Organizations deserve exemplary governance.
And yet, few boards perform at this level. I believe every board wants to shape a meaningful future for the organization it is governing. If it is do this a board needs to achieve 3 outcomes through its governing system:
- Role clarity
- Protection of the organization’s assets
- Focus on the future
This requires the board to be proactive, not reactive, and to be the initial authority, not the final authority. To function this way may mean a board needs to reset its traditional processes and practices.
In a past blog, I wrote about the board’s need to differentiate its role of governing the organization from the CEO’s role of managing the organization. I wrote that “careful attention and precision in defining roles can help boards avoid the confusion and conflict that so often characterizes lack of role clarity.”
The purpose of this blog is to delve a bit deeper into the work that boards need to do regarding role clarification. There are 2 key roles that report to the board:
- The board chair or president
- The CEO of the organization
The relationship between these 2 roles and the relationship of each to the board can be the source of confusion and, sometimes, conflict. Either detracts from the board’s ability to govern effectively.
Both roles exist to support the board in fulfilling its responsibilities. The board delegates authority to the CEO and the chair and holds each accountable for how that authority is exercised. Clarity depends on the board avoiding role overlap or role sharing and not allowing individuals to determine how to fulfill a role. It also depends on the board not delegating decisions to the chair or CEO which belong to the board as a whole to make.
Unfortunately, boards often react to situations as they arise rather than being proactive and anticipatory. Frequently, board underperformance or conflict is caused by:
- Confusion or incorrect assumptions about who has or should have what authority
- Personality clashes
- The chair or CEO deciding the other isn’t performing the role “as it should be”
If a board simply lets things work themselves out it is failing in its duty of oversight. Poor performance or absence of performance by one or either of the CEO or Chair lies at the feet of the board.
How does a board get out front? Boards are used to writing policies that set direction for the organization or establish boundaries for prudent and ethical organizational activities. Less frequently does a board write policies that direct itself in how to do its job and fulfill its accountability to the membership. I am a strong advocate of writing a comprehensive set of board governance process policies and also regularly and systematically evaluating performance against these policies.
Given that a board is responsible for its own job design, its own discipline, its own development, and its own performance, it needs to write policies that address the relevant elements of each of those 4 areas. By specifying the expected results of the Chair’s job in a policy, the board eliminates any fuzziness about its expectations. One of the characteristics of this policy is that it describes the Chair’s role in terms of the outcomes or results rather than a more traditional list of roles or activities.
Following is an example policy for Role of the Chair. It addresses 2 common questions: What is the role of the Chair in supervising the CEO or Executive Director? What are the boundaries of the Chair’s decisions with external organizations?
The Chair of the Board is a specially empowered member of the board who assures the integrity of the Board’s process and, secondarily, occasionally represents the Board to outside parties.
1. The assigned result of the Chair’s job is that the Board behaves consistently with its own rules and those legitimately imposed upon it from outside the organization.
- Meeting discussions will include only those issues that clearly belong to the Board to decide or monitor.
- Information that is neither for monitoring performance nor for board decisions will be avoided or minimized and always noted as such.
- Deliberation will be timely, fair, orderly and thorough, but also efficient and kept to the point.
2. The authority of the Chair consists in making decisions that fall within topics covered by Board policies on Governance Process and Board-Management Delegation, with the exception of (a) employment or termination of an Executive Director and (b) instances where the Board specifically delegates portions of this authority to others. The Chair is authorized to use any reasonable interpretation of the provisions in these policies.
- The Chair is empowered to chair Board meetings with all the commonly accepted power of that position, such as ruling and recognizing.
- The Chair has no authority to make decisions about policies created by the Board. Therefore, the Chair has no authority to supervise or direct the Executive Director.
- The Chair may represent the Board to outside parties, including the sport’s international federation and national multi-sport associations, in announcing Board-stated positions and in stating the Chair’s decisions and interpretations within the area delegated to the Chair.
- The Chair may delegate this authority, but remains accountable for its use.
The policy makes explicit the board’s expectations for the role of the board chair as servant leader for the board. “The chair’s role is not to instruct the CEO, interpret board discussion for the CEO, or be the CEO’s advocate at the board table.”
This is a first step in the area of job design. A board that is proactive about its own processes and responsibilities is taking one step in a journey to exemplary governance. At the end of day: “If a board cannot govern itself, it cannot govern an organization.”
The board also needs to be proactive about avoiding ambiguity in the CEO’s role. It won’t surprise you that I recommend writing policies that define how the board will delegate authority and how it will require the CEO to be accountable for exercise of that authority.
The board delegates to the CEO the authority to achieve the results it has specified that the organization produce within the boundaries of prudence and ethics it has determined are required to protect the organization from unacceptable risks.
The CEO is accountable to the board as a whole. On a schedule determined by the board, the CEO needs to deliver evidence of achievement or progress towards achievement of board-determined results as well as evidence that all decisions and practices are within the predetermined boundaries. This seems pretty straightforward. But, again, it requires the board to be proactive: set clear directions, specify boundaries and set a timetable for monitoring.
The board wants to avoid the temptation to manage management (final authority) rather than governing management (initial authority) on behalf of those to whom the board is accountable. In sport organizations, boards are governing on behalf of members.
Boards should avoid inserting themselves into management. This happens when a board sets up committees in areas of responsibility that the board has delegated to the CEO, such as finance, human resources, or marketing. Such instances are a sure way to compromise clarity.
Having terms of reference that permit the board chair, board committee or committee chair, or individual board member to advise or instruct the CEO (or even worse, the CEO’s direct reports), in addition to the directions provided by the board, are also unhelpful. This translates to a situation where the board can no longer hold the CEO accountable for the resulting outcome. How can the CEO be accountable when management decisions can be controlled by another entity?
Finally, the board needs to be vigilant about avoiding situations where the CEO might “manage up” by determining or controlling the board’s agenda, asking the board to “approve” decisions for which the CEO already has authority, providing information to the chair or individual board members with the goal of influencing board decisions or deciding what information the board should receive. It is not unusual when there is a long-serving CEO that a board looks to the CEO for leadership, or that the CEO feels compelled to step in when leadership seems absent.
The CEO and board are a leadership team. The CGO and CEO are parallel leaders empowered by the board. This only works as it should if the board is proactive, intentional, and disciplined.