The Habits of Highly Effective Boards

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ASSOCIATIONS NOW, January/February 2014, Feature

Summary:

Great board performance doesn't happen by mistake. Qualities like strategic orientation and a culture of accountability are common among the best. Find out what the highest-performing boards can tell us about good governance.

Having a board is more than a legal requirement—good governance matters to association performance. But when it comes to good governance, it can be hard to find a path through the anecdotes, the conventional wisdom, and the sometimes competing notions of what works and what doesn't.

To be honest, that's not so bad a place to be. Given the enormous variety in association missions, sizes, scopes, and memberships, association board members should be looking to themselves first to ask the hard questions about what success means for their organization. And what works for one association may not apply everywhere.

But benchmarking can be helpful. Best board size, best recruitment strategies, best election methods, best board development activities, and best self-assessment practices—we should be learning from the boards that have figured it out.

In a three-year project, the ASAE Foundation is working on understanding good association governance from several angles. The foundation's 2013 book, What Makes High-Performing Boards: Effective Governance Practices in Member-Serving Organizations (which I co-wrote with my colleague at Indiana University, Ashley Bowers), benchmarked governance practices from a broad perspective encompassing member-serving organizations across many tax statuses and missions.

Research Next Steps

The ASAE Foundation's next governance project, to be completed in 2015, will look at the journey that ordinary boards take to achieve high performance: how they get started, the decisions they make, and the processes and support systems they put in place to achieve a higher level of strategic engagement. The authors hope to make this an engaged learning process with plenty of opportunities to share stories. To tell yours, contact Beth Gazley at bgazley@indiana.edu.

This article looks at the boards that have succeeded. Here, I've taken a slice off the top of the data, to see what we can learn from the associations participating in our 2013 study that received the highest performance rankings from their CEOs and executive directors.

The Top Tier

Among more than 1,500 associations, just 170 ranked in the top 10 percent (see page 57 for the performance measures they were ranked on). It might surprise you to learn that these were not all multinational associations with large, stable memberships. In fact, half of the top performers had budgets below $750,000. They were just a few years older than the average association. They reported an equally competitive playing field when it came to new member recruitment. And although the high-performing boards had slightly larger and more stable staffs, staffing was not the strongest driver of organizational performance. Nor did geographic scope make a difference.

What does set them apart? Three things:

  1. a strong strategic orientation
  2. a culture of self-assessment and accountability
  3. healthy attention to board member recruitment and development

More specifically, the highest- performing boards had the following attributes:

  • Strategic focus. High- performing boards were twice as likely to invest substantial board meeting time to strategic considerations. Fully 99 percent of these boards were operating under an organizational strategic plan—and the plan was more likely to be one the board had worked jointly with staff to develop, rather than allowing staff to drive the planning. The result is striking: The top-performing boards also had healthier membership and budget growth. And their leadership was more stable, as their CEOs were less likely to report intentions to leave the organization.

  • Commitment to assessment and skills development. These boards were twice as likely to set board-level performance goals for themselves, almost twice as likely to invest in board development activities such as mentoring and training, and twice as likely to engage in formal or informal board self-assessment.

  • Effective recruitment processes. They were also more likely to recruit new board members broadly, by, for example, soliciting nominations from outside the board rather than depending on CEO nominations. They were more likely to screen prospective board members and to hold competitive elections rather than voting for a single slate. The result? Their CEOs were half as likely to report challenges finding board members who had the qualifications they needed and half as likely to report problems keeping the board members they wanted.

  • High participation levels. Once these board members were recruited, the CEOs at top-performing associations were half as likely to report board meetings that failed to make a quorum or to report that board members had left office before their terms were up. These may seem like minor issues, but they weaken leadership, complicate governance processes for staff and other board members, slow down board decision making, and create a culture of weak accountability.

Performance Measures Your Board Should Consider

In the ASAE Foundation research, CEOs were asked to give their board a numerical rating on each of the following 20 measures. The rankings were 1 for "needs improvement," 2 for "satisfactory," and 3 for "excellent." Board performance rankings were based on the sum of all ratings.

