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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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Presented with an agenda, a Type I board proceeds reflexively, as if the goal were to complete a governance punch list. Discussions are brief, often perfunctory; committee and board votes are mechanical and pro forma. Dissent has no place. A good board does not get “side-tracked” or fall behind schedule.
The typical agenda of a Type I board indicates how a group of intelligent people can be consumed by fiduciary tasks. Agendas are, of course, artifacts of bureaucracy designed to control and organize discussions that might otherwise meander unproductively. Imperfect as they are, agendas are valued precisely for this reason. But leadership creates value by interrupting such routine. A finance or facilities committee might have to approve a contract to repair a roof; however an entire agenda of routine matters all but guarantees that the board will add marginal value at best. A more consequential topic might be the larger question of deferred maintenance, unfunded depreciation, or the challenge of intergenerational equity—the trade-off between funding today’s needs and tomorrow’s. Exhibit 3.2 offers some illustrative questions that invite boards to explore the deeper implications of fiduciary issues that often lie just beneath the surface.
exhibit 3.2 reflections on fiduciary issues
• What do we hold in trust, and for whom?
• What are the fiduciary, but nonfinancial, roles of our board and committees?
• How do we know the organization is fulfilling its mission?
• Does a proposed initiative effectively advance our mission?
• What safeguards do we have in place to avoid the well-publicized fiduciary failure of some other nonprofit board?
• If we held an annual stakeholders’ meeting, what would we say about the organization’s fiduciary performance and the board’s effectiveness as a steward?
• What is the evidence that we are a trustworthy organization?
What are some examples of times when we earned the title of “trustworthy?”
• What are our major financial vulnerabilities? What are we doing as an organization and a board to address them?
• Even though we are not obligated to abide by Sarbanes-Oxley and similar legislation, should we voluntarily adopt certain principles and practices these laws require?
The substitute’s dilemma. To the extent that boards institutionalize bureaucratic approaches to governing, trustees will become vulnerable to the fatigue and boredom of highly routinized work, and the fiduciary value that the Type I boards are engineered to produce will be jeopardized.
These problems challenge trustees to think about reflexive responses to the obligations of fiduciary governing. Can they identify and exploit the leadership opportunities that Type I work presents—finding and framing fiduciary challenges? Perhaps more important, can boards, in effect, learn to steer into a skid? Can trustees do fiduciary governing, as they must, without
freezing in the form of a fiduciary board? Can they practice other types of governing, not as a substitute for fiduciary work, but as a complement to it?
Type I governance is essential, but the Type I board is problematic. First, the urgent drives out the important, and the stress on efficiency displaces the quest for effectiveness. Second, the board adds value primarily to the technical core of the organization, not to the core purposes of the organization.Third, the board’s work becomes so predictable and perfunctory as to be tedious and monotonous. Trustees become bored spectators at a dull event.Worst of all, the routines of the Type I board become so deeply ingrained that the board cannot see the larger picture or govern in another mode. Every issue looks like a fiduciary matter, and every trustee thinks only like a fiduciary. The more the board behaves in this manner, the more management obliges with exclusively fiduciary agendas supported by exclusively fiduciary information. Before long, the board develops such a limited sense of the organization that the trustees’ ability to challenge and enrich organizational thinking atrophies.
Type II Governing: Strategic
If the standards of success for nonprofits were purely legal
compliance and financial equilibrium, then Type I boards might suffice. But just as healthy and prosperous people also seek purpose, connection, and fulfillment, nonprofits—especially nonprofits—have comparable needs: the desire to serve a socially valuable mission, to have a positive impact, and to create communities of interest. For these reasons, nonprofits need strategy.
To participate in strategic governance, trustees need a new mental map that goes beyond Type I terrain, where organizations are machine-like bureaucracies, chief executives are managers who implement board decisions, and organizations are insulated from the influence of constituents and the larger environment. A Type II mental map charts new territory, where organizations are complex human systems, chief executives are leaders (though neither omniscient nor omnipotent), and nonprofits are highly permeable organizations susceptible to both internal and external influence.
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