7 practices of super boards.

Transform your governing body into a high-performance board with a structured process of improvement.

The revolutionary changes buffeting the American economy are creating new forms of associations and organizations, and forcing existing ones to choose between an unprecedented type and pace of change or extinction. As new forms of associations and organizations emerge, new forms of more effective governance are required to lead them.

Yet just at a time when effective governance is more important than ever before, there is trouble in many boardrooms. Ineffective governance and its consequences are now routinely in the news. Consider the cases of the United Wax, of America, Archer Daniels Midland Co., and Columbia/HCA. All of these cases posed the same burning question: Where was the board?

Thankfully, there are also many high-performance boards - both nonprofit and for-profit - that keep their organizations one step ahead of the curve of change and several steps ahead of their competitors. These super boards are exemplars of effective governance, and can much to other boards that wish improve their performance by studying the characteristics of truly effective governance.

Following are some crucial things super boards do. Implementing one or two of these practices can result in a good board; implementing all seven results in an excellent one.

1. Embrace systems thinking

Many boards are composed of members who were explicitly or implicitly chosen, or believe it is their role, to "represent" specific constituencies. This gives rise to representational governance, which simply means that the members of the board do not consistently focus on the best interests of the system or organization as a whole, but rather focus on the best interests of specific constituencies. Representational governance is the antithesis of systems thinking and is a mortal enemy of effective governance.

Consider the following common example. A new, large organization is created through the merger of several different organizations, and to cement the merger, each founding organization is given several seats on the new board. The new board hums along until it is forced to confront the issue of excess capacity in its system. The board realizes that one of the founding organizations must close. Now all that is left is to decide which one it will be.

Instead of considering what will be best for the new, large organization, each board member will likely think "not my organization." This board is not a systems thinking board at all, but a loose confederation of ever-shifting coalitions with a primary, focus of preserving the pieces of the new organization, not advancing its strategic interests as a whole. Because of this representational governance, the new organization will certainly suffer and likely fail.

Representational governance is not prevented only through an emphasis on structure, such as how the board members are chosen. For example, an association board selected from the representative components of its membership will not necessarily function as a representational board if board members have a mission focus and are trained in how to apply systems thinking.

Systems thinking in governance means that the board members of subsidiary, subordinate, or member organizations recognize that the interests of their institutions or constituents will be best served in the long run if the association as a whole pursues and achieves its mission. It also means that every member of a board places the best interests of the association above those of any constituencies or subordinate institutions - even if the board member strongly identifies with a particular constituency or subordinate institution.

One of the best ways of ensuring that a board consistently practices systems thinking is by being true to its mission, which is the second, and perhaps most important, characteristic of super boards.

2. Focus on the mission

Regardless of the type of association, the primary purpose of governance is the same: to single-mindedly steer the association toward the accomplishment of its mission. A constant of effective governance is the ultimate accountability of the board to the mission of the association or organization it governs. This provides a fixed compass point for effective governance even as a board changes its members, structure, or function.

Unfortunately, the mission statements of many associations and organizations are so vague and intentionally ambiguous as to be useless in that they provide no foundation for the direction and strategy of the organization. In such situations governance has abdicated its primary, responsibility and consequently does not have a meaningful mission to follow as it attempts to lead its association. This board will find itself without a guiding light during times of crisis and at critical decision points. This is the type of board that improvises its ethics to justify the indulgence of its desires.

A simple exercise can demonstrate the extent to which your board is mission-focused. During a retreat or at the beginning of a board meeting, request, without prior notice, that each board member write the association's mission in his or her own words on a blank sheet of paper. Collect and review the responses to see if all of the board members are saying the same thing, and if so, if it is consistent with the formal mission.

An effective board with an effective mission will demonstrate a consistent response, both internally among the board and compared with the formal mission. An ineffective board will demonstrate one of three other outcomes:

* Everyone on the board says the mission is something different.

* Many people submit blank responses, not knowing what the mission is and not wishing to guess.

* The responses of the board are roughly equally divided between two conflicting missions.

While all three of these outcomes demonstrate ineffective governance, the third is by far the worst. When there are two competing camps among the members of the board, the board will not make consistent, predictable decisions that are based on preestablished principles. Instead, every major decision confronted by the board of directors will become an argument over which competing belief system will prevail. The result is governance by personality, not governance by principle. This is governance at its worst.

An effective board will have a knock-down, drag-out battle once every two years or so to test the mission, and to reaffirm or revise it. Board members who argue strongly for one belief system and lose to the majority will face two simple choices: Support the mission or resign from the board. Many boards cringe during this process when one of their members proclaims, "Well, if that's your mission, I cannot continue to serve on this board." Often these boards will back off and water down the mission in a misguided effort to restore harmony to the board and coax the indignant board member back into the fold. This is precisely the opposite of what a super board will do.

A super board recognizes that a good mission is simultaneously attractive and repelling: It attracts those board members that have a similar belief system and repels those who do not. A super board will accept the resignation of indignant board members, wish them well, send them on their way, and get down to the business of making tough decisions based on the principles espoused in the mission. An ineffective board will not, and will be condemned to repeat the argument about which belief system is appropriate each time the board confronts a critical decision.

