Govern More, Manage Less
BoardSource’s new book, Govern More, Manage Less, prompts a Q & A blog post on current governance issues with Outi Flynn, director of knowledge resources at BoardSource.
OGF: Is BoardSource seeing more issues related to balancing governance and management?
Outi: We have always tried to clarify the primary differences between governance and management. Not an easy task as the line is not always a clear one – sometimes it is difficult to determine on which side of the fence an issue belongs. This dilemma leads us to stress what we call a “constructive partnership” between the chief executive and the chair. The two leaders need to work together in regular communication and guide their respective teams to focus on issues that they should handle. This becomes much easier when the two leaders are in agreement on the boundaries.
OGF: What is the biggest change in governance practices these days?
Outi: Some of the hot issues that we observe in the boardrooms today: higher fundraising expectations, difficulty dealing with the changing of the guard from one generation to the next, rebranding, adapting to social media. Practices change slowly but accepting change as necessary is inevitable.
OGF: The book talks about procedural vs. performance accountability: what does this mean and what are its impacts?
Outi: We can probably credit three recent “authoritative” measures that have had an impact on the increased attention to accountability. The Sarbanes Oxley Act woke up the nonprofit sector as it got worried about similar regulation controlling the diverse organizations on our side. The Senate Finance Committee a few years ago spent countless hours focusing on specific tax-exempt practices. And now the new Form 990 wants all filing organizations to explain their governance processes, not just to state whether specific policies are in place. All this attention has forced nonprofit boards to take a deeper look at their own household items and how they carry on their governance work. Procedure became the hot button issue – maybe at times to the detriment of the overall performance of the organization.
OGF: The book suggests that nonprofits are focusing more on procedural accountability: do you see this trend changing?
Outi: Compliance – paying attention to legal requirements or procedural accountability – is the base of good governance but it can’t be an end in itself. Exceptional boards get their ducks in a row and then start focusing on how to make a real difference. They understand that making a difference is the ultimate purpose of their organization so paying attention to impact is their driving force. Any board that has realized this is paying attention to performance measures.
OGF: How will a foundation’s board and the foundation itself benefit from shifting to an appropriate balance between governance and management?
Outi: There are times when a board needs to take a step back and get more involved in the operational issues. During a chief executive transition the board needs to keep a closer eye on the operations to ensure that nothing falls between the cracks, that attention is paid to the critical issues even when daily leadership is missing. As mentioned above, when the organization struggles with finances – due to the tough economy or mismanagement – the board’s fiduciary duty requires it to get closer to the numbers and processes to ensure the organization remains viable and is able to readjust its activities appropriately. During calm periods the board needs to assume its governance role: keep track of the past but focus on the future.
Entry filed under: Governance.