wise board who is in touch with, and responsive to, its members as it
makes policy decisions. Theoretically, this makes sense; practically, an association with
different constituents struggles to convert diversity into collective vision and quick action.
cont’d...
Ruth Armstrong, VISION Management Services
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NONPROFIT GOVERNANCE:
The Next Generation — evolution of structure and function
...cont’d
Paradox: self-interest and collective interest
An association is lobbying government to centralize the allocation of contracts and
resources within the association to its members. It finds itself at odds with its larger
member organizations who have been relating to government without the
association's help. These larger organizations stand to lose their autonomy, power
and ability to negotiate directly with the government. Smaller organizations,
however, need the strength of the association to improve their situation.
Most members join associations for two major reasons: to satisfy their own needs through
member services and to exert more power by pooling collective resources and skills. Many
association boards are weakened by the tension inherent in this paradox. If board directors
see their primary role as representing their constituency's interests, they may have difficulty
in setting aside specific constituent needs and voting for the association's collective interests.
Board directors represent constituents and bring constituents' perspectives to the board table
so that a collective decision can be informed, rather than driven, by constituent self-interest;
however, this approach is often lost.
Paradox: service and advocacy
An association is caught in an all too common tension. The board is pushing for
increased advocacy activities. The CEO is insisting that any decrease in member
services will have an adverse effect on the membership, membership fees and
therefore the association's financial viability. Articulating this tension as "either
advocacy or service" is not helpful or accurate. The conflict, however, is taking its
toll.
Most associations have a dual reason for existing. Firstly, they deliver tangible services such
as benefit plans, education, consultation and information. Secondly, they capture the strength
of a broad-based constituency with large numbers of participating members and use it to
influence the industry's environment. The tension arises when allocating limited resources
and energies to each direction. Members as customers continue to want quality services.
Members as owners recognize that the future is about preparing an environment that is
supportive of the industry. Resources spent on changing legislation, lobbying government,
increasing the industry's profile can be never-ending without recognizing a direct link to
outcomes. Evaluating the return on the association's investment is much more tenuous for
advocacy activities than for service activities.
cont’d...
Ruth Armstrong, VISION Management Services
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NONPROFIT GOVERNANCE:
The Next Generation — evolution of structure and function
...cont’d
Governance Responses
Associations continue to address these paradoxes and challenges in a variety of ways. Five
responses have become successful strategies for several associations recently interviewed.
A) Clarity
Associations with written policies describing the different roles of board, members and staff
have reduced confusion in the areas of power and accountability. There is not one "correct"
description. An effective process of clearly differentiating roles starts with role negotiating
and articulating the roles and is followed by written policies. Policies outlining board
recruitment, nominations and elections are particularly sensitive areas requiring clarification.
B) Communication
Communication represents a critical lifeline in the health of an association. The increasing
demands and expectations of members to receive timely, complete and accurate information
become a tremendous challenge. Association boards and staff who are attentive to improving
communication among board, staff and constituents/members have benefited by creating a
connected membership.
C) Commitment and Connection
Ownership and involvement of board and members can be encouraged in a variety of ways.
Active committees, project work, strategic planning and effective communication keep large
numbers of members connected to the association. Members generally do not feel committed
or connected unless they are actually contributing something more than simply membership
fees.
D) Conflict Resolution
Resolving conflict among competing interests must be a targeted and active issue. Structured
conflict resolution techniques and discussions go a long way in facilitating satisfying
outcomes. Developing important conflict resolution skills among board directors assist in
addressing association tensions. The resolution process adopted by the association can be
communicated to all members in developing a common approach to conflict.
cont’d...
Ruth Armstrong, VISION Management Services
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NONPROFIT GOVERNANCE:
The Next Generation — evolution of structure and function
...cont’d
E) Contracts and Agreements
Because of the pluralistic nature of associations and the diversity of interests, some boards
have found it useful to sign letters of agreement between the board and its constituency
representatives. The contracts clarify conflict of interest, financial contributions,
accountability and information exchange. Agreements often describe: how the board director
will be accountable to the association and his or her constituents, how he or she will keep
members apprised of important information, the nature or amount of contributions the
director or the constituency will make, how conflicts will be resolved, and the commitment
to the mission/direction of the association. As board directors change, an association's vision
can become diffused because of multiple interests carried by a changing broad based
membership. Contracts serve to stabilize the organization's vision and processes as it moves
forward.
Critical factors for success in constituency based and emergent cellular organizations include
a combination of self-analysis and creative response. Boards need to understand their unique
characteristics, paradoxes and tensions. Only then can they design a governance model to
address their realities. Innovative organizational forms and governance models are finding
fertile ground.
3.
Job Definition
Board members often cite lack of clarity in role and responsibilities as a barrier in their
ability to fulfill their governance function. This deficit can be addressed by ensuring that the
board’s job definition is written and communicated during an orientation of new board
members.
Problems arise when job definitions do not match the life cycle stage of organizations. Board
members are then torn between the articulated job definition based on a particular
governance model and the work that needs to be done.
