Wednesday, August 8, 2012

Fishing in the Boardroom: Catch of the Day

A selection from Origami in the Boardroom and Other Misadventures in Nonprofit Governance©
By Neil Bohnert

It was a golden opportunity! The chance to make a difference; to create a vital future for the organization. The nominating committee of this national organization, elected by the members of the organization at the last annual meeting, was now proposing its slate of nominees to serve on the board.  The committee had been meticulous in selecting candidates based on criteria such as geographic residence, membership class, and other representational factors that would ensure a popular slate.  The chairman of the meeting called for nominations from the floor and, as had become the rule rather than the exception for this membership organization, there were nominations.  And one among the floor nominees was elected.  The organization had a new board, fairly and openly elected without any undue influences. Perhaps not the board everyone expected or the one the organization needed, but the one inevitably formed by the prescribed process.  Order was observed and the principles of democratic rule had triumphed.  It was a glorious achievement. But the consequences were less than noble.

We all remember the fishing pond at the school carnival in which a child is given a pole with a string and hook attached to the end of it.  The child then casts the hook to the other side of a curtain obscuring the “catch.”  The child waits in excited anticipation as a carnival assistant attaches a prize to the hook and the child retrieves the special surprise.  Neither the child nor the assistant can see what is on the other side of the curtain.

We’ve also had experience with elaborate nominating schemes designed to restrict the board’s hand in selecting its members.  Such schemes create a curtain, separating and obscuring the selection process from the board.  The result is the same in both the carnival and the boardroom—a complete surprise. 

An isolated case, you say?  Decidedly not.  It’s not unusual for organizations to have carefully designed processes to control the selection of board members.  So determined are some organizations that special provisions are often written into the bylaws or the charter to provide for boards to be appointed in part or in whole by authorities outside the organization, such as direct appointments by governmental bodies, church organizations, beneficiary groups, founding organizations, or other authorities beyond the influence of the organization.

These “firewalls,” which keep the selection process at some distance from the board, are intentional to ensure that the organization is controlled in a certain way.  Good intentions, but also some unintended consequences.  In this case, no one on the nominating committee held a seat on the board and the board was neither considered nor consulted. There was no way for the committee to know what skills and talents were needed on the board and with an open nomination process, candidates were often elected with no consideration to the organization’s needs for board composition and leadership. The board in this case was casting its line to the other side of the curtain and saying to the nominating committee, “Send over another three” and then returning to the boardroom with the “catch of the day.”

Why is this important, you ask?  Each election of directors is one “golden opportunity” to get the ablest and most committed people to serve as volunteers in governing the organization and  to design a special mix of expertise on the board that will uniquely fit the strategic needs of the organization well into the future.  The board’s composition is an important resource and the selection of board members should not be a random, perfunctory, chance event.

What can possibly be the negative consequences of these good intentions?  One is a random composition of skills on the board.  No thought is given to what skills are needed.  Are we losing critical talents needed to direct the organization?  Do we need to bring to the boardroom important skills and experiences, such as leadership, executive experience, business acumen, fundraising and networking strengths, minority views, diverse ideas, or any number of key talents that may be called upon to address the strategic issues of the organization? 

The other unintended consequence is the misplaced belief that board members “represent” constituencies within the organization.  This is common and it has the potential of eroding the unity of the board and excluding key skills needed to direct the organization.  Boards should certainly not be homogeneous bodies of like-minded persons.  Neither should they be a collection of representatives.  Every member of the board represents the best interests of the organization and has fiduciary responsibilities to the whole.

What’s to be done to take advantage of this golden opportunity?

Let’s start with determining the needs of the organization for governance vis a vis strategic priorities.

Let’s start by abandoning the need to form representational constituencies.

Let’s start by designing and building tomorrow’s board today.

Let’s start by creating a vital, strategic board function that effectively positions the organization in a competitive environment.

Let’s get started!

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