Experts gathered to share their insights on board effectiveness at a recent webinar, “Increasing Board Effectiveness”, hosted by BoardEffect. Watch the full 30-minute webinar to find how your board can take a modern governance approach to ensuring board effectiveness.
Experts on the panel included Diarmaid Ó Corrbuí, CEO of Carmichael, a consultancy delivering training and support to the nonprofit sector, and Patrick Downes, Managing Partner of Lionheart Consultants, a leading Corporate Governance practice. Led by BoardEffect Director of Sales Edward Rees, the panel discussed board effectiveness sharing insights from their experiences serving on boards.
The panellists examined:
- What it means to be an effective board
- How to measure board effectiveness
- Important considerations when recruiting new board members
Making it Your Mission to Deliver on Your Mission
At their core, all effective boards possess a clear understanding of the mission and purpose of the organisation they are serving. “It goes back to the essential question, ‘What do you want to be effective at?’’’, says Ó Corrbuí.
An organisation’s mission is what drives them, but their purpose is why they’re driven. Take Carmichael, for example; their mission is ‘to work with nonprofit organisations to enhance their governance and effectiveness in delivering their objectives, by using Carmichael’s sector knowledge, experience, resources, and physical space to help them achieve real and positive change for their beneficiaries.’ Carmichael is driven ‘to provide expert guidance and support for nonprofits.’
When evaluating areas for gaps, boards like Carmichael’s must consider the qualities of an effective nonprofit board of directors. Once boards identify the gaps, they can begin to consider candidates that possess the qualities that help successful boards deliver on their missions. Because when it comes to board effectiveness, there is no disputing — it’s all about delivering on the mission.
“When we look at effective boards, for example, it’s that whole piece about possessing a clear understanding of what the mission is and the purpose of the organisation in terms of what direction it’s going in.” – Patrick Downes
Board effectiveness is not just a tick in the box for boards that meet their objectives and achieve their goals. Although it may be true that all boards delivering on their goals are effective, boards setting out to be the most effective employ a tactical approach from the start.
A tactical approach to board effectiveness includes:
- Setting timely goals
- Having the right board members
- Taking advantage of KPI’s
Tackling the Tactical Approach
1) When Goals aren’t Set, Goals aren’t Met
Anyone can claim they’re an effective board, but what does that mean? What is the benchmark for that? And how do you know whether something is effective?
“An effective board needs to be clear about what it needs to be effective at.” – Diarmaid Ó Corrbuí
Setting timely goals isn’t possible without first having a clear understanding of what the organisation wants to accomplish. Once everyone is on the same page, effective boards will determine what their goals are, what it will take to accomplish them, and when they will be completed. Establish early that everyone is responsible for keeping the team on track to motivate the board to work together.
The Pareto principle dictates that 80% of the time boards spend should be focused outward on the future, meaning the remaining 20% should be spent reviewing what worked and what didn’t. Still, too many boards aren’t meeting to establish annual goals. Directors evaluating how to measure board meeting effectiveness must learn to prioritise productivity and efficiency without forgetting the importance of looking back.
At least once a year, boards must ask their members for feedback. Every three years, boards can elect to do an even deeper look-back and include interviews with everyone on the board from directors to chairs to members of the executive board. This is an opportunity to document how the board conducts its business.
2) From Trusted Trustee to ‘Bored’ Member, Having the Right People on the Board Matters
Many state boards now have a requirement on diversity and gender, so nonprofit boards are following suit. However, diversity is not just about gender and race, it is also about having a diverse mix of skills that make up your board. Boards should meet to discuss goals and expectations at least once every year, keeping track of their progress at board meetings along the way.
Board members are expected to lead with confidence; it is imperative each board member fully understands their role. Board members must relate back to the purpose of the organisation constantly to remain informed by the organisations vision, mission, and actions. In the past, boards would be comprised of members with skillsets in the areas of legal, accounting, and fundraising. As the demand for new skills continues to evolve, the most sought-after skill sets currently are related to digital and cyber risk. Insight into attracting these potential trustees is of the utmost importance to boards right now.
An effective board needs to be clear with what they’re doing, listing step-by-step what needs to be accomplished to achieve the mission. This is why purpose-driven leaders are often found at the helm of effective boards. Effective leaders understand the importance of creating a roadmap for success.
The “pale, male and stale” syndrome still seeps its way into boards despite recent diversity measures. Leaders have got away with falling asleep behind the wheel for too long and the governance code recognises this as an opportunity for constant renewal and refreshing across all boards. Smart boards will value this opportunity to revamp their onboarding materials.
As organisations continue to evolve in this digital age, boards are getting more creative with their succession planning efforts, finding new ways to capitalise on their newfound skill gaps. Using competency and skill set audits, successful boards quickly discover opportunities to incorporate new members with digital and cybersecurity experience, both areas that are booming in demand across boardrooms. Once new members are initiated, they gain access to their board portal and can start viewing any and all documents that might help them on their journey.
3) The importance of KPI’s
Key performance indicators (KPI’s) can support boards to better monitor, track, evaluate, and take stock of what their organisation is doing. When board members are engaged at every step of the process it’s easy to see where they’re going, how they’re getting there and if they got there effectively. The introduction of dashboards with board metrics are a critical part of being a more effective board. In fact, there is a shift towards more forward-thinking purpose-driven boards now focusing on purpose in terms of reporting and KPI’s.
Boards that recognise the need to upgrade their governance strategies can start by identifying the critical elements for board effectiveness. Metrics like board culture and leadership can be the most difficult to measure, but technology empowers an effective board to decide how it will measure success for itself. An effective board knows what they want to achieve and how they’re going to measure it.
Boards should measure their effectiveness periodically. If nothing else, a desktop exercise consisting of a series of questions can help determine if they have:
- To plug skills gaps
- The right skill set for the job
- The right people for the board
- A clear way of tracking performance
- An environment that’s changed or evolved
- To increase skills or develop skills of the members
From embracing technology through using and measuring KPI’s to recruiting board members strategically, practising good governance is made easy when boards are supplied with the right tools. Upskill your board members with BoardEffect and watch the full webinar here to find out even more insights on board effectiveness.