Corporate Governance To make a difference, boards need a boardroom revolution

Policies that make difference, missions that are clearly articulated, standards that are ethical and prudent, meetings and committees that work… Got your attention yet?

These noble goals outlined on the flyleaf of new edition of John Carver’s book, Boards that make Difference, remind me of those beautiful photos in recipe books. Nothing I cook ever looks like that!

And most boards don’t look like that either – according to chap who’s got to know heck of lot of them. When Carver laments that few boards ever live up to their potential, are widely seen as bouncing from rubber stamping to meddling, and that the realities of group decision-making “forever resigns boards to be incompetent groups of competent people”, it is criticism born both of familiarity and “love”.

The book is written, he says, out of his “love affair” with boards and is both hopeful (results can be much better) and presumptuous (he beats up few sacred cows such as undue focus on bean-counting activity). He concentrates more on non-profit and public organisation boards hence his descriptive title. However, much of what he has to offer is valid for private sector governance policy and approach.

The problem with most boards is that people join them with good intention, strong purpose and dreams of making difference, but find themselves trapped in trivia, mired in seemingly purpose-free meetings and generally diverted by too much day-by-day detail.

As Carver puts it, the majority of what most boards do either does not need to be done, or is waste of time if done by the board. Meanwhile, what they need to do for strategic leadership is not done. That, says Carver, signals “a major dysfunction in what’s accepted as normal”.

He believes boards are trapped in an inadequate job design – wrong-footed from the start into being reactive rather than proactive. His cure: get explicit about the big picture policy issues. What is the board’s purpose in this world? Who is it there to serve? How can it best do that? What are the values and perspectives (the policies) that drive its activity?

It’s the same recipe that values-led companies follow and is designed to state an organisation’s essential raison d’être and therefore provide sound base for leadership that is strategic, decision-making that is coherent, and behaviour that is both consistent and purposeful.

While this book specifically focuses on boards of public and non-profit organisations – bodies that as Carver puts it also have to contend with “muted market” signals as to their performance – there’s plenty of takeaway in it for board governance in general.

Having discovered on the job his own approach to governance which, as he says, “severely departed from much of conventional wisdom”, Carver has become probably the world’s most prolific author on the subject. And if he’s hard on boards it’s because broad experience of their workings as consultant has showed him how good they can be.

Governance, he says, is unique form of management in several ways. Boards are at the end of the accountability chain (the buck has to stop there); they act in moral and sometimes legal sense as agent of largely unseen and often undecided principal (particularly those in the public/non-profit arena); they’re set of individuals operating as single entity; and they work at remove from the organisation.

So, unique job – but no template for doing it. It is an irony in management literature, says Carver, that where the opportunity for leadership is greatest, the job design for leadership is the poorest.

He advocates new conceptual framework and demonstrates, both in principle and with specific examples, how it could work. It’s been tested in practice and, he says, is capable, with tailoring, of fitting any type of organisation.

Carver starts off by detailing governance principles and why problem-based improvements tend to miss the mark. Should boards be more involved or less? Should they function more as watchdog or cheerleader? Is their role to be manager, planner or communicator? All have been advocated to fix specific problems.

He then lists his ingredients for what good model of governance should do.

• Cradle vision – encourage dreaming;
• Explicitly address fundamental values and ensure focus on these;
• Force an external focus (purpose in wider world);
• Enable an outcome-driven organisation (weigh everything against the standard of purpose);
• Separate large from small issues and deal with large first;
• Force forward thinking;
• Enable proactivity;
• Facilitate diversity and unity;
• Describe relationships to relevant constituencies;
• Define common basis for (self) discipline;
• Delineate the board’s role in common topics;
• Determine what information is needed (not too little, too much, or wrong);
• Balance over-control and under-control (meddling versus rubber stamping); and
• Use board time efficiently (don’t waste time on trivia).

A modern approach to governance must enable board to cut quickly to the heart of an organisation without being seduced into action or paralysed into inaction by trappings along the way. Which is why board needs first to define its big picture – establish hierarchy of policies that start from the big, all-encompassing ones then cascade down through more specific governance areas.

The point, says Carver, is to establish the board’s policy-making process as both preliminary and predominant so it is not driven by staff agendas into dealing with issues in an ad-hoc, piecemeal or incoherent manner.

Boards have to get explicit about what really drives the organisation (values are powerful force but often not spelt out) and avoid being allured by the concreteness of specifics.

Because policies permeate and dominate all aspects of organisational life, they represent the most powerful lever in the exercise of leadership, says Carver.

He lists four reasons why policy-focused leadership is hallmark of good governance.
1. Leverage and efficiency – because it is in tune with fundamentals.
2. Expertise – you don’t need to have specialised skill (and possibly get lost down specialist silo), maintain an overview by focusing on policies.
3. Fundamentals – keeping everything relevant to organisational ends.
4. Vision and inspiration – dreaming is obligatory for leaders. “Dealing meticulously with trees rather than the forest can be satisfying but it neither fuels vision nor inspires,” says Carver.

He also creates four categories to help guide board debate derived not from administration but from an enquiry into governance.
1. The ends to be achieved.
2. The means to those ends – focusing on inspirational ‘why’ rather than prescriptional ‘how’.
3. Board-staff relations – including view of the CEO’s role, approach to dele-gation and manner of assessing performance.
4. The process of governance itself – effectiveness can only be sensibly assessed if you know on whose behalf the board acts.

Carver outlines his new conceptual framework by getting down to whole bunch of nitty gritty around how to run more efficient meetings, create policy limits that actually give staff more freedom to act, and simplify board function and structure in way that gives it greater unity and coherence while avoiding the mire of trivia.

In redefining governance excellence, Carver urges boards to be obsessed with effects for people, invest in selection and training; dare to be bigger than you are; surmount conventional wisdom, and perpetually redefine quality.

As to achieving excellence he says there is so far to go that there is “urgent argument for revolution in the boardroom”.

Visited 4 times, 1 visit(s) today

Business benefits of privacy

Privacy Week (13-17 May) is a great time to consider the importance of privacy and to help ensure you and your company have good privacy practices in place, writes Privacy

Read More »
Close Search Window