Governance and You

I listened to a great podcast the other day sponsored by Institute for Organization Management on governance.

The following is the Q&A discussion I wanted to share.  Thanks to Kate Conroy for asking the questions and Claire Louder, Louder NonProfit Strategies, LLC for her responses on this important issue.

What Are Your Red flags of Governance?
 

• Board meeting without the executive.

• Not reviewing the financials.

• Board doesn’t show up for your board meetings.

• Lack of term limits.

• Board interfering with staff – the board should hire the CEO and the CEO should hire and manage the rest of the team.

 
They went on to have a brief discussion on the fiduciary responsibility of boards, the Duty of Care, Duty of Loyalty and Duty of Obedience.  As a reminder, that responsibility can be described as:
 

• Duty of Care - as a board member it is imperative that you do your homework on the board materials prior to the meeting so you can fully participate in the discussion and make informed decisions.
• Duty of Loyalty - as a board member you must take your business hat off and put the hat of the organization on and do what’s best for the organization, not your business.
• Duty of Obedience - as a board member you must stay true to the mission of the organization and not get involved in things that are not part of your articles of incorporation or bylaws.

 
What Are Your Green Flags of Governance?
 

• Collaboration of board and the executive.

• Leading vs managing.

• Participation in an annual strategic plan and make sure you set aside the appropriate amount of time to be effective.

• Board members showing up on time, engaged on the big issues going on in our community (workforce development, economic development, etc.).

• Board understands their role (board commitment form).

 
Advice Someone Told You?
 

• Life work balance is crucial.

• You’ve got to manage expectations and take care of yourself.

• Keep something in the tank for those who love you!

• A great quote by Claire that stuck, “you can’t warm other people by setting yourself on fire.”

• Set limits and stick to them.

• Prioritize is also a key element in staying focused and a way to manage your time. (7 things book).

 
How Do You Prioritize?
 

• List of things that need to get done on a weekly basis.

• I also budget time to write blogs, etc.  You’ve got to get it all down on paper or on your digital calendar.

 
What Questions Should the Board be Asking?
 

• How are the chambers financials and actually review those financial statements.

• Ask about any red flags staff may see coming in the future.

• Mike Gellman has a great dashboard that can be found HERE and used to inform your board on financial questions.

 
How Do You Disconnect to Stay Fresh?
 

• Visit a local microbrew establishment with people I know and recognize me and they serve sparkling water too!

• Happy hours in the neighborhood.

• Zoom calls with folks to stay connected and talk about things outside of your current workload.

 
They finished with a list of great resources you should have bookmarked to help you answer any governance questions or issues that arise in your workday.
 

• Association Law Handbook

• Bob Harris’ Website

• Frank Kenny’s Facebook Page for the Chamber Professional Community

• American Society of Association Executives (ASAE)

• U.S. Chamber of Commerce IOM Resource Page

Building a Fit-For-Purpose Association Board in the Turbulent Twenties

As part of the Association Insights series, in Old Town, this webinar discussed the title of this blog post.

The following are my notes from Jeff De Cagna's, Executive Advisor, Foresight First, LLC presentation.

He started with the comment of “we must do something different with our organizations and boards.  Association boards must become more!”

 

He asked a series of questions:

• What will our successors say about us?
• What will the next generation of leaders think of the work you did as a board and organization?
• Why is it critical to build a fit-for-purpose board?

He talked about how this decade is going to get worse and the four forces we face:

• The impact of AI/automation technologies on human beings;
• The worsening climate crisis;
• The surge in human inequality; and
• The rise of ideological extremism.

He discussed what is normal.  And his answer, “nothing is normal.”  He states this as the most acute short-term threat organizations face.  He made the following statement, “boards must adapt to operating in the discontinuous next.”

He went on to talk about boards being risk adverse.  Where are we headed?  Boards need to think towards the future and don’t debate current events.  That’s tough to do!

What are the foundational beliefs of a fit-for-purpose association board?

• Focus on where you are going and not where you have been;
• Think about your successors and stand up for the future;
• Let go of historical expectations;
• Get away from orthodoxy assumptions; and
• Embrace the responsibility of stewardship with other organizations on collaboration.

