Background on Board Governance
Glenn Tecker and the Principal Consultants of Tecker International LLC
Introduction
Organizational governance can be understood by considering the alignment of structure, process
and culture.
Governance relates to the decision making units of the organization and the relative powers,
authorities, and responsibilities that each possesses. It also involves the way in which they
exercise those powers, authorities and responsibilities. Governance is also affected by the
behavior of the individuals that compose groups with decision authority. The aggregate of their
behavior both guides, and is guided by, the governance culture of the enterprise.
Structure refers to units with decision authority, the nature of their authority, their relationship to
each other, and how they are composed. Process refers to the systems, methods, and
approaches employed by the unit to accomplish its assigned responsibilities. Culture refers to the
beliefs, values, and behaviors which exist as the norms of behavior within the enterprise.
Good governance principles apply to all units of governance. Over the past few years, many
associations have done much to streamline their governance systems in a world that requires
more decisions be made more quickly and with better knowledge. They have sought to
accomplish this without diminishing the democratic and participatory nature of a membership
organization. Those that are most successful in balancing these equally important objectives
have done so by employing methods to obtain reliable and up-to-date insight about the
experience, opinions, and preferences of the populations whose interests they serve.
Trade and professional associations are organizations composed of members. In most trade
associations the members are organizations. In most professional associations the members are
individuals. Some of organizations provide membership categories for both. In any case, the
model of governance employed by membership organizations tends to be a peculiar blend of
political and corporate characteristics. This hybrid is often referred to as “the representative
governance model”.
The political dimension of the representative governance model occurs as a result of the use of a
selection or election process to identify the individuals who will sit on the respective governance
bodies. Usually, the selection or election process is expected to provide leadership with access to
the variety of perspectives that reflect the diverse experiences and expertise represented in the
membership population. The character and systems of the selection or election process will
determine the degree to which the “political” objectives of the model are, in fact, achieved.
It should be noted that good governance assumes attention to the views held by various
communities within the total population. Dependable information is essential to groups afforded
authority to decide on any group’s collective behalf. To avoid being “opinion rich” but “information
poor”, good governance earns confidence in the ways in which it moves relevant information
from” the people and places that have it” to “the people and places that need it.”
Emergent technologies have enhanced the ability of governance bodies to be accurately informed
about the experiences, values, opinions, and preferences of the many sub constituencies that
usually exist within a complex organization. Additionally, effective governance recognizes that it
needs to understand not just the opinions held by particular communities, but al so what values,
experience, or self-interest serve as the basis for the opinion held.
The corporate dimension of the representative governance model occurs as a result of the
fiduciary responsibilities of a governing body as defined by law. While these legal obligations are
primarily directed to the board of directors recognized in the required articles of incorporation of
the enterprise, the spirit of those laws also extends to units of decision authority to whom a Board
of Directors may report, to whom may report to the Board of Directors, or with whom the board of
directors may operate in parallel. These legally enforceable duties are discussed in greater detail
later in this paper.
In the “representative governance model” the relationship between three variables of
effectiveness usually determines the relative success of governance. These three variables are
(one) the role of the governance unit, (two) the process used to implement its role, (three) and its
capacity to efficiently employ the process.
The role of a governance unit is defined by the decision authority, responsibilities and
contributions which the organization is dependent upon the unit to contribute to its thinking
haven’t enterprise. The process of a governance unit is defined by the systems, procedures, and
methods it employs to accomplish what the organization expects it to contribute. The capacity of
the governance unit is defined by the degree to which it possesses the resources necessary to
effectively execute the process employed to implement its role. These resources include the size
of the body, its frequency of meeting, and the quality of access to the information that it requires
to make informed decisions.
Whenever role, process, and capacity are not in alignment for governance unit it is likely to be
dysfunctional and unable to accomplish its job regardless of the intentions or talent of the
individuals of which it is composed. When any unit of governance, especially those that are part
of the representative governance model, is not in alignment, all of the units of governance with
which it is involved will be negatively affected. Confidence in the quality of the enterprises
decisions is directly related to the degree to which there is clarity and consensus in the respective
contributions of its working parts. The failure of any part of the whole to earn a reputation for of
effectiveness in product and efficiency in process will diminish the reputations enjoyed by its
partner units. Thus, the trite but accurate observation that “a chain is only as strong as its
weakest link” is especially applicable to human systems on which others depend for leadership.
