Five Star Governance PDF

FIVE STAR GOVERNANCE  INTRO We developed this downloadable document so that it could be used as a handout at a board meeting to have a very thoughtful conversation with the board about how they govern as an entity and consider chang...

FIVE STAR GOVERNANCE  INTRO We developed this downloadable document so that it could be used as a handout at a board meeting to have a very thoughtful conversation with the board about how they govern as an entity and consider changes to improve board performance. Board members need to have real clarity about their roles and responsibilities so they know what success looks like. Who doesn’t? As a result, we spend time (or should spend time) ensuring that all board members know their basic responsibilities. But when it comes to words like “governance” and “oversight,” it can be hard to know when you are getting it right. The list of responsibilities tells you what you are supposed to do but so many board members struggle with the how. DEFINING TERMS Open a book from Board Source and you will see three methods of governance – how you go about fulfilling your duties. 1. Fiduciary: The focus is on whether or not the organization is doing the right things. Focus on facts, figures, financials, and risks. 2. Strategic: The focus here is on closing the gap between where we are and where we want to be. 3. Generative: The focus here is more creative and less solution-oriented. The Board functions as a thought partners with the Executive Director and senior staff. These discussions do not take the current reality at face value but rather challenge the organization to think differently and bigger. In a discussion of this sort, board members should work to suspend what they think they know. These conversations are freer and not bogged down with getting from point A to point B.  TIME FOR A QUIZ Take a few minutes and consider how you approach your board service. Which of these best describes the way your board sees itself? For each, consider answering “sometimes,” “always,” or “never.” Hint: There is no completely right answer. Stay with me. 1. We react to information provided to us allowing us to ___ Sometimes monitor the effectiveness of the organization. ___ Always ___ Never 2. We work with staff to set goals across the organization. ___ Sometimes ___ Always ___ Never 3. We look at budget, finances, and program goals. ___ Sometimes ___ Always ___ Never 4. We think strategically about budget, finances, and program ___ Sometimes goals. ___ Always ___ Never 5. We engage in strategy discussions at least annually. ___ Sometimes ___ Always ___ Never 6. The big strategy stuff comes up once in a while. ___ Sometimes ___ Always ___ Never 7. We are kind of like watchdogs in a way. ___ Sometimes ___ Always ___ Never 8. We often use tools like a SWOT analysis to help us think about ___ Sometimes what is going on now and where we want to go and then ___ Always develop goals with an eye toward closing the gap. ___ Never 9. We ask questions all the time like: How else might we look at ___ Sometimes this issue? What else should we be thinking about? ___ Always ___ Never 10.Our Executive Director welcomes our questions. ___ Sometimes ___ Always ___ Never 11.We don’t take the current reality for granted and we don’t ___ Sometimes assume. ___ Always ___ Never 12.Lots of “what ifs”. ___ Sometimes ___ Always ___ Never 13.Our Executive Director sees the board as a valuable thought ___ Sometimes partner. ___ Always ___ Never 14.We see the Executive Director as a valuable thought partner. ___ Sometimes ___ Always ___ Never Ready for the correct answer? Sorry, don’t have just one. There are a series of answers: 1. Hopefully, you checked “always” or “often” on fiduciary responsibilities. Why? Because fiduciary governance is essential to the health of every organization. Full stop. That said, five-star governance is not found in solely fiduciary governance. Boards that are primarily reactive will miss something important – a challenge or more importantly an opportunity. 2. Perhaps you checked “often” for fiduciary and “sometimes” for strategy. It’s possible your board operates largely as a watchdog, but you meet annually for a retreat to talk strategy and set goals. Pretty common, and yes, your board can and should operate in multiple forms of governance depending on the circumstance. Great! 3. But, ideally, what we’re aiming for is a board that operates as thought partners for the organization. You need to be in this mode of generative governance at least some of the time. A five-star board governs in each of these three ways throughout the course of a year.  