CHAPTER 1
Organizational Greatness Begins with Great People
Great organizations begin with great people. Apart from people, an organization is only an empty shell. It knows nothing. It can do nothing. It is people that imbue an organization with greatness.
âThe only way anything ever runs itself,â said one successful leader, âis downhill. Treesâhave you noticed?âdie from the top. That is true also of organizations.â
In his highly acclaimed book, Good to Great and the Social Sectors, Jim Collins suggests that the formula for organizational greatness is: (a) getting the right persons on the bus; (b) getting the wrong persons off the bus; and (c) positioning them on the bus for maximum effectiveness. Organizational greatness is all about people.
Building a great board
Building a better board begins with an objective examination of your current board membership, including the following qualifications:
Competencies: Do you have on your board the skills needed to give direction to the organization you are directing? This includes professional skills in the field of your endeavor, financial savvy, proven leadership ability, human relations competence, and just plain common sense. What do your directors know? What can they do?
Representation: Is your board more or less representative of the membership/constituency? Does it include women and men, young and experienced, and persons representing your ethnic and religious diversity? When your supporters see a picture of your board, you want them to say, âWe feel well represented by them.â
Proven performance: Are there directors on your board who are not pulling their weight or whose attendance record is lacking? Harboring dead wood is not just an inert place at the table. It is a negative. It suggests that poor performance is tolerated at the highest organizational levels.
When the results of this self-analysis are known, you need to act on your findings. The Board Service Committee, an expansion of what was previously known as the Nominating Committee, usually handles this task. It is arguably the most important committee on your board since it holds the key to your future effectiveness.
A frequently asked question is âHow large should a board be?â When a board is too large it becomes unwieldy. Seven to nine is a good number for a small or intermediate sized organization. Twelve is still workable, but anything beyond that becomes unwieldy. An organization with a diverse and scattered membership might feel compelled to have larger boards to achieve broad representation.
The Nominating Committee is arguably the most important committee on a board.
Drawing up the list of candidatesâand checking it twice
Once you have identified how many new directors are needed, what competencies are needed, and what representational gaps need to be filled, you are ready to start drawing up the long list of candidates. The Board Service Committee should be in charge of this process. Throw the net out wide. Look for people with a stellar reputation, strong stature and few known negatives. The CEO might have names to suggest, but I caution against constituting a board made up of friends of the CEO.
In the second step, the long list is pared down to the short list, consisting of not more than three of the lead candidates who are then vetted thoroughly. The board should keep on record the files of any persons not making the short list in case it is necessary to re-open the selection process and/or for future openings.
The thoroughness of the vetting process depends on how well the candidates are known. A bad choice can cause havoc with board dynamics and raise questions in the public mind. Unseating a director is more difficult than discharging an unsatisfactory employee. When it is necessary to discharge someone to make room for new blood, do it with the utmost of sensitivity and empathy. Boards should never find themselves so desperate to fill a vacancy that they elect someone with whom they are not well acquainted.
Unseating a director is more difficult than discharging an unsatisfactory employee.
Even candidates who are thought to be well-known may have some dark spots in their pasts. It is good to do some discreet personal checking. At a minimum, you will want to do a Google search, examine the police record, and have a personal interview. Persons completely unknown should be screened more thoroughly, including, without fail, a personal interview.
Making the ask
Once the board has made its selection, its next challenge is to proposition the candidate in such a way as to increase the likelihood of an affirmative response. It is all an academic exercise until the candidate has confirmed acceptance. I find that when the right person is asked at the right time and in the right way, the likelihood of an acceptance is substantially increased.
Timing of your ask is important. Do not ask someone who is about to have surgery or who has just had a major job change. Do not ask a CPA to become your treasurer when they are in the throes of the tax season. Timing your ask can make all the difference.
Timing your ask can make all the difference.
Consider carefully how you ask. Do not be overly casual. Give it the air of importance it deserves. Always do it in person, not by telephone, and never by e-mail. In some cases, do it over a meal or at least a cup of coffee. Many deals are consummated on the golf course. Do whatever works for you, but set the stage for an affirmative reply.