This background paper reflects what we observe to be effective practices among association
Boards that are operating in the best interests of their members and in a manner that delivers
maximum value to their organizations. While it focuses on the role of a Board of Directors, the
attributes of effective governance examined also apply to other units with defined decision
authority such as Houses of Delegates, Executive Committees, Councils, etc.
The Board of Directors of an association can be an elected or appointed body but no matter how
it is constituted, its responsibilities are to provide fiduciary care and governance of the association
on behalf of the owners of the association. In most not-for-profit associations, the owners are its
members.
Individual members of the Board have a fiduciary relationship with the association. The duties
that are owed by the Board member are among the highest standards of conduct that the law
imposes. Board members are required to act honestly, in good faith and in the best interests of
the Board and those it serves, and to apply the level of skill and judgment that is reasonably
expected of a person with their knowledge and experience. As an official of the association, a
Board member must meet certain standards of conduct and attention in carrying out his or her
fiduciary responsibilities to the organization for which a court will judge conduct. The three duties
are obedience, loyalty and care.
The Duty of Obedience
The governing board must comply with local, state and federal law and conform to
the organization’s tax exempt standing, articles of incorporation, bylaws and policies.
This duty forbids acts outside the scope of corporate powers.
The Duty of Loyalty
To meet the duty of loyalty a board member must act in good faith and must not allow
personal interests to prevail over the interests of the organization.
The Duty of Care
This duty requires volunteers to be diligent and prudent in managing the
organization’s affairs, including direction setting, cultural modification and
management oversight. Volunteers are charged with governing and must handle the
organizational duties with such care as an ordinary prudent person would use under
similar circumstances or in the management of his or her own company.
Board members are expected to monitor and inquire when there is something that
alerts them to a wrong direction, something outside the mission of the association, or
an illegal action. The duty of care is not about inquiring as to why something was
done a certain way, but to monitor, through the information the Board member
receives, that action taken is in the right direction, within the scope of the nonprofit’s
charter, and legal.
The Board’s Governance Role
Governance is both what the board does – the areas in which it exercises its governance role and
the approach it takes when exercising its role. Governance is also a term used to describe how a
board does its work – the processes used by the board as it fulfills its fiduciary obligations.
To understand ‘what’ a board does requires an understanding of the areas in which the board
exercises a governance role. At its most basic, a Board approves the strategic direction and
programs of the organization, approves the resources available to execute those approved
strategic directions and monitors the implementation of that execution. Boards typically have
responsibility for strategic planning, quality, and financial oversight, management oversight of the
CSO, risk, communications, culture, and governance.
A board has authority subject only to the authority of the members. And while bylaws of some
organizations may delegate some specific exceptions of authorities and accountabilities from the
Board to the Executive Committee of the Board, in general a board has three specific roles – the
corporate role, the legislative role and the adjudicatory role.
The Corporate Role
In its Corporate Role, the Board has the responsibility for hiring the chief staff executive and,
usually through either a Compensation or Executive Committee, overseeing the
negotiation/renegotiation of the contract and the evaluation of the CSO’s (chief staff officer )
performance and subsequent compensation adjustments.
The Board is also the keeper of the strategic plan. As the “keeper” of the plan, the Board monitors
the plan’s execution at a strategic, not tactical, level, annually reviewing the continued
appropriateness of the organization’s strategic direction and progress in that direction and making
adjustments as needed. In the strongest organizations we’ve dealt with a ‘manageable’ sized
board, the Board also serves as the strategic planning committee, and by doing so, ensures that
all members are familiar with and in agreement on the overall strategic direction of the
organization, as well as in agreement on purpose, values and vision of the organization.
Ultimately the Board approves the strategic plan and ensures that its decisions are consistent
with the strategic direction embodied by the plan.
The last element of the corporate role is to oversee the programs and resources of the
organization. This does not mean that the board engages in oversight at the tactical level nor is it
involved in daily operational decisions about the execution of program strategy. It does mean that
the Board makes strategic decisions about the relative allocation of resources across possible
program or business lines and it outlines expectations of what those business lines should be
capable of delivering when effectively executed. Here the Board’s focus is on ‘what are the right
things for the organization to do’ rather than on whether or not the organization is doing things
right.
