Sometimes the simplest question unlocks the greatest complexity. During a recent discussion about strategic leadership, a board member of a sizeable nonprofit organization asked, “How do we get there?” Knowing the board had completed a comprehensive strategic planning process, I knew he wasn’t referring to a road map. Over the past 18 months, the board had hired a new CEO, approved a new strategic plan, recruited six new board members, and scored high in a board self-assessment survey. Yet it was stuck.
Wedded to expansive committee reports and buried in its oversight role, the board was immersed in operational details and financial management functions. Given the expense to implement the new strategic plan, the chair of the development committee was desperate for board members to embrace their role in fundraising, yet the board bowed to its historic culture of avoidance. The self-assessment survey included no mention of that – or other — critical governance functions. Getting “there” meant a different way of thinking, understanding, and behaving.
The key lies in the culture. Board culture plays a pivotal role in an organization’s development, effectiveness, and even sustainability. Consider the demise of Enron — according to Great Boards, “what Enron lacked was not structure, process, or talent, but a culture of accountability, independence, diligence, and candor in which directors raised hard questions and didn’t rest until they got good answers.” The lesson is no matter what supports are in place for effective governance, culture is the primary factor for determining “whether board members can apply their skills to the fullest.”
Board culture can be defined as “the way we do things here.” No matter how comprehensive a board manual or orientation for new members might be, it is unlikely that the unconscious behaviors and beliefs of a given board have been captured in writing – or even awareness.
For some organizations, board culture is the greatest obstacle to overcome in the implementation of a board portal or other technological innovations. Key champions can provide step-by-step instructions, indisputable justification, and unlimited support to introduce new systems, processes, and skills, but cultural resistance is harder to surmount or sometimes simply recognize.
Great Boards gives face to the invisible challenge by promoting the benefit of transforming the common “acquiescent board” to the more ideal “accountable board.” The culture of the former is characterized by collegiality over conflict, as board members typically don’t wish to challenge one another or the status quo. By contrast, a culture of accountability promotes the board’s ownership of the organization’s overall performance and is characterized by five behaviors:
- Commitment – no matter what roles they play outside, board members must be invested fully in the organization and its mission, vision and values, as well as to one another as part of a team.
- Independence – a board must act on behalf of others (for-profit boards represent their shareholders just as nonprofit boards represent their stakeholders) and are not beholden to the desires of management or individual board members.
- Trust – board members (and management) must believe that all parties are working toward a common goal, even if opinions differ along the way.
- Diligence – board members must prepare for and participate in all meetings to ensure proper board engagement.
- Candor – Board leadership must encourage ongoing inquiry, active participation and constructive dissent at all meetings, in part by establishing agendas that provide time for substantive discussions.
In the case of my client who asked how to get there, board member readiness (in the form of frustration with the status quo) precipitated an exploration of board culture. Sometimes, though, external factors trigger a shift. Germany, for instance, is the largest economy in the world to institute a quota for female board members, according to The Globe and Mail. The new law, passed last year, embarks on “a major experiment into whether government policy can shift corporate culture.”
In another example, a dramatic change is underway across Europe in how arts and culture organizations attract funding — what used to be guaranteed by government must now be solicited from individual donors and other sources, according to Arts in America. Talk about culture shock.
To adapt to a new orientation around fundraising, some European boards have had to overcome cultural obstacles beyond the board room – not every cultures discusses money freely, so asking for funds was unfamiliar and seemed almost crass. To sustain their organizations, however, boards are learning to embrace a new norm and incorporate a shift in their own behaviors and beliefs around the board table.
While cutbacks in the US are not always as overt or extreme, the same principles apply. Changes in the landscape impact funding and boards must transition from acquiescence to accountability. Funding makes for an easy illustration about culture. No matter how many experts or processes a board has in place, a culture that avoids discussion of money will sabotage the best laid plans.
According to nonprofit board consultant, Nancy Axelrod, as discussed in Associations Now, “governance research across all sectors reveals that culture trumps structure in influencing a board’s performance.” She explains that boards which stifle challenging questions or constructive dissent tend to be more comfortable with “dysfunctional politeness and groupthink” than respectful exploration of divergent opinions.
She encourages board and executive leadership to work together is fostering a board culture that promotes civil dialogue, debate, and deliberation through these mechanisms:
- A positive governance climate created by the “tone at the top”.
- Agreement among the board members on how they will operate as a group.
- Opportunities for board members to gather informally.
- Forums designed for continuous board education and improvement.
- Articulation of governance competencies needed by prospective board members.
- Intentional design of substantive, strategic, and interesting board meetings.
The above steps can be instrumental in evolving a board’s culture to embrace the new processes, new thinking, and new behaviors required to integrate new technology. Champions must not be thwarted by cultural acquiescence to the status quo; instead, they must rally the board to look differently at the way things work as the first step in getting there.