Finally, consider who does the asking. I attended a meeting recently when one member volunteered, âPermit meâhe owes me big time!â He was deputized and got his trophy! Quid pro quo often works. If you have a really important candidate in mind, get your chairperson to do the asking. It communicates the importance you want to convey.
Big people respond to big challenges. Small bait only attracts small fish.
Whatever you do, do not dumb down the position, hoping to improve your chances of getting an acceptance. That only sets the stage for a lukewarm director. Big people respond to big challenges. Small bait only attracts small fish.
After meeting with a candidate, follow up your ask with a letter summarizing your invitation. Do it before he or she has had an opportunity to reply. Keep the momentum moving in your favor.
Seating the new director
When the election has occurred, you have one more challenge. That is to help your new member to become a contributing member of the board. A thorough orientation can be seen as an acceleration lane. The board chairperson and the CEO should meet with the newly elected member to learn her/his particular interests and abilities. They should provide a packet of materials, including recent board meeting minutes, a copy of the bylaws, and a board manual. The new director should be briefed on the organizationâs history and current issues. A time of transition is a good time to effect change in your corporate culture and way of doing business.
Your board is now fully constituted, and you are ready to go to work. But before a board can be effective, it must understand its governance role as distinct from the role of management. That is the subject of Chapter 2.
A board must understand its governance role as distinct from management.
Use the Board Self-Assessment Form attached as Exhibit A. Tailor it to your particular circumstances if you wish.
DISCUSSION QUESTIONS
1.   Does your board have within its membership the needed competencies?
2.   Is your board representative of the membership/supporting body?
3.   Does your board have a succession plan to keep it strong and to avoid costly gaps in membership?
CHAPTER 2
Helping Directors Understand Their Governance Role
An organization is made up of two parts: governance, which is the responsibility of the board of directors, and management, or operations, which is delegated to the management under the direction of the CEO. To be effective and to discharge its responsibilities faithfully, a board must understand this distinction. It is illustrated below.
The Big X
Management-Centric X
The boardâs role is minimal. Management has assumed most functions, whether by delegation or default. The board essentially rubber-stamps reports, budgets, and plans prepared by management. The boardâs role is basically advisory.
Management has taken ownership of the enterprise. It keeps the board generally informed, and the board dutifully approves legal documents that require board action. Beyond that, the boardâs role is minimal.
Board-Centric X
Here the board is dominant. It reserves to itself all major decisions, sometimes dipping into managementâs domain. It prides itself on being hands-on. Its meetings are long and frequent. Its critics say it micro-manages.
Management does as itâs told. It is not expected to play a major role in decision-making. In fact, things go better when it doesnât.
Partnership Model X
The board exercises its fiduciary role through establishing the organizationâs vision and mission. It delegates implementation to management under the direction of the CEO, along with basic policies that define the sphere within which management is authorized to operate. The board evaluates the performance of the CEO and participates with staff in evaluating program performance annually.
Management accepts its accountability to the board. It assumes responsibility for program implementation with the parameters established by the board. The CEO keeps the board well informed. When a major decision is needed, the CEO brings a recommendation for board approval.
This appears simple and straightforward, but in experience this important distinction between governance and management often becomes unclear, resulting in confusion. When a board understands this distinction and adheres to it consistently, it becomes easier for management below the Big X line to define itself. The importance of this distinction cannot be over emphasized. It is step number one in organizational effectiveness.
Governance and management complement each other.
Governance and management are both necessary, to be sure. They complement each other. They are partners. The German proverb says it well: âOne hand washes the other.â The line that separates these two organizational functions should, however, not be thought of as a stone wall. The wavy line in the following illustrations is meant to illustrate that the line is negotiable. More on this later.
When I was chairman of Habitat for Humanity International, I participated in four Jimmy Carter blitz builds. I took orders from the house forepersonâwhoever that was. I was a volunteer builder like all the others. That I was chairman of the board gave me no special status. A build was not a board...