Within this context, the Board has responsibility for both organizational quality and financial
integrity. From the quality perspective, the board identifies appropriate performance standards
and indicators (metrics) for the work of the organization, as well as determining and evaluating its
own performance standards. The strongest boards are those which regularly assess their own
behavior and consistently work to strengthen their effectiveness. From the financial side, the
Board serves as steward of the finances of the organization, approving financial policies and
ensuring the annual budget is developed consistent with those policies and that a reserve policy
is both in place and adhered to. Further, a Board is responsible for overseeing the integri ty of the
internal controls and approving audited financial statements.
The Legislative Role
The second major role of a Board is a legislative or policy role and that policy focus is divided
between internal focus and external focus. On the internal side, the Board establishes operational
policy. The nature of this policy focus still normally stays at the strategic level. For instance, a
board might set the compensation philosophy of the organization, deciding that the preferred pay
point for staff is in the 50th percentile rather than the 75th percentile of the pay range or that the
organization is going to offer a SEP retirement savings program rather than a defined contribution
benefit plan. And while the Board establishes these broad internal human resources policies
(usually based on recommendations from the CSO), the Board does not get involved at the level
of establishing salaries for any position other than the CSO.
On the external side, the Board approves positions on external issues of interest to the
membership. These are typically the public policy stands that the organization will take, either
legislatively, scientifically or educationally. This policy setting may or may not be informed by
member referendum or informal member feedback, dependi ng on the culture and past practice of
the organization.
The Adjudicator Role
As the world in which associations operate has become more complex, the adjudicator role has
become an increasingly important one. This role encompasses the Board’s responsibili ty for
decision making. The traditional choices have been to choose between positions presented, to
compromise or create an alternative solution more acceptable to all participants or to decide not
to decide, which is, of course, a decision – a decision to defer.
In light of the limitations of these traditional approaches to decision making, a new approach has
emerged. Called Knowledge Based Decision Making, in its simplest form, it moves the group
from the limitations of formal parliamentary procedures like Roberts, O. Garfield Jones, or Sturgis
where the motion controls the scope of the discussion, and into the committee of the whole. In
that setting the group is free to engage in a wide ranging dialogue designed to explore all
possible solutions to large and complex issues facing the organization. The process begins with
the identification of a mega issue question that addresses an issue of strategic importance to the
organization, usually a question that cannot be answered yes or no and that needs to be
addressed over a significant time period. These are typically not single discussions. A
backgrounder is then prepared addressing these four knowledge based questions:
1. What do we know about our members’, customers’, stakeholders’ needs, wants and
expectations that is relevant to the question at hand?
2. What do we know about the evolving dynamics of our members’ marketplace that is
relevant to the question at hand?
3. What do we know about our capacity and strategic position that is relevant to the
question at hand?
4. What are the ethical implications of this discussion?
Using the answers to those questions as a shared information framework, a multi-step dialogue
then occurs that identifies the options available to the organization, evaluates the options,
determines areas of consensus and assigns accountabilities and timeframes for action. The
results of the dialogue are then placed into a motion and brought before the Board for deliberation
and a vote.
Governance vs. Management
A Board’s governance role can be described in terms of what it is not – a board is not responsible
for day-to-day management of the organization. In simplest terms, the board governs and staff
manages. A Board’s role is to see that the association is well managed but it is not the role of the
Board to do the managing. This is a critical and challenging distinction. When the Board crosses
the line to delve more deeply into matters that should be solely within the purview of
management, the Board loses both its focus and the time that it needs to spend on Board
business.
Creating an understanding of the difference between the two roles (as well as delineating what
falls where) should be done at the onset of each new Board’s term. Otherwise, the desire to be a
“good” Board member and appropriately execute one’s fiduciary responsibility can be confused
with micromanaging and stepping into the responsibility assigned to staff. This confusion is
understandable, particularly when Board members new to their roles have come from affiliate or
local organizations that did not have the luxury of staff and therefore no such distinctions existed.
Board orientation makes clear what appropriate fiduciary responsibility truly is and what behaviors
are supported an encouraged within the culture of the organization.
It falls primarily to the Board Chair to help the Board maintain its governance role. The
Chairperson does this by carefully setting Board agendas in concert with the chief staff officer in
advance of the board meeting and by carefully facilitating the discussion during Board meetings.
