WHAT DIFFERENCE DOES A BOARD MAKE?
A Short Article by Caroline Oliver
Almost every board member I have ever met wants to know – what difference are we making? Sitting around a board table far from the everyday action, it is hard to know. And, the more frantic the pace of action on the ground, the harder it is for a board to feel that it is doing more than following along in their employees’ wake trying to make useful suggestions and ask relevant questions.
When board members wonder about the difference they are making, they tend to think in terms of organisational performance. That is they tend to think that if they are doing a good job the result will be seen in terms of organisational performance. Frankly, I am not so sure.
Consider, for example the following scenarios:
a) Hospital A loses 20% of its income as a result of a decision made by another body to transfer services it used to ask the hospital to provide to a different part of the health system. The body making the transfer is clear that this is not the result of any judgement about the standards of service provided by Hospital A. However, the hospital’s position in national performance rankings goes down. What does this tell us about the board’s performance?
b) The owners of company B come together to make a high risk investment in exploiting a new resource. If their company can get to that resource before their competitors they stand to make a lot of money. Sadly for all involved, the attempt fails. However everyone agrees no more could have been done. Does this ultimate failure mean that the board was a bad board?
c) The members of organisation C want to send an humanitarian aid mission into a war torn region. The mission ends in the kidnapping and killing of its leaders. Everyone agrees that all precautions that could have been taken were taken and that the leaders were fully aware of the risks they were taking. Has the board failed?
In all of these cases, I would suggest that organisational performance would be a very unreliable indicator of board performance. So, what would more reliable indicators be?
Drawing on the theory behind John Carver’s approach to the work of a board1, here are the six I would suggest.
Six Questions for Assessing Your Board’s Performance
1) Is Your Authority Legitimate?
Has your board created a continuing, clear and direct connection with those to whom it regards itself as ultimately accountable2?
2) Is Your Authority Compromised?
Does your board identify and manage any conflicts of interest its members may have with those to whom it regards itself as ultimately accountable?
3) Have You Defined Your Organisation’s Performance?
Has your board consciously translated the best interests of those to whom it is ultimately accountable into a clear framework for governing performance and risk.
4) Is the Delegation of Your Authority Clear?
Are your delegates clear what authority you have and have not given them?
5) Have All Your Expectations Been Communicated?
Has your board communicated all its expectations to its delegates?
6) Can You Account for All You Have Delegated?
Does your board regularly and rigorously monitor the fulfilment of its expectations?
Notice that these board performance standards could have been applied to each of the three scenarios set out in this article quite separate from the organisational performance depicted.
My point is that boards do make a difference but that difference does not necessarily show up at any given moment as organisational performance. The difference boards make comes from their role as the critical link in the chain between owners2 and organisational performance. Boards make our organisations accountable and define and monitor their performance. Boards do not “do” the organisation’s performing.
We all know that the definition of success varies hugely depending upon the perspective we bring to it. We also know that, even when we have the experience of success, it is always a moment in time rather than a fixed state. Pinning board performance to such an enormously subjective and variable measure as organisational performance will not help us build the kind of boards we want – the kind of boards that can provide accountability and clear leadership through good times and bad.
¹John Carver is the creator of the Policy Governance® model and author of many articles and books including Boards That Make a Difference: A New Design for Leadership in Nonprofit and Public Organizations, Jossey-Bass Publishers. 3rd Edition, 2006
2 For more on this subject see the article “Ownership and Boards” April 2009, at www.goodtogovern.com.
© Caroline Oliver 2011
About Caroline Oliver
Caroline Oliver helps boards develop accountable, ethical and effective governance systems and approaches. She is also author or co-author of three books and numerous articles on the work of boards.
Her 2009 book Getting Started with Policy Governance: is published by Jossey-Bass/Wiley and can be ordered through Amazon and other leading booksellers.
Caroline is also the founding Chair of both the International Policy Governance Association (2000 – 2005) and the UK Policy Governance Association (2006 to present). She is the Chief Executive of the international consulting firm Good to Govern, and founder of The Governance Corporation Network.
Caroline Oliver can be contacted by email at: firstname.lastname@example.org