The performance of board of the governors innot-for-profit organisations

Thursday, April 2, 2009
With the current unprecedented economic downturn around the globe in which The Gambia is no exception, it is prudent to revisit the performance of boards of not-for-profit organizations, in terms of leadership and management skills that are required to build the engine of growth for organizational development.

I am currently conducting a study on board of director effectiveness for not-for-profit organizations in a developing country (The Gambia) and would like to share some of the current thoughts with regards to board leadership and management through your newspaper.

The leadership and management of boards and executives of not-for-profit organizations undergo greater scrutiny more than ever before and are being held to higher levels of accountability. The recent intense scrutiny of not-for-profit organizations has centered mostly on whether they are complying with legal and ethical obligations. Observers have also argued that the recent public scrutiny of governing boards have been fuelled by the high level of corporate failures. These arguments are now evident in both the UK and US where governing boards of several financial institutions (Royal Bank of Scotland, HBOS, First Bank Financial Services etc) are held responsible for majority of organizational failures that are currently being experienced. Previously, in most developing countries, not-for-profit board accountability has not been seriously taken into consideration.

However, there is an upsurge in change of heart towards this tendency. Recently in The Gambia, all not-for-profit organizations that operate as an arm of government were required by parliament to submit their audited accounts and annual reports for review. Although such a request is not the first of its kind, it must be acknowledged that parliament’s approach and commitment to bring about accountability within the not-for-profit organizations signalled the beginning of a new era.

The governing board of any not-for-profit organization is ultimately accountable for the long-term strategy and vision for that organization and volunteer board members should establish policy and provide governance. Unfortunately, many boards remain unclear about their strategic role in leading the organization into the future. Board members are held to three standard of conduct; namely: The duty of obedience – requires board members to be faithful to the organization’s mission and to act in a way that is consistent with the central goals of the organization and applicable state and local laws; the duty of care – requires board members to exercise reasonable care by staying informed, participating in decisions, and acting in good faith when they make decisions on behalf of the organization; the duty of loyalty – requires board members to put the interests of the organization first when making decisions affecting the organization.

The CEO plays a unique role, as this person represents both management and governance, which makes the issue of leading the board even more critical. The CEO is the link between governing board performance and organizational performance and is also the primary driver of the board’s collective competency and effectiveness.

Not-for-profit Organizations: Mission, Vision and Strategic Direction
An effective not-for-profit organization is characterized by a well shaped mission and vision that is supported by a viable strategic plan and sound policy decisions. The board has responsibilities to define a clear and compelling mission, vision, and strategy for the not-for-profit organization. Good boards ensure a vibrant discussion about the mission and are willing to consider altering that mission when needed. Best practice suggests that a mission should be tested to ensure continuing validity. Derived from the mission is the organization’s vision, a perspective of the organization’s status within a set period.

Therefore, the vision for an organization is equally critical for decision making, particularly in regards to the strategic plan, which provides link between where the organization is at the moment and where it wants to be in the future. The planning process is an opportunity to formalize a key component of the board’s strategic role: the ability to take a forward-looking view, figure out what really matters, and recognize when the organization needs to change or in transition. A formal strategic planning process ensures that the board has the opportunity to revisit the environment periodically, assess the organization’s capabilities, and evaluate its success against the outcomes suggested by the mission. This provides the platform for the board to debate new programs, assess the performance of current programs, and develop fundraising objectives, capabilities, and strategies.

Board of Directors Effectiveness Practices:
Some research supports the hypothesis that board effectiveness is related to the use of certain prescribed board practices whilst others support the hypothesis that board effectiveness is related to overall organizational effectiveness. However, board involvement in strategic planning, the use of good meeting management techniques, and low conflict within the board are strongly related to executives’ positive assessment of board performance.

The quality of board service remains crucial to the well-being of the organization. An effective board involves itself in what an organization is doing. Boards of directors are ultimately legally responsible for the affairs and conduct of the organizations they head. It is widely accepted that not-for-profit boards are expected to perform important and difficult roles; unfortunately it is strongly argued that many boards do not meet those expectations.

