Penn State, Sandusky, and Board Governance

There has been much discussion about the question of board culpability for the sins of Jerry Sandusky at Penn State and at his foundation, Second Mile.

In all the hand wringing about Penn State/Second Mile/Sandusky there is an underlying perplexity regarding, “what about the boards?” What is the business of accountability and responsibility and assuring both? People have no problem fixing blame and responsibility to individuals. We muddle around when it comes to the boards. We usually ask, “Did the boards react appropriately?” This belies our underlying mental model of governance by question-asking and reaction. We rarely ask, “What responsibility did the board(s) have to pro-actively minimize the likelihood of a Sandusky?” We have a hard time figuring that out. This comes from our view of board governance and the lack of clarity, even befuddlement, over execution of board responsibility to delegate and assure accountability, first, by assuring that board values (including the unwanted) are expressed and then reasonably, yet sufficiently, implemented.

What Does It Take To Get Us To Move? Even Improve?

I’ve been thinking about the relationship between decision-making, especially in the light of board governance, and actual change in a board’s or anyone’s) behavior. Here are some thoughts:

To change people must:
1. Be searching for applicable truth - be curious and have a sense of our need, even urgency in seeking truth–and be willing to seek truth in areas where you do not want it!
2. Hear truth - be open and looking. We naturally resist or deny truth that is, or may be, contrary to our present course of action or our beliefs. We rationalize why it doesn’t apply or may not be true. This, of course, also means testing the information we’ve received concerning its reliability and truthfulness–its alignment with reality.
3. Receive/accept/believe it. Without being convinced that what we have learned is true we will not go to the next step which is…
4. Internalize/absorb/grasp it - Not only be convinced that what we have learned is true but that it true for us and has meaning and impact for us. It is part of our reality and it creates emotional energy in us. We must apply it to ourselves and our situation. If not, we will not act, (unless compelled against our will.)
5. Begin to act on it. - practice doing it. Without practice there is no learning and growth in proficiency.
6. Continue doing it. Inertia works against us when starting something but in our favor when we have begun something and are developing the practice, (such as sticking to an exercise regimen or a diet). Author Jim Collins talks about the flywheel effect - that by giving small impulses repeatedly and persistently in the right direction we can get even a large, heavy flywheel spinning faster and faster. Excellence absolutely depends on persistence–getting better and better.

These principles apply to governing boards. I see boards all the time that get interested, profess the desire to improve and only begin before they falter and fail. Board members must believe in what they are being coached to do to improve their governance. It is almost always uphill against their current practices and often involves greater rigor for them. So the strong tendency is to begin with good intentions but then increasingly resist the need to change and then slide backwards. Generally someone on the board must take the role of the one who gives the flywheel a shove.
We experience this in our everyday life. Our spouse encourages us to keep doing something that for a variety reason we might fall back from, e.g., a diet or going to the gym. He or she gives our flywheel a shove. We need that.

Passion and Focus, A Board Requirement for Excellence

For a governing board to accomplish anything of significance regarding the quality of it governance, much less excellence, it, too, must have passion, i.e., care deeply, for its work. I say “too” because CEOs and employees are told all the time that they must have passion for the mission, and boards are told the same occasionally. But not passion for what should be their work - governing the organization well. No attitude of passion for governing with excellence and the board ends up reverting to old habits, i.e., passive laziness and reactive governance. I have seen it over and over. The board starts excited to improve (or, for example, implement Policy Governance) but stalls out (much to the growing cynicism of the CEO). However, couple passion with a clear vision for governing with excellence, and the board begins to focus. Focus results in persistence (follow-through on its original intent), and focus, coupled with follow-through, results in a developing character of tenacity and endurance to reach the goal - the board’s goal of excellent governance. Excellent governance transforms the organization and attracts excellent CEOs.

Resourcing Board Governance: Be Careful What You Call Yourself

Nonprofit board members may be unpaid but they are NOT volunteers. As I work with nonprofit boards across the country, especially faith-based ministry boards, and reflect on my own experience on NP and ministry boards, I have learned that the typical board thinks poor. Because they think of themselves as "volunteers," everything (except perhaps the audit, which is often required)regarding their governance is done on the cheap. Little do they know how much they are costing the organization for which they are accountable. They are unwilling to invest in themselves to improve their own governance, even become excellent if they tried. They seem not to realize they are as much a legal component of the organization as the CEO's office, or the financial section. Not only that, they, collectively, are accountable for the organization. They are NOT volunteers as one normally thinks of volunteers. In fact, if they get it wrong, they can suffer consequences, meltdown, front page notoriety, fines, bankruptcy, etc. Their job is to lead the organization, but most boards do not know how to do that, and they do not know they do not know. So they lapse into reacting and asking questions as they review whatever has been put before them, typically financial reports. Governance is providing both direction and protection. To do that well does mean some investment. However, considering the vital role the board (should) play, the relatively small percentage of the organization's budget good governance costs pales compared to the importance a good board can bring in value to its organization.

