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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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Mobilization of the board’s political capital inside the organization presents a somewhat different picture. Individual trustees, of course, spend political capital internally all the time, for instance, through a phone call or an aside to the CEO, a contingent pledge, a special plea, a request for information—even an arched eyebrow. When trustees act alone, executives can become confused, frustrated, and whipsawed. On occasion, a single board member with ample political capital may prevail, regardless of the merits of the argument, which only further exasperates management. At worst, the board becomes little more than a horde of lobbyists for personal preferences and pet projects; in effect, the trustees start to look and act like every other constituency.
In order to achieve an attractive rate of return on the board’s political capital, nonprofit organizations must avoid the extremes. At one end of the spectrum, some CEOs question the risk/ reward ratio of a board internally influential beyond the fiduciary sphere. These executives favor and design structures that preclude all but the most cursory relationships between trustees and staff or stakeholders lest board members be unduly influenced by constituents or vice versa. At the other extreme, some boards plunge headlong into the internal fray, not merely to influence events but to unilaterally impose policies, programs, and even personnel. As described in the previous chapter, a board
154 GOVERNANCE AS LEADERSHIP
reluctant to assert influence internally invites governance by default, and a board hell-bent on exercising formal authority and veto power at every turn produces governance by fiat. Neither extreme has much to offer.
A more balanced approach that taps the board’s political capital with little risk for management and substantial advantage for the organization adheres to three guidelines. First and foremost, the board expends political capital as a board—the outcome of collective determination, not the exercise of personal preroga-tive.While inherently desirable as a means to foster cohesiveness within the board, this approach promises an even more pragmatic advantage: preservation of capital.The more that trustees act independently, the faster the board’s political capital dissipates; in nonprofit boardrooms as in capital markets, institutional investors have far greater leverage than individuals.
Second, the board asserts influence primarily through mainstream processes rather than back channels. Committed to transparency and accountability, nonprofit boards must rely on legitimate means to achieve legitimate ends.We do not expect boards, or board members, to peddle influence, pursue selfinterest, or negotiate secret deals. In short, nonprofits, as a matter of principle, should invest political capital in “open markets.”
Third, unique among all stakeholders, the board serves as the fulcrum of organizational politics, the counterbalance to the parochial interests of other constituencies.This may, from time to time, position the board as the “loyal opposition”: independent-minded, impartial, and sufficiently dedicated to the organization’s success to stake a contrary position or make an unpopular decision. At stressful and, one hopes, rare moments like these, when the trustees decide to withdraw political capital from the
WORKING CAPITAL THAT MAKES GOVERNANCE WORK 155
board’s account, surely they will cherish the value of the political capital they methodically stockpiled in calmer times.
social capitaL
Few concepts are more familiar or more misunderstood than “social capital,” which sociologist Douglas Massey defines as the “productive value that can be extracted from social networks and organizations” (Massey, 2002). Confusion arises when people equate relationships with social capital; these are not synonymous terms. Relationships comprise the raw material that produces social capital. For instance, a close-knit neighborhood may create a safer environment for children, or a tightly integrated professional network may facilitate the exchange of valuable information about employment opportunities or best practices.
In an organizational context, certain characteristics (for example, a sense of inclusiveness, trust, shared values, and common purpose) enable people to extract productive value from their relationships. These attributes accelerate cooperation, commitment, cohesiveness, and efficient exchange of knowledge and information which, in turn, advance purposeful activity and common enterprise. As the group strengthens these qualities, the members’ productivity increases and generates tangible benefits for the organization. By contrast, members of a group without social capital are far less motivated to act productively and achieve collectively.
Boards of trustees necessarily involve social relationships, but social relationships do not necessarily produce the kind of social capital that improves board performance. On some boards, most notably Type I boards, trustees are apt to have rather tenuous
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