Where Board members demonstrate by behavior a lack of understanding of the different roles, it
is the responsibility of the Board Chair to create clarity. If that clarification role falls to the Chief
Staff Officer, it is too easy for Board members to misinterpret statements as inappropriate power
plays rather than clarification of agreed upon roles.
In an article in The American School Board Journal (May 2006) entitled Working Together,
authors David Larson and Robert Rader outline responsibilities for School Boards and Board
Directors, respectively. We have adapted their recommendations to the broader world of
associations.
The Board’s Responsibilities
1. To establish and regularly review policy, ensuring they are lawful
2. To hire, support and conduct an annual formal evaluation of the CSO
3. To refer administrative communications, including questions, complaints and personnel
inquiries to the CSO as appropriate and to follow Board established protocol
4. To seek the CSO’s input before taking action
5. To adopt and oversee the organization’s budget, which is responsive to the needs of the
members and the profession or industry represented by the association
6. To delegate to the CSO responsibility for all administrative functions, except those
specifically reserved to the Board through Board policy and legislation
7. To conduct an annual self evaluation of its own leadership, governance and teamwork
8. To ensure the appropriate resources for the CSO to carry out his/her responsibiliti es
9. To have the Board Chair work with the CSO to develop agendas for meetings
10. To communicate and interpret the organization’s mission to the members, customers and
stakeholders and to listen and incorporate appropriate perspectives into dialogue
11. To support the decisions of the Board once made
The Chief Staff Officer’s Responsibilities
1. To implement policies approved by the Board and recommend changes, if appropriate
2. To develop, implement and inform the Board of administrative procedures necessary to
implement Board policy
3. To serve as the association’s chief executive officer
4. To respond to communications as appropriate and ensure adherence and appropriate
response through adopted communications protocols
5. To keep Board members advised about association issues in a timely manner
6. To ensure preparation and implementation of an annual budget that supports the
strategic plan
7. To provide the Board with information they need to make informed decisions
8. To oversee the organization and manage its operations on a day to day basis
9. To participate, as appropriate, in the annual self evaluation of the Board
10. To work closely with the Board chair in developing meeting agendas and to ensure
needed information is provided to support the decisions needing to be made
11. To hire and fire personnel for the association in keeping with best practices and to ensure
each employee is properly supervised and evaluated
12. To serve as the key effective member of the staff leadership team
Joint Responsibilities
1. To work together with the membership to develop a purpose, values, vision and goals for
the organization and to monitor achievement of those goals.
2. To provide leadership for the profession or industry by creating strong linkages with
appropriate organizations, agencies and other stakeholder groups
3. To collectively execute their legal responsibilities and ensure adherence to Federal, state
and local laws
4. To participate in continuous learning specifically geared to their respective organizational
roles
5. To support Board actions and decisions
6. To establish a regular opportunity to discuss Board/CSO relations
7. To institute a process for planning strategically that positions the organization for success
Fostering a Culture of Respectful Board Behavior
The behavior of the Board establishes the leadership culture of the organization and establishes
expectations of what behaviors are not only appropriate but rewarded. In the strongest Boards
we’ve encountered, the following board behaviors are in place:
1. Board discussion focuses on desired outcomes consistent with strategic intent and core
values, rather then detailing how an outcome is to be achieved or re-managing work after
its been accomplished.
2. Discussion addresses what needs to happen next, rather than on what has already been
done.
3. Emphasis is on using information; not collecting it.
4. The Board honestly considers issues of capacity, core capability, and strategic position in
deciding what to do.
5. The Board makes the investment in individual and group behaviors that earn and sustain
trust.
6. The Board sustains a deliberative process that gives governance the tools it needs to
lead intelligently.
7. The Board encourages policy-making as opposed to political behavior.
8. The Board focuses on the value of what the organization produces for its stakeholders
rather than on the distribution of power inside the organization.
9. It understands that its fiduciary responsibility is to define what will constitute value and
ensure that value is delivered.
10. The Board encourages member and staff leadership to collaboratively assume
accountability for delivering value, in an honest, open and well-informed partnership
11. The Board chooses to view mistakes that will occur as a natural result of risk taking and
innovation, as a rich opportunity to be diagnosed and learned from.
12. It redefines measurements of success on the basis of indicators of quality and not just
quantity.
13. The Board neither enables nor accepts dishonesty or manipulation, even when it is the
path of least consequence.
