In the world of social impact and donor-funded organisations, a board of directors plays a key role to keep development organisations on track. This is the case for international organisations as well as local ones. Boards are expected to provide effective and independent leadership and governance to the organisation but they often fail. For a multitude of reasons. In this post, we will look at the characteristics of four failing boards and what to we can do about it as management advisors and organisation development experts.
A board can have an enormously positive impact on the performance of a development organisation but, let’s face it, they often just serve to boost the cv’s of its members. A well functioning board of directors has the knowledge, drive and time to support and guide an organisation to operate to its fullest capacity. This requires a good understanding of organisational aspects like accountability, efficiency, effectiveness, innovation, compliance with the law but also contextual aspects like stakeholder and client satisfaction, public image and strategic positioning of the organisation. The members of the board are also expected to promote the organisation in their network and to the donors and assist in fundraising. This is a lot to ask from the directors serving on a board but when selecting a competent and motivated board, organisations have a lot to gain.
When assisting international and local development organisations, we can identify four types of boards that should trigger our attention for not being supportive of the organisation and its performance. We call them dysfunctional boards.
- The friends and family board: The board is composed of members that are selected among the friends of the organisation or sometimes even direct family members. This provides a real danger to the objectivity of the board. The friends or the family on the board tend to support each other where they should take a critical position about the performance of other board members or the members of the organisation. These boards are characterised by favouritism and biased decision making.
- The domain experts board: We often encounter boards that are composed of members that have a background in the same domain or field in which the organisation is active. E.g., development organisations in the health sector having all board members with a background in this sector. These boards risk becoming like horses with blinkers, boards with an overly narrow focus or inability to see the larger picture. This type of board is characterised by their weak innovative capabilities.
- The no-time and I am too busy board: Boards with members that have little or no time to support the organisation are very often seen. Members take not enough time to guide the organisation and fail to do their statutory duties. They don’t take the time to read the reports or notes of the organisations and when asked for their help, they indicate that they have to much other important work. Boards of this type provide little support and guidance to an organisation and fail to see when things go wrong.
- The disconnected board: Often a result of the three types of boards mentioned above, but can also result from boards that have been in place too long, unchanged. The directors on the board are disconnected from the dynamics of the current organisation and the changes the organisation went through in the time that has passed. Support and guidance are based on an outdated understanding of the organisation and instead of moving the organisation forward, their guidance moves the organisation back again. These boards are characterised by outdated and often destructive guidance.
As management consultants and organisation development experts we need to pay attention to the functioning of a board of directors. A dysfunctional board has a negative impact on the performance of the development organisation and limits the organisation to realise its real potential and to achieve social impact the donors support the organisation for.
The following guidelines can be used to increase the performance of a board of directors in local and international development organisation:
- The most important first step is to make a good assessment the performance of a board of directors: how often they meet, the notes of the meetings, and most importantly, how they see their role and contribution to the organisation. McKinsey and Company developed a good tool to support this assessment and to get a clear picture of the quality of the board. It is also key and often forgotten, to make an assessment of the individual members of a board of directors: profile of the members, their relationships, competences and motivation. This may reveal the weak links in the boards in term of their friend/family relationships, competences and engagement.
- Boards are often in a position where they untouchable for change. In most cases, there is no mechanism in place to replace or repair dysfunctional boards. Moreover, consultants feel intimidated by the seniority of board members and fail to push for change. However, if the assessment is part of a larger donor supported organisational analysis, the consultant has the ethical obligation to report back to the donor on the functioning of the board and s/he should not be hesitant to name dysfunctional ones.
- Make sure that policies of the board are aiming at improving the quality of the board as a whole and the individual board members instead of protecting the board from change. Prepare a critical assessment of the policies governing the board of directors and make sure regular moments are created where board members are re-elected or replaced. Also, it is recommended to implement a suitable continuous improvement programme as part of the policies.
A well functioning board of directors can guide organisations in the development sector to be more efficient ineffective in in their objectives. It is therefore important to pay attention to the composition and functioning of the board. The critical assessment of a management consultant or organisation development expert is often the first step to maximising the impact of the boards.