Effective governance requires an effective mission. In turbulent times a board without a clear sense of an association's purpose is likely to focus on short-term issues, overreact to events as opposed to examining and altering the processes that led to the events, and contribute to organizational drift and disarray.

A super board demonstrates a relentless, laser-like focus on the mission, which in turn focuses the association on action. The super board defines the specific strategies needed to attain the crucial goals relevant to the mission. In this way, the super board engenders a truly disciplined organization, one in which no precious association resources are wasted, as they are all concentrated on achieving the reason for the association's being: the mission.

3. Lead change

In a super board, governance is the engine that drives the train of organizational change. In ineffective boards, governance is often the caboose dragging along behind; and worse, the caboose often has the brakes on.

In past times of stability and incremental change, the role of the board was to react, to monitor the past. In today's times of increasing turmoil and revolutionary change, the fundamental role of the board has changed to become one of creating the future through forward thinking, active planning, and action. This requires boards to move away from a cumbersome decision-making process to a streamlined, rapid one.

This transition to the new role of the board is not easily made, because boards, like the organizations they govern, traditionally resist change. Consequently, they are usually swept along or rolled over by change, and rarely influence, control, manage, or direct the change that will dictate their future.

There are many reasons why boards typically resist change. Some boards are comfortable with the old paradigm and, in their complacency, do not wish to change. Some boards realize that they must change, but do not know how, and like a deer caught in the oncoming headlights of a car, they become paralyzed into deadly inaction. Other boards deny that change is occurring, still other boards fear change, and so forth.

Many boards resist change because of how they spend their time. In stable and prosperous times a typical association or organization board spent most of its time monitoring the past. Its agenda was largely consumed with discussion of what happened last month, last quarter, or last year. This type of governance tends to artificially perpetuate the comfortable ways of the past, rather than prepare a board to address the future.

Super boards control how they spend their single most precious commodity: their time together. These boards spend their time creating the future, not monitoring the past. When approaching a new environment or a radically different paradigm, a super board spends a majority of its time deliberating and planning the future. Reviewing the past (monitoring) is reduced to no more than 25 percent of a board's time, and talking about and creating the future (planning, setting policy, and making future-oriented decisions) consume a majority, or about 75 percent of a board's time. Super boards drive their associations by spending most of their time looking out of the windshield, not transfixed by the scene in the rearview mirror.

4. Request good governance information

Super boards do not simply respond to any information they happen to be given; they request information specific to identified strategic issues and current and predicted market conditions confronting their organizations. These boards make certain that the agenda information they receive frames big-picture issues and is policy focused and future oriented.

Unfortunately, some boards do not receive governance information. Instead they are given voluminous management reports and tactical staff information. Spending precious time reviewing material that really isn't relevant to the critical, strategic issues confronting the organization can lull a board into a false sense of security. A board given largely useless information will be a largely useless board. It's up to the chief staff executive in dialogue with the chief volunteer leader to carefully identify what information is relevant to the board's strategic deliberations.

During retreats, boards of directors are frequently asked to list the strategic or other issues that are most critical to their organizations and their future. Amazingly, many boards are unable to form a consensus on this list; they don't know or have not agreed on what are the most important issues confronting their organizations.

Those boards that can list these agreed-upon issues are then asked to list the areas and issues on which they spend most of their time and receive the most information. Comparing these two lists reveals that they are rarely consistent with one another. This means that many boards do not devote a majority of their meeting time to what is most important to the organization. They are spending their precious time on issues that have little meaning, but which provide false comfort because of their familiarity.

Super boards control their time by controlling their information. They have clear consensus on the critical strategic issues confronting their association, demand information relevant to these issues, and spend most of their meeting time addressing them.

5. Hold board members accountable to performance standards

A truly effective board creates a culture of performance and accountability. One of the ways that it does this is by evaluating the performance of its members against preestablished criteria. These criteria are both quantitative, such as minimum meeting attendance and continuing education requirements, and qualitative, such as thoughtfully contributing to board discussions, supporting board decisions and policy, and carefully reading agenda materials prior to board meetings.

One of the most difficult things for any board to do is to remove one of its members from office. "Firing" a trustee who is giving of his or her time, no matter how ineffective or detrimental he or she is to the function of the board, is a task that most boards avoid like the plague. Yet the tendency of boards to tolerate these limited and limiting individual members creates a negative dynamic that slowly but inexorably diminishes the effectiveness of the board, and paradoxically alienates the most effective members from the board.

Moreover, in ineffective boards the renewal of trustee terms is automatic - meaning that a board with term limits of three, three-year terms has a culture where every board member serves on the board for the maximum of nine years. Super boards do not automatically renew trustee terms. Not only is the trustee's performance reviewed against the criteria, but the board also considers the skills, characteristics, and professional focus of the trustee relative to the changing needs of the board.

