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.

Board Governance, Diligence, and Entropy

In an article posted this month on the electronic version of Quality Digest Donald Wheeler, one of my favorite trainers and authors in the use of improvement statistics, discusses the power of entropy (as in the Second Law of Thermodynamics) to drag an organizational process toward deterioration and chaos. Sometimes the process appears to be giving us the results we want but occasionally and unpredictably fails. Underlying that particular pattern may be a process that is not really fundamentally reliable at all, (i.e., it is unstable and is unpredictably so, at that), but it appears to be giving results, which lulls us into complacency and hence, benign neglect. Because we don’t recognize nor probe the real root cause of this behavior, the process swings from looking good (but underneath is “On the Brink of Chaos”) to “Chaos” and failure and then back as we reactively patch it. Wheeler calls this the “Cycle of Despair.” We constantly patch to fix it, getting it back to giving us results and then, wham, it goes out on us again.

As I reflected on this phenomenon, I realized that I commonly see governing boards behaving this way. They start into improving themselves, for example, saying they will learn and apply Policy Governance®, improving the rigor and intentionality of their governance. They promise their CEO to improve so he can be free to manage and they can govern. But as they begin to change and improve, they become complacent and don’t realize they are fighting a very persistent and pervasive hidden enemy, entropy. When they relax in their complacency, they slide backwards toward old habits and ineffectiveness.

Of course, there can be other causes for a board experiencing this pattern. A common one is laziness - a close cousin of complacency. It is always easier the old way (even if less effective). The chairman just doesn’t get around to doing what must be done to stay the course. (He is use to showing up, and finding the agenda and all the reports there in front of him ... done by the CEO.) Often staying the course simply means for the chair doing the agenda the way it should be done and holding the board to its stated intent. But it is easier to let the CEO do it, it’s new to me; he’s done it in the past, or use an old agenda - one simply calling for reports.

Occasionally ignorance may be cause, but that has no excuse either, since a phone call or e-mail for counsel or assistance is just a phone dial away.

Usually there is irony (or hypocrisy) here. The board would never condone its organization not striving for excellence and the diligence it takes but is, itself, unable to persevere against entropy and continue the climb to excellence.

Now that I'm off the board...

“Now that I’m off the board I am more valuable.”

I had a friend just recently mention to me that he had stepped down from a board he had been on for some time, and discovered that he felt that he could be more helpful off the board than on. He is not the first to make that observation to me. Indeed, I recently stepped down from a board myself and told both the president and the board chair that I would be available gratis as an advisor, feeling as though I had exhausted my value to the board and could be more valuable off than on.

The chair and president have indeed sought my counsel from time to time. My contributions are pure observation and advice. I can be candid because of it. This provides a refreshing freedom to what I can say to either the chair or the president.

So I began to think about the pros and cons:

1. When you are on a board you have to be careful that you don’t use your board position to “instruct” or “help” the CEO (or other employees). It’s so easy to be misunderstood. The board as a whole is the boss of the president, not individual board members. Nevertheless, a member’s position of presumed authority can be confusing, and board members often behave as though they had individual power. The CEO can get all the help he needs from anywhere. He doesn’t need a board to do that. The board is not for advice or help (much to many people’s disillusionment); it is to govern. Roles and power can be very easily muddled or misperceived when on the board. Off the board you can give all the advice you want and it can be accepted or rejected free of misunderstandings.

2. Now I can be friends with both chair and president, free of mixed loyalties. When I was a board member my first and legal duty was to the organization and its moral owners as we saw our accountability. Yet I developed friendship with the President (and his staff) and with that friendship goes a certain natural loyalty. This is a problem in governance because that friendship can blind or weaken my loyalty to the organization - my ability to be firm if necessary. There is real tension and there are innumerable studies discussing this issue. I believe that it is the most common reason behind CEO induced meltdowns - huge compensations, poor org. leadership, poor strategy, etc.

3. Your timing is your own. You can phone up for a visit at any time or e-mail a thought. It does not run the risk of being seen as tied to an issue coming up on the board, since you don’t know what is coming up. Your motives are seen as purer - less likely mixed.

4. The president or chair is free to be more open since your motives are not, of necessity, mixed anymore. This actually enables you to give better advice. You learn more and you see more clearly.