Life cycle stages of organizations have an effect on governance needs.
(Armstrong, 1998)
cont’d...
Ruth Armstrong, VISION Management Services
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The Next Generation — evolution of structure and function
...cont’d
A newly created organization in Stage I focuses on building its foundation: creating
operational systems, policies (at all levels) and procedures. These activities take much board
and staff energy, and are antithetical to the Policy Governance Model's separation of means
(staff) and ends (board). Once the foundation is laid the organization can focus on its
strategic agenda in Stage II. The board attends to its vision and mission by allocating
resources strategically. At this second stage, the board can remove itself from the operational
foundation building and function like a policy governance board.
Once the organization reaches Stage III and has experienced progress towards its strategic
agenda, it can begin to form external alliances and transcend its organizational boundaries to
influence the system. At this third stage, boards fit the Policy Governance Model in
developing board-to-board linkages.
At Stage IV, boards should be exploring innovative organizational forms to assist the
organization in adapting to unpredictable challenges. At this fourth stage, the Policy
Governance Model provides more of a trap than a springboard into the future. The
Emergent Cellular Model offers a more robust structure and approach.
The Policy Governance Model encourages boards to enshrine processes and structures in its
policies. Although policies can be changed by boards, many boards and CEOs use these
policies as a stabilizing mechanism. This is helpful for Stages II and III of an organization's
life cycle but does not facilitate Stages I and IV.
A one size model or one best structure does not fit organizations at all stages of development.
4.
Culture
The culture of a board has a powerful impact on success or failure. Culture as a system of
shared beliefs and norms is generally not explicit and so is difficult to change. Some boards
on the other hand have not only articulated their beliefs and values but are extremely
committed to actualizing their values and principles.
These committed boards guide their organizations from a strong value base and measure all
actions against stated principles.
cont’d...
Ruth Armstrong, VISION Management Services
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The Next Generation — evolution of structure and function
...cont’d
Boards that are conflicted internally and polarized in their values struggle to overcome this
dysfunctional state. Many resources (time, money, effort, people) are often consumed in
correcting a dysfunctional culture. At times little progress is evident until a critical mass of
board members and/or management turns over.
5.
Competence
The knowledge, skills and attitudes of board members contribute to a board’s competence.
Boards generally try to attract competence as well as build it. In some sectors like mental
health where there is a strong consumer movement, boards take on the responsibility of
educating board members. This responsibility ensures that marginalized consumers can
participate in the governing function of their organization. The board identifies one of their
functions as education and capacity-building.
Carver (1990) says "board difficulties are not a problem of people, but of process". His
policy governance model features a well-designed system and ignores human nature. Despite
well-crafted policies, clear role separation and a focus on ends, board competence can be
made or destroyed by individuals and their behaviours, skills, motivations.
6.
Management of Board Process
The planning, implementation and evaluation of board process is a board responsibility.
Some boards are able to carry out these functions successfully. This ability is most closely
connected to the leadership, competence and job definition factors. More and more boards
are attending to managing their own processes. Many CEOs however are still playing an
active role in assisting boards in this basic activity. The maturity of the board (i.e. later stage
of life cycle) has an impact on the board’s readiness and/or ability to attend to its own
management processes.
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STRUCTURE
Board members are often concerned with their committee structures, information needs, agendas and
meetings. These structures should support the governance model and specific functions of the board.
Although straightforward in the notion that structure follows strategy and form follows function,
appropriate implementation is sometimes elusive.
Committees
The current trend in the boardroom is to reduce the number of committees needed to assist the board
in fulfilling its governance functions. The Policy Governance Model relies more on the work of the
board as a committee of the whole.
Some boards have eliminated all their committees only to find that the board is less productive and
finds it difficult to do all its work within a two to three hour time frame. The reduction of
committees has also had an impact on keeping board members active and connected to the
organization and staff.
Boards are experimenting successfully with ad hoc committees and task forces. These flexible
structures allow board members to commit to shorter term time frames in relation to their interests,
availability and skills. Board members also recognize accomplishment more easily when the task is
defined and delegated by the board. The board’s responsibility in creating task forces includes the
articulation of outcomes, terms of reference, composition and reporting requirements.
Within the Constituency and Emergent Cellular Models, self-managing units and other cell type
structures are more effective in encouraging innovation and evolution. Committees as we know
them do not operate with the flexibility and autonomy expected of a cell-like structure.
Information
The volume of information is overwhelming. The effect of too much unsorted information has the
same impact as too little information. CEOs try to second guess their board’s information needs and
respond accordingly. The results: board members are often dissatisfied with the timeliness, form and
volume of information. Boards are beginning to think about and articulate their information needs –
a task that proves to be more difficult than it seems.
cont’d...
Ruth Armstrong, VISION Management Services
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The Next Generation — evolution of structure and function
...cont’d
Experimentation is a useful way to approach getting it just right. Unfortunately, a drawback to
experimentation is the increased CEO and staff workload necessary to respond to shifting reporting
requirements.
The balance between the information the board needs to do its job and the investment of time by staff
in preparing the information is constantly changing. This is an area where board and CEO can
negotiate a mutually beneficial agreement.