A trustee who was chosen, say, for his skill and experience in mergers may not be invited back for a second term if the merger has been successfully consummated. The board will tell this trustee that this decision is not personal, or related to poor performance; it is simply that the board needs that slot for someone with skills that more closely match the new strategy of the organization. The super board recognizes that the members of the board must be balanced and constantly fine-tuned to create and maintain a focused, efficient, forward-thinking board.

6. Control governance structures

Super boards control their structures; ineffective boards are controlled by them. The structure of governance refers to board size, numbers and types of board committees, and numbers and types of subsidiary or related boards.

Many boards are attempting to confront 21st-century issues with governance structures reflective of the 1980s. While governance structure is indeed secondary, to governance function, appropriate, streamlined governance structure is essential to effective governance function.

Unfortunately, some associations have too many subsidiary or associated boards, and some boards are too large. Often, boards will have too many committees, and the committees address outmoded issues relevant to past paradigms. Frequently, the board does not control its own committees but rather is controlled by them. Often, there is a lack of strategic alignment between the different governance entities within an association. Some boards have no control over the selection of their members; others are required to use representational selection processes.

Ineffective governance structure typically results in one of two polemical governance diseases (in the worst of all worlds, it can result in both): governance gridlock or governance conflict.

In governance gridlock, the system or organization suffers from cumbersome, drawn-out decision-making processes due to the number of multiple boards causing confusion regarding which board has the authority to make which decisions. In this situation, these boards will often adopt a consensus-based decision-making process that is untimely and not responsive to the vicissitudes of the market. Governance gridlock also results in a diffusion of the focus and commitment of each governance entity, which in turn contributes to more gridlock and interminable decision-making cycle time.

Governance conflict, on the other hand, is where the different boards in an association fight over which board has the authority and responsibility to make certain decisions or to allocate or use association resources. In this situation, boards can actually come into open conflict, make intentionally incompatible decisions, and occasionally even end up in court.

Whether ineffective governance structure results in governance gridlock or conflict, it always results in a waste of time: both the boards' and that of the chief executive officer.

Super boards realize that structure will either facilitate or inhibit effective board function, and so they continually examine and fine-tune their governance structures. Every time a super board changes its function, scope of responsibility, or strategic direction, it examines and fine-tunes or significantly changes its structure as well. Super boards use governance structure to facilitate effective governance function.

7. Use board job descriptions

It does not take a genius to realize that an effective board knows what its job is. Yet in many boards there is confusion among board members about what the roles and responsibilities of the board are in general. Further, there is often confusion about the roles and responsibilities of the board in relation to those of management, other boards, and committees of the board. Moreover, it is frequently unclear what the job of the board chair, committee chair, and board member is. This is never the case in a super board.

The fundamental characteristic of excellent governance is that all board members have a shared understanding of the job of the board - its role, responsibilities, and relationships with management and other leaders. It is tempting to think that the answer to these questions will be the same for every association board. Yet every board has a subtly but significantly different definition and allocation of its roles and responsibilities. Every board has a different mix of skills, personalities, and challenges. Every super board answers for itself the basic question: What is the job of the board of this association?

In fact, super boards go one step further: They have a job description for the board chair. This helps improve the leadership and overall effectiveness of the board because much of a board's effectiveness and development depends upon the quality of its leadership.

Unfortunately, one of the problems with many board leadership positions is that there is no job description for the chief elected officer. When this is the case, the effectiveness of the board often varies with the changing of board chairs. Personality, rather than principle, dictates board function and focus.

Super boards do not allow individuals to dictate the function or direction of the board or association, even if that individual is the board chair. By having a job description for the chief elected officer, the board can hold the chair accountable and he or she will know what is expected.

Board job descriptions are a significant and simple tool to improve board performance. They enable board members to clearly share a sense of what they do. This enables them to then assess how well they have done their job, and to constantly improve their future performance.

Effective governance has never been more necessary for American associations. Yet good boards will often flounder at precisely the time when new mind-sets and structural characteristics are necessary for governance to effectively lead their associations into the future. Thus, being a good board is not enough; the goal must be to become a super board.

Adopting the seven practices of high-performance boards is not difficult. The chief executive officer and the chief elected officer must commit to teaching the board systems thinking and to altering selection mechanisms for board members to minimize representational governance. A strong mission, used as the basis for the strategic plan and for principle-based board decisions, will provide a mission focus and help boards control their time so that they may effectively lead change. This in turn will enable a board to identify the best content and format of information it will need to best perform its job.

Restructuring governance to streamline it will do away with cumbersome structures that waste precious time. Developing board job descriptions and holding board members accountable to them will not only clarify the work of the board, it will also make it easier to develop criteria to evaluate the performance of individual board members and enable a board to remove dysfunctional members.

Super governance is not a happy accident. Rather, it is the result of an integrated process of planning, coordination, implementation, and evaluation. Left to chance or tradition, or to simply responding to whatever situations arise, governance abdicates its responsibility for leadership and contributes to organizational atrophy. While truly effective governance is more art than science, it can be achieved through a structured process of improvement to make your governing body a super board.

James E. Orlikoff is president of Orlikoff & Associates, Inc., Chicago.