Anyway, those are some of the dynamics behind this feeling we have sometimes when stepping off a board but desirous of continuing to contribute. We can be valuable in a profoundly different way. Both roles are vital. But we can’t do both at the same time. There is a time…

Board Governance Requires Spine

When I took my training in Policy Governance(R) from Dr. John Carver many years ago he spoke frequently of moral courage. I saw moral courage as the courage to stand up for your convictions - and it is of course. We had a saying, "There is nothing more dangerous than a scared board." For example, keeping promises is part of integrity, but boards frequently do not even remember their words, much less keep them. (But the CEO remembers.) Boards are notoriously unreliable. I've had boards make promises or commit to excellence and then three months later change their minds or quit.

But that is not what I am talking about today. Today I am talking about a very common problem, both with corporate boards (notoriously so) and with NFPs and ministries. The board discussion and research literature (what there is of it) is looking increasingly at the Board-CEO relationship, because so often the board capitulates to or ignores imprudence or failure to fix a non-compliant situation on the part of the senior leader (CEO, Executive Director, President, pastor, etc). The speculation in the literature (whether looking at Disney or a small local ministry) is that this fecklessness on the part of the board is due to a too close relationship that develops with its chief executive. The board develops a "warm" - more than cordial - loyalty to the CEO and can no longer represent the interests of the owners and the organization firmly and effectively, becoming conflicted by their loyalty to the executive. I call it the Feeble Board Syndrome (FBS) and I am seeing and experiencing it a lot - too up-close in some cases.

I became (reluctantly) part of a board that turned out to have this problem. It could not and would not make its executive comply with its own policies - or even reporting requirements. He gamed them either out of simply not getting it or out of resistant passive aggressiveness. AND they all knew it! But they couldn't bring themselves to act. The emotional costs were too high.

This summer friends of mine (well trained in governance) on another national board acted in exactly the same manner while they watched their organization enter the zone of insolvency and approach the edge of the cliff. They could not bring themselves to lower the boom. They liked and sympathized with their CEO. And I understood perfectly what they were going through.

Right now a for-profit client board is going through the same thing I fear. I do not like what I am hearing about the financial performance, and the CEO appears not to be totally candid with his board. And the board knows it! The outside stockholders are near rebellion and the board cannot bring itself to confront this CEO.

We are human after all and do develop close relationships with our CEOs and the literature tells us to! It calls the board-CEO relationship a "team." NOT. It is legally and morally an accountability hierarchy whether academics like that term or not. And if boards do not and cannot step up with sufficient spine and cordial firmness, even sterness, to insist on performance on behalf of the people depending on them (even employees in many cases), something is wrong with the way we implement governance.

Boardsmanship requires spine and a friendly but firm (sometimes stern) relationship with its CEO. It must never confuse its fundamental fiduciary obligation with loyalty to the executive. It must show that kind of moral courage if the time comes. That is not easy - friendship while holding someone accountable. A loyal caring blended with firm integrity so-to-speak. What kind of training would accomplish that? Maybe we should find a temperament test for it and apply it as one aspect for selecting board members. Or the board itself develop an outside "accountability observer" who may see more clearly than the board when its feeling are deeply mixed. I don't have an easy answer, but recognizing it is a step in the right direction.

Well, the evidence is growing. In an e-newsletter some time ago I mentioned, based on growing research on team performance, that boards are downsizing and that the ideal size is probably under ten. The latest (May 2009) Harvard Business Review has a wonderful interview with J. Richard Hackman, Edgar Pierce Professor of Social and Organizational Psychology at Harvard, and recognized expert on team performance. He starts the interview by pointing out how difficult it is to opimize team (including board) performance. Usually teams underperform their potential - often disasterously. Later in the interview he points out several fallacies about teams, one of which is the bigger the team, the better. After discussing what goes wrong in larger teams he say his rule of thumb is "no double digits." Bingo! A governing board is a team with a product to create - wise decisions and policies, and team performance principles apply. Further it has several strikes against it going in, infrequent time together, little opportunity to build trust and relationships, etc. Why further damage the performance with size?
As I said, the evidence is growing and becoming virtually a consensus. Keep board size (or committee, or team, or any body intended for creating a product - a plan, decisions, etc.) under ten. Other evidence has suggested that performance actually peaks around six! I've seen excellent boards in the five to six range. Furthermore, they hold each other accountable more effectively, stick to their word better, deal with mavericks or dysfunctional members more effectively, and they can, when a board, and using the right governance process, represent a diverse ownership just as well or better than a large body.