CORPORATE GOVERNANCE 02 – BARRIERS TO BOARD EFFECTIVENESS
There are a number of factors that help to explain why some boards don’t function effectively. Taken together, these factors provide a checklist for assessing a board and identifying problem areas. Examining these barriers to board effectiveness can be the first step in revitalizing an existing board or building from scratch. Let’s take a look at some of the now:
Temptation to micro-management. Practically everyone can share hair-raising stories about boards that spent untold hours discussing trivial subjects while neglecting major agenda items deserving their more careful deliberation. It is critical that the board focuses its attention on items of critical importance to the organization. In order to do this, the board must avoid the temptation to micro-manage or meddle in lesser matters or in areas that are more appropriately handled by the professional staff. The average board, meeting monthly for two hours, has approximately 24 hours of meeting time per year to make all of the major decisions as well as address critical issues that come before it unannounced. It is simply impossible to do an effective job with in those 24 hours of meeting time, even if only a few hours are wasted on trivia.
Ineffective Nominating Committee. Many boards lack an effective nominating committee. We need to remember that the work of the nominating committee has lasting impact on organization — and this committee’s work determines who board leaders will be for many years for years into the future. The nominating committee should be well organized, have a clear sense of recruiting priorities as well as expectations for individual board members especially in the area of fund-raising. These elements are frequently missing in many organizations. If the nominating committee or board recruiting committee is poorly organized, board members in turn are not likely to have a good understanding of the organization and their role as board members.
No Plan for Rotation. Another problem is the lack of a plan for orderly rotation of board members on and off the board. If the same people serve year after year, there is no way for new blood and new ideas to come into the board. Despite their sense of commitment, these same people will make the organization a “closed corporation.” Rotation prevents the ingrown possessiveness sometimes found on self-perpetuating boards. In a time of rapid change, the presence of new people who bring a new perspective will promote creativity and innovation in board decision-making.
Failure to remove unproductive members. Another problem that leads to poor performance is the failure to remove unproductive board members. People who are not carrying out their commitments as board members become major blocks to overall board effectiveness. There needs to be a process for evaluating board member performance and making recommendations regarding their future service with the board.
Too small. Sometimes a board is ineffective because it is simply too small in number. When we consider the awesome responsibilities of board leadership, it’s easy to see why we need enough people to do the work. While it is difficult to specify an appropriate size for all boards, in general, a board should range in number from 11 to 21 members. We need enough members to lead and form the core of the committees and, in general, share in the other work of the board. We also need sufficient numbers to reflect the desired diversity in the board as well as assure the range of viewpoints that spurs innovation and creativity in board planning and decision-making.
Lack of functioning committee structure. The lack of a functioning committee structure is another reason why boards fail to perform at an acceptable level. While it is true that major decisions are made in board meetings, it is also true is that most of the work that supports and implements this decision-making occurs at the committee level. If the board has a committee structure that functions inadequately, this can lead to poor performance in general.
No strategic plan. The lack of a strategic plan, in most cases, will also lead to poor board performance. If the organization lacks a strategic plan that provides clear direction — so critical in this period of rapid change — the board can spend significant amounts of time talking about topics that simply don’t matter. Related to the absence of a strategic plan is the lack of a long-range service delivery and financial development plan that will advance the strategic plan.
No plan for orientation of new and old members. Boards also fail because they have no plan for orientation of new and old members. Deliberate thought is rarely given to the matter of blending new and old board members into a well-functioning team. Related to this, is the lack of a formal plan of board training and education to continually upgrade the level of board skills and knowledge.
Innovative Castle 