In addition to these behaviors as a group, individual members of the Board demonstrate their own
leadership competencies through appropriate behavior including:
Each Board member stands in a fiduciary relationship to the Board. As a fiduciary, each must
act honestly, in good faith and in the best interests of the association.
Board members must avoid situations where their personal interests will conflict with their
duties on the Board. They must also avoid situations where their duties to the Board may
conflict with duties owed elsewhere. It is advisable to have all Board members sign an annual
conflict of interest statement in order to ensure all are clear about expectations in this regard.
All Board members must respect the confidentiality of information learned in the execution of
their Board service.
Board members must act solely in the best interest of the association.
Board members bring to the Board diverse background, skills and experience. Board
members will not always agree with one another on all issues. But in the discussion,
disagreement should be with the idea, not with the person holding the idea, and all
discussions should occur in an atmosphere of mutual respect and courtesy.
Board members are expected to commit the time required to perform Board duties.
Board members need to develop and maintain sound relationships and work cooperatively
and respectfully with the Board chair, other board members and association staff.
Properly authorized Board actions must be supported by all members of the Board. Board
members who have voted against a motion must adhere to and support the decision of a
majority of the Board.
Board members are expected to:
o Attend Board meetings and meetings of Board Committees on which they serve,
either physically or electronically
o Prepare for each meeting by reading Board materials in advance and coming
prepared to contribute to the discussion
o Remain up to date on board correspondence, email and other communications
o Offer constructive contributions to Board and committee discussions
o Voice conflicting opinions during the Board session but keep those conflicting
opinions limited to the Board meeting
Board Representation
Governance’s processes for work and decision-making must be transparent in order to earn the
trust of members. In order to do this, members need to view governance as credible and
legitimate. When the process of governance is viewed as credible, members view the process by
which decisions are made as one based on rationality, not on political power, and on the
reasonable use of information gathered from a variety of sources. When the process is viewed as
legitimate, members believe that all of the views of all the important voices were part of the
conversation that led to the judgment.
Transparency and trust in governance occurs when board members understand the difference
between being “representative for” vs. being “representative of.” If Board members believe they
are “representative for,” then they see themselves as the elected representatives of a particular
constituency. They voice only the self interests and opinions of that constituency, and vote only
on behalf of that constituency’s interests.
Board members who view their role as ensuring that the views, beliefs, values and self interests
of the constituencies they know the best are on the table as part of the conversation, are
“representative of.” They ensure that others are informed of the views of the constituencies that
they understand the best. They participate in a collective dialogue and deliberation based on what
is in the best interests of the organization itself.
Leaders who are part of national governing bodies by virtue of their role in local or statewide
governance must have a particularly clear understanding of this distinction. Leadership’s role in
this case is to represent the best interests of the organization whose chair they are sitting in at the
moment: When on the national board, their fiduciary responsibility is to that board. When on the
local or state board, their fiduciary responsibility is to that organization. On both boards, their role
is to be representative of; not representative for.
The choice of “for” or “of” is a foundational decision about the culture of governance. An effective
and enjoyable culture can be achieved with (a) communication of that choice as a fundamental
tenet of the organization’s governance philosophy, (b) the enforced expectation that the commitment be reflected in organizational behavior, and (c) attention to the health of the systems that support it
Summary
Governance as we’ve described relates to the decision making units of the organization and the
relative powers, authorities, and responsibilities that each possesses and the way in which they
exercise those powers, authorities and responsibilities. The most effective Boards do this in what
we call a Leadership Partnership with staff.
Positive indicators of a successful leadership partnership include:
Clarity and understanding of roles, where neither behaves as superior or inferior.
Commitment to mission and values
Good communications and information
Long range goals and a defined set or results including a common understanding and
expectations of where we’re going, why, how we’ll get there and how we’ll know we’ ve
arrived.
Cooperative evaluation of progress including a board committed to appraising both
progress and achievement, staff management accountable to perform and demonstrate
performance, and volunteer workgroups committed to and accountable for accomplishing
work.
We’ve focused here on the Board, but good governance principles also apply to the other units of
governance. Over the past few years, many associations have done much to streamline their
governance systems in a world that required more decisions be made more quickly and with
better knowledge. This background paper reflects what we observe to be best practices among
association Boards that are operating in the best interests of their members and in a manner that
delivers maximum value to their organizations.
by Glenn Tecker and the Techer International talent bank