Values and Zero Sum Thinking

I have just read my umpteenth book (and article) on ethics, values, values and leadership, values and planning, etc. Virtually all the writers confuse or fail to differentiate between "be" values and "do" values, which leads to planning confusion. "Be" values, generally virtues as I use the term, such as integrity, compassion, teachability, courage, etc. are those you and your organization want to increasingly become. They "saturate" the decision and behavioral environment, so to speak, like dye a fabric. Furthermore, they do not lie on some sort of common continuum between each other - as one increases another diminishes. Each has its own dimension. Ideally, we want to be fully mature in each value. The concept of "core" really is not a good way to attempt to think of these values. Developing those is a continuous process.
"Do" values are values that require activity such as family time, recreation, personal development, spiritual development, etc. Since they require activity, they take time and are subject to allocation limits. This means that such principles as balance, prioritization, defining a core set, time management, etc. do pertain to these values.

Differentiating the nature of the values will help avoid confusion and, therefore, our strategy for dealing and moving toward our values. - Both types are important but require totally different approaches.

What is the Connection Between Values and Performance?

Everything starts with values, and by values we include ethics and virtues. We are convinced that consciously articulated values are profoundly required for at least two (for starters here) vital components of high performance organizations.

As we and our colleagues have worked with organizations, including ministries, their attitude and approach to risk and risk management (or not) are fundamentally values-based. Are they willing to confront the truth? How do they avoid denial, the deadly disease of organizational failure? Do they let the truth in? How rigorous are they willing to be in protecting against serious risks? What is their sense of accountability? What is their attitude toward excellence? Is it part of the culture? Or is the culture one of “adequacy?” (Which is a true experience of mine!) Are they willing to act - to execute as needed?

The second is an issue raised by Jon Katzenbach and Zia Khan in their article in the summer issue of Booz&Co.’s magazine, Strategy+Business. Katzenbach argues for the wise integration of good results measures and the soft side of organizational leadership - culture. The article points out that good measures energize and align. “In business the informal organization is most successfully mobilized when there is a sharp focus on performance ..people want to know how their informal collaboration will lead to improvement in results.” I might add that people also want to know how they and their team and their organization are doing toward larger ends. This is, in fact, an important personal motivator.

Katzenbach observes that one of the keys to driving change (in the organization he using as an example) “was the focus on metrics that matter and motivate. To that end, (the leader) needed to make the organization more values driven…” the company then set about intentionally creating and articulating its values. I have to admit this is the first time I’ve seen an academic link values to good results metrics. But I agree. We fail to recognize the fundamental beginning point that values constitute - even for such a “hard science” as performance metrics.

More on Board Spine, an Interesting Experience

It Often is the Little Things That Make a Difference and are Just Enough

I had an experience a few days ago that is very relevant to the blog I posted in October on the need for a board to have spine as a necessary component of governance. This was a favorable experience for once and fit the turnaround pattern that was emerging in this organization.

Here is the story. I was standing in an informal group prior to a meeting, a group which included the prior chair of the organization on whose board (mentioned earlier) I had reluctantly joined to help turn the organization around and rescue it before it went over the edge. Also, in the group was the CEO we had appointed to replace the previous one. This board was, (or became soon enough), a Policy Governance® board and so was looking forward to the first Ends (intended results, for whom, & the resources to be used) monitoring report under this new CEO. The new CEO had been unable to submit an ends report last year after just after arriving because the prior CEO had terminated the data system that enabled the quantification of ends.

As the group visited informally the new CEO seemed excited about his work on the ends monitoring, which would be submitted to the board very shortly. Suddenly into the casual conversation of this group, the CEO commented that one of the reasons he had been so diligent regarding reinstating the data system and driving him toward excellence concerning the ends monitoring was that the chairman last year had made a single comment. When he, the new CEO, had told the board last year, just after taking his position, that he would be unable to submit ends monitoring because the data system had been terminated by his predecessor (but he would be reinstating it), the chair had simply commented, “That (failure to monitor ends) is not acceptable.” The CEO told the group that that comment had “rung in his head” all year and he had not forgotten it!

One comment by a chair was all, in this case, that it took to reinforce to this willing and able CEO the fact that the board was serious about receiving decent ends monitoring reports. He assumed (rightly) that the chairman was speaking for the Board, and he needed no further indication of Board resolve.

That is a wonderful example of the use of just the right amount of Board firmness required in this case, and for this CEO, who got the message and willingly set about complying. The chair knew his board and where it stood in this matter and applied just the right amount of firmness to his message. Nothing in writing, just a simple, almost casual comment was all it took.

The Ends monitoring report? It was great! It focused the Board on the ends accomplishments of the organization, and suddenly all the effort and pain of the past couple of years were worth it. The Board and CEO, together, contemplated the future in terms of ends, discussed new challenges and dreamed about the future. That board went home feeling it had done its job.