Stewardship

  • Overall quality of board relations with staff
  • Overall quality of relations among board members
  • Stewardship over the organization's resources
  • Willingness of the board to take responsibility for difficult decisions
  • Ability to make decisions based on organizational interests and not self-interest
  • Collegiality of the board atmosphere
  • Leading the organization in a way that maintains the public trust in nonprofits

Member Relations

  • Overall quality of board relations with the membership
  • Accountability to members
  • Direct outreach and engagement of membership

Strategic Performance

  • Effectiveness at strategic rather than operational thinking
  • Board participation in advocacy, public policy
  • Effectiveness at aligning the organization's resources with strategic needs
  • Ability to serve as a catalyst for change
  • Understanding of the organization's external environment and trends
  • Ability to achieve strategic plan

Internal Accountability

  • Board's ability to set performance standards for itself
  • Board's record of enforcing self-imposed performance standards
  • Securing feedback on its own performance from key constituencies

Chapter Relations

  • Overall quality of board-chapter relations (if applicable)

As my coauthor and I observed in What Makes High-Performing Boards, "a high-functioning board may not have all of the answers, but it's willing to invest in learning them." So here's the first step—a profile of good governance that you can use to start (or continue) a conversation within your association about how to achieve the qualities of a high-functioning board. Whether or not you have these practices in place, asking your board colleagues and your CEO smart questions such as "Why do we have these practices? Why don't we?" will help you understand the value these practices bring to your governance work and which practices should be prioritized.

Start the Conversation

Your board's Governance or Board Development Committee is the best place to begin. The role of this committee is to ensure, through training and support, that all board members are equipped to perform their fiduciary duties. The Governance Committee may also have responsibility for new board member recruitment and nomination, making its connection to effective board member selection obvious.

This committee may not have the explicit task of observing board culture. But when it fails to pay attention to internal board dynamics, the Governance Committee limits its role to recruiting members for the board it already has, rather than fostering a healthier culture to create the board it wants to have. Committee members can serve as important role models to set the tone for a culture of learning and self-assessment by asking effective questions about board dynamics. "Who speaks at board meetings?" is a deceptively simple but excellent question to initiate a discussion about the qualities of an engaged board.

Once committee members are in agreement about the value of investing time in board development, the same conversation must be held with the board as a whole. The goal is agreement on which board-level changes potentially will have the greatest payoff. A board member retreat—another practice we saw more often in high-performing boards—is a good forum for the discussion, but there are others. Some boards find that outside consultants are helpful—they often bring effective planning tools and processes.

But ownership of the process should always rest in the board itself, not in staff or consultants. Above all, be sure there is consensus on the priorities related to board development before moving forward. And keep in mind that just having the conversation starts a form of strategic thinking and active learning that also supports a healthier association culture.

This study also helps boards to understand how board dynamics affect staffing. As we found, associations with high staff turnover were also more likely to have board performance and turnover problems. And as noted, there was a strong connection between CEO dissatisfaction with the board and eventual CEO turnover. Understanding such connections should empower boards to address staffing issues and other matters they might see as outside their purview. For example, we found that high-performing boards were more likely to have invested in association management training for staff leadership.

In many instances, the differences between high and low performers were subtle. For example, low-performing boards were no more likely than high-performing boards to have policies on term limits, to screen board members, or to impose diversity requirements on board membership. There are no easy fixes.

Rather, the margin of excellence appears to rest in the ability of some boards to connect the dots. They learn to use board structural considerations not as a crutch or excuse but as a vehicle for asking the tough questions and engaging in a deeper level of introspection that leads to an effective understanding of what works well for them.

Beth Gazley, Ph.D., is associate professor at the School of Public and Environmental Affairs at Indiana University. Previously, she was a fundraising professional and management consultant for public interest, health, and higher education institutions. Email: bgazley@indiana.edu

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