The board might consider its information needs in alignment with its job description and
accountability role. Information needs might include:








external environment forces (eg. government directions and policies);
controversial internal issues that may have an impact on public perception;
trends within the sector (eg. increase in homelessness, poverty);
financial information about significant variances between budgeted and actual
expenditures;
significant staffing issues (eg. high turnover, volume of grievances, critical
incidents);
progress towards achievement of mission and strategic plan;
violation of policies;
significant legal and fiscal issues.
Agendas
The agenda is a powerful tool which can assist the board in having the right discussions about the
right topics. Often agendas are similar in form from one meeting to another. The agenda’s form
often repeats the categories of:






approval of minutes;
business arising;
CEO report;
committee reports;
other business;
adjournment.
Agendas can signal the theme and purpose of any particular meeting. Agendas can build excitement
and prepare participants for decisions and discussions.
cont’d...
Ruth Armstrong, VISION Management Services
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The Next Generation — evolution of structure and function
...cont’d
Matching agenda items to the board’s job description and to its strategic priorities keep the focus on
its role and on its future.
Placing agenda items that require decisions and discussion ahead of information items ensures that
board members’ energies are used productively. Often information is delivered and passively
received by board members at points in the meeting when energy is high. Decisions left to the end of
a long meeting are sometimes hastily disposed of as board members get distracted by the lateness of
the hour and a low level of attention.
Board Meetings
Some boards open all their board meetings to staff and public. The public, staff and media are
welcome to attend. Other boards are reticent in having their meetings open – even to staff other than
the CEO. These styles are sometimes influenced by mandate (eg. children’s aid societies are
required to be open to the public) or by principle.
This openness affects stakeholder activity and interest. This in turn affects the board’s legitimacy
and power. Broad based constituency support can be aligned more easily with the Constituency or
Emergent Cellular Models described above.
In camera sessions are a technique used to protect sensitive or controversial issues from becoming
public. Some boards whose meetings are open to the public routinely go in camera during every
board meeting. Other organizations go in camera when it is warranted. A policy on when boards
may choose to go in camera can be useful in guiding a board’s self-management processes.
Ruth Armstrong, VISION Management Services
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CONCLUSION
The subject of board governance as a field of study is relatively new. Although as a
society we have experienced boards for over a century, the academic community began
studying boards only twenty years ago.
Recently (1990), John Carver, an American consultant and author, has had a
tremendous impact on the non-profit and voluntary sector in Ontario and Canada.
Carver in his book "Boards that Make a Difference", has been able to articulate clearly
the distinct roles and responsibilities of board members and staff of non-profit
organizations. Aside from Carver's marketing abilities, his Policy Governance Model
has been a timely response to the increased public demands for accountability and the
decreased availability of funds.
Organizations in Canada have been experimenting with the Policy Governance Model
as described by Carver over the last eight years. Academics, consultants, board
members and chief executive officers have begun to assess this and other models of
governance.
So the evolution of board structure and function continues. This paper outlines a
framework of four models which serve:

To emphasize that there is no one best way to govern an organization.
A board's structure and way of operating must fit with the
organization's history, culture, maturity, size, external and internal
pressures, strategic goals and life cycle stage.

To introduce and analyze four models of governance so that boards
can choose the unique combination of features that can serve them
best. In essence, this means creating a hybrid model of governance
tailored to the individual organization.
The hybrid governance model will be heartier for having been developed within its own
unique set of circumstances.
Where to from here? We must evaluate the effectiveness of our governance functions
and processes. What works and why? We must share our made-in-Canada versions
through writing, presenting and research.
Ruth Armstrong, VISION Management Services
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The Next Generation — evolution of structure and function
REFERENCES
Armstrong, R. Does the Carver Policy Governance Model Really Work?
Front & Centre, Canadian Centre for Philanthropy, May 1998.
Armstrong, R. Association Governance: A Study in Paradoxes
Association Vol. 15 No. 4, June-July 1998.
Armstrong, R. Hybrids are heartier: Exploring four models of board governance
Working Paper, Vision Management Services, 1996.
Bradshaw, P., Stoops, B., Hayday, B., Armstrong, R., Rykert, L. Nonprofit Governance
Models: Problems and Prospects
ARNOVA Conference – Paper for Presentation, Seattle, November 1998.
Carver, J. Boards that Make a Difference
San Francisco: Jossey-Bass, 1990.
Harris, M. The Power and Authority of Governing Bodies
England: Working Paper 13, 1993.
Kearns, K. Managing for Accountability
San Francisco: Jossey-Bass, 1996.
Leighton, D., Thain, D. Making Boards Work
McGraw-Hill Ryerson Limited, 1997.
Miles, R., Snow, C., Mathews, J., Miles, G., Coleman, Jr., H. Organizing in the
Knowledge Age: Anticipating the cellular form
Academy of Management Executive, Vol. 11 No. 4, 1997.
Ruth Armstrong, VISION Management Services
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