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Governance as leadership Reframing the work of noprofit boards - Ñhait R.

Chait R. , Teylor B.E. Governance as leadership Reframing the work of noprofit boards - Wiley publishing , 2005. - 226 p.
ISBN 0-471-68420-1
Download (direct link): governanceasleadership2005.pdf
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36 GOVERNANCE AS LEADERSHIP
courage waste, prevent abuse, or promote efficiency. Second, boards aim to ensure that resources are used effectively in service of the mission.Toward this end, good boards ask not just whether but also how effectively programs advance the mission, a type of analysis that involves performance measurement. Third, boards attempt to promote lawful and ethical behavior. They seek to ensure compliance with basic standards of safety, legality, and honesty. Finally, trustees are expected to serve the interests of the organization, not self-interest. Trustees are obligated to eschew even the appearance of conflicts of interest, which may include direct or indirect financial benefits as well as relationships with competing organizations.Whether the work at hand is about efficiency, effectiveness, or ethics, most boards conduct Type I work through oversight. They routinely examine financial and programmatic reports, often through a familiar committee structure.
But good trustees also take advantage of the leadership opportunities that fiduciary work offers. In addition to the routine review essential to accountability, they also spot and debate the fiduciary significance of issues. Consider the CEO of a youth-serving organization who expected quick approval of a balanced budget proudly presented to the board. Instead, the budget prompted trustees to discuss the declining condition of the organization’s recreational facilities and the low salaries and meager benefits package for staff. The board pointed out that the operating budget was, in effect, balanced on the back of the organization’s facilities and personnel.After further deliberation, the board and staff decided to reconfigure an expensive but apparently ineffective program for middle-school students and to undertake a capital campaign.
TYPE 1 GOVERNING: FIDUCIARY 37
Fiduciary work also reveals questions about the fit of programs and mission, providing another leadership opportunity for boards. For example, a museum director recommended an expansion of educational programs, complete with a new position of director of museum education, outreach to local schools, and an extensive Saturday art-school program for area children. She explained that the expansion could be funded by reallocating resources from other activities. In response, the board requested a more detailed cost analysis, evidence from the field of the value of these programs relative to other priorities, and an evaluation process to judge the results of the effort. This board viewed a balanced budget as only one part of its fiduciary responsibility. Program effectiveness, impact, and opportunity costs were important, too.
Exhibit 3.1 illustrates the differences between traditional fiduciary oversight and what we might call “fiduciary inquiry,” which extracts leadership value from a board’s engagement in fiduciary work.
Although only a brief sketch of Type I governing, this account is doubtless familiar to most trustees.Trustees know why it is indispensable and, on the whole, they know how to provide fiduciary oversight, if only in the narrowest sense of the term. Society wants more Type I governing, practiced more diligently. Much less is known, however, about the organizational assumptions that underlie Type I.We turn now to the perspectives on organizations that shape Type I governing. This mental map helps answer important questions:What must people assume about organizations if this is the way they govern them? What kind of organization, or what aspect of organizations, is best suited to Type I governing?
38 GOVERNANCE AS LEADERSHIP
exhibit 3.1 fiduciary oversight to fiduciary inquiry
Fiduciary Oversight Questions Fiduciary Inquiry Questions
Can we afford it?
Did we get a clean audit?
Is the budget balanced?
Should we increase departmental budgets by 2%—or 3%?
Will the proposed program attract enough clients?
Does a merger make financial sense?
Is it legal?
How much money do we need to raise?
Can we secure the gift?
Is staff turnover reasonable?
What’s the opportunity cost?
What can we learn from the audit?
Does the budget reflect our priorities?
Should we move resources from one program to another?
How will the program advance our mission?
Does a merger make mission sense?
Is it ethical?
What’s the case for raising the money?
How will the gift advance our mission? Does the donor expect too much control?
Are we treating staff fairly and respectfully?
The Type i menTAL mAp
The familiar arrangements of Type I governing—the division of labor among committees (budget, audit, endowment, and so on), the routine production and review of technical reports, and highly structured board meetings with fixed agendas and parliamentary rules—are all outgrowths of what may be the most innovative and enduring organizational form ever envisioned: the bureaucracy.
Early twentieth-century giants of organizational and sociological theory, notably Max Weber and Frederick W. Taylor, developed theories of leadership and organization that helped
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