BRINGING THIS ALL TO LIFE The following table offers the board a conversation starter – some examples of how each form of governance might operate. It should also ensure that the conversation gets real and does not live in the abstract. Fiduciary Strategic Generative FINANCIAL REVIEW Finance committee Finance committee Finance committee reviews financial reviews prepared leads a discussion at statements, pays statements and the board meeting to close attention to engages in a address negative variances. discussion about the variance in variances and the fundraising. Treasurer reports out causes. Lots of at board meeting. analysis on the How might we think reasons behind the about fundraising ED offers numbers. differently? Should commentary. we be looking at Treasurer reports out new strategies for on how the visibility? What if we organization will approached board compensate or recruitment adjust based on differently? variances. ED? ED offers commentary RELATIONSHIP BETWEEN Finance Committee During an ED report, ED and Board Chair ED AND BOARD Chair (or Treasurer) the ED puts a commit to twice- and ED challenge on the annual board communicate openly table – something meetings dedicated about finances. keeping her up at to free thinking, night. opportunities to do No surprises at the things very board meetings. The board offers the differently, how to ED things to consider scale through as they solve the innovation. problem. Possible solutions surface. ED feels the conversation was of value.  Fiduciary Strategic Generative RELATIONSHIP BETWEEN ED and Chair meet ED sends agenda Meetings are ED AND BOARD CHAIR fairly regularly. ED ahead of time. Topics strategic but they go reports out to the discussed are higher further as it relates Chair. level and offers the to how they lead the opportunity for the organization The meeting board chair to help together and engage sometimes doesn’t problem solve – the board in feel very necessary. maybe a community innovative thinking. An email might have issue or staffing/ Typically, this would done the trick. Glad volunteer challenge. be in the design of a to have met. board meeting or retreat. FUNDRAISING Finance Committee Board has a Board Development monitors budget vs Development Committee facilitates actuals. Committee that is a discussion with the responsible for board about Board members and thinking about how potential revenue ED work to raise the board can be a streams. enough money to more effective cover the budget. engine for Raising ‘what if’ development, questions is ED works on events, holding the board welcomed: What if grants, etc. Board accountable and we charged for this fulfills give/get. working to generate program? Or What if new ideas for raising we stopped doing X? money. Would another org pick it up?  MOVING FORWARD: A FEW IDEAS The bottom line is that you want to strive for fewer meetings that live only in the fiduciary space. Of course, monitoring progress and financials and other fiduciary roles are essential. But it is when you move into the strategic and generative realms of governance with greater regularity that organizations move from surviving to thriving. The key is making small changes that begin to ‘tip’ the board towards a more engaged, strategic leadership model which can then evolve into healthy, generative governance that makes space for the big questions. A few ideas on how to start moving toward a robust, generative governance model: 1. Intentional Board Recruitment The very best conversations are had and the best ideas are generated when you have the right folks at the table. Bringing diverse skills, experience and attributes. Founders must pay close attention to this. A board of friends and colleagues of founders are way less likely to ask the tough questions. 2. Strong Board Leadership Electing a strong board chair makes all the difference. How a board meeting plays out, what kind of relationship you build with the E.D. – these are the levers that move a board into a way of governing that is smart, strategic and maybe even innovative. 3. Valued E.D. Executive Directors are generally pleasers and want the board to know that everything is under control. But this actually disengages board members. They know that nonprofits are messy but are not invited into a conversation about how to navigate challenges. It does not come naturally to an executive director to share “weaknesses” or “challenges.” A great conversation to have at a board meeting – to give the E.D. permission to share the challenges, see the benefit. Slowly but surely you all will get the hang of it. 4. Dedicated Planning Time Please have a board retreat. What prevents generative governance most often is time. Lack of time. The “what if” conversations need space. My two very favorite questions that will put the entire organization right into the generative mode: If your organization was erased from society’s hard drive tomorrow, what gap would there be and who would fill it? $5 million (or some game changing $) falls into your lap. What would you do with it?