Leadership qualities of Board of Directors
There are a number of leadership qualities for board of not-for-profit organizations that should impact on organizational performance, together with known/learned skills and the opportunity to act. Amongst the qualities listed are: a. A good board exhibit passion, commitment and vision, and it articulates these clearly. b. They have the ability to communicate with and engage others. c. They know what they do not know, are willing to take risk, are comfortable seeking outside help, and are honest and forthright in recognizing and naming problems. d. They are able to support the CEO by making time available to sustain his/her vision and implementation. e. The board leader’s first loyalty is to the mission and constituencies the organization serves.

Leadership is often defined as having answers, or taking charge and that one of the most important forms of leadership that board members undertake is simply to ask substantive questions. Ways to enhance Board of Directors effectiveness, questions are being asked as to whether the traditional roles attributed to boards, along with their legally prescribed fiduciary obligations are sufficient to enable boards to fulfill their potential. Board effectiveness continues to be a major issue for most organizations although effectiveness means different things to different people, but complaints about board performance reflect recurring themes. According to Axelrod (2004), three (3) of the most common complaints are that: a. board does not spend enough time on the things that matter most b. board meetings and other forums are overly scripted and arranged and offer little opportunity to explore emerging issues, consider viable alternatives, and make thoughtful decisions; c. individual board members seem to perform better than the group as a whole.

Herman and Heimovics (1991) described six specific board competencies associated with a "board-centered" chief executive; namely:

a. Facilitating interaction in board relationships
b. Showing consideration and respect toward board members
c. Envisioning change and innovation with the board
d. promoting board accomplishments and productivity
e. Initiating and maintaining a structure for the board work and
f. Providing helpful information to the board vehicles for Board of Directors
Development The most proactive board executives recognize that a board can provide the organization with high-quality support to which it is entitled only when it has the tools for good governance. The CEO can inform, educate and engage the board members by integrating those activities with the regular functions of the board.

Axelrod, (2004) identified the following four vehicles to provide opportunities to design and implement meaningful board development inventions.

1.Creating a dedicated Board Development Committee. The work of the committee revolves around five major areas namely: help create board roles and responsibilities; pay attention to board composition; encourage board development; assess board effectiveness; prepare board leadership

2. Evaluating the Board’s performance.
 There are a number of ways that a board can seek feedback on its performance and this include: a. dialogue on a dimension of the board meeting; b. constituency surveys; c. third-party reviews; d. internal reviews by an ad hoc or standing committee of the board; e. reflective discussion of critical incidents; f. feedback solicited at the conclusion of each board meeting

3. Designing Better Meetings
There is yet no specific definition relating to board effectiveness and those organizational factors such as board size, committee structure or the number and duration of board meetings.

However, as noted earlier, the process and substance of board meetings can have significant influence on the board performance. Board meetings should provide opportunities for airing multiple viewpoints, new approaches even disagreements. Board meetings should create the conditions where members can genuinely think together and direct the board to issues of strategy and not administrative. The board chair and the CEO should genuinely invite the board members to raise concerns, voice criticisms, and express ideas in the boardroom, that challenge the status quo.

4. Strengthening Board structure to align with substance
The median size for board is seventeen members (Board Source, 2000). Down-sizing is the trend for most boards with large boards. The impetus to reduce the number of board members varies, but motives include: o Increasing the capacity of the organization to actively engage each board member o Reducing the cost generated by boards. Delegating some of the work to other groups such as advisory councils that can fulfil discrete, non-fiduciary board functions.

Critics to this article might conclude that there is nothing new in the issues discussed above which I will partly agree to, but the issue here is not the points discussed above but whether CEO’s and board members of not-for-profits in the Gambia are putting those points/issues into use during their tenure as board members. The purpose of my study is purely to assess in generality which board practices are mostly practiced in a developing country like The Gambia. From data collected one would be able to determine the effectiveness of boards in The Gambia, following which specific recommendations could be given as to which board practices are not put into use and how they could help enhance board leadership and management effectiveness.

aojallow1@yahoo.co.uk
Author: Abdoulie O. Jallow,Graduate Student, National Taiwan Normal University,Taipei, Taiwan