How can your organizations board become fit-for-purpose?  Being a board vs. becoming a board?  Think long-term and our boards must be more and not just checking the boxes of being a board (i.e. 990 review, annual budget review, etc.).

He suggested asking your board the following three questions:

1. What positive-sum transformation can your board pursue?
2. What sacrifices will your board make to benefit our successors?
3. How will the directors and officers help each other to become a fit-for-purpose board?

He ended with circling back to “what will our successors say about us?” and a quote from Barbara Jordan, “For all of its uncertainty, we cannot flee the future.”

For more information on Jeff De Cagna and his work go to his website HERE.

Ten Purposeful Provocations for Association Boards in 2021

I recently attended a webinar on the subject of this blog post by Executive Advisor, ForesightFirst, Jeff De Cagna.

Jeff is always thought provoking in his presentations and his insights are worth discussion as we navigate the new order of our organizations in these unprecedented times.

He segmented his presentation into three areas:

Where are we at this moment?

• Turbulent Twenties (T20s)
• No new normal, we have to adapt to the new way of doing business.  The pandemic has changed the way we do business and we must change our thinking moving forward, as we serve our members.
• Uncertainty, volatility and risk is the new “discontinuous next.”
• Finding a balance between the short-term and long-term for our organizations, think the next quarter vs the next decade.

Ten Provocations for Boards

1.  Embrace voluntary service – it is a high privilege to serve on a board, it’s a choice to serve the long-term stewardship of an organization;

2.  Capacity over comfort – continue to look at building capacity in our organizations versus thinking about just being comfortable.  The future will have uncomfortable times for boards and the decisions they will need to make;

3.  Discard orthodox beliefs – everything we think about is grounded in history and that has changed.  We have to base the future on the now and not the past.  Don’t let orthodoxy capture our thinking going forward;

4.  End inequities – build diversity in your boards, move to picking key stakeholders who may or may not be part of your membership (an orthodoxy is that all board members must be members of the organization);

5.  Pursue stewardship with intention – leaving systems in better shape than what they inherited;

6.  Focus on governing – ensure the organization knows what it is trying to accomplish.  Focus on outcomes;

7.  Stand up for the future – ask different questions with an eye towards the future (i.e., again think decades not the next quarter).

8.  Step back from strategy – stay out of the weeds and bring in younger stake-holders;

9.  Reject ideological division – reject the divisions on our boards and in our communities and focus on what is good overall for our organizations; and

10. Sacrifice for their successors – long-term shared interest for the members of the organization for when board members are long gone.

What are we going to do differently this year?

• Don’t wait to act on the new way of thinking in these turbulent times on your boards and organizations.
• Reinvent the work of your boards.  What can we do differently?  Your boards need to ask the question, where are we going, not where are we or where we’ve been?
• Build a high-performance board to thrive in the turbulent T20s.

He ended his presentation with his favorite quote from Barbara Jordan – “For all of its uncertainty, we cannot flee the future.”

For resources on Jeff and his work go HERE.

Governance: Balanced Boards

There are a lot of books and articles on the subject of this blog title and I’d like to highlight the ideas put forth by Glenn Tecker at Tecker International LLC, in a slide deck he recently shared with the association community.

He starts out by talking about the 3 key attributes you should look for when identifying potential new board members.

 

Skill set – marketing, lobbying, legal, finance, fundraising, etc.?

 

Diversity – this would include but not limited to generations, geographic, industry sector, gender, ethnic, etc.?

 

Experience – what experience do they have in the community, working on a board and knowing the work of the chamber?

 

The slide deck included a list of the “Six Key Attributes of Board Members.”  This list below is verbatim from his slide deck (Copyright 2020 Tecker International LLC).

• The ability to think strategically and analytically and to effectively communicate thoughts and the reasons for them.

• Possession of earned respect of other key stakeholder group members.

• The ability to work well with others as a member of a collaborative group with group decision-making authority and an understanding of the fiduciary duties of loyalty, care, and obedience.

• A demonstrated understanding of the differences between “oversight” and “supervision.”

• An earned reputation for emotional maturity, personal integrity, and honesty.

• A demonstrated familiarity with the body of knowledge related to both the process for which the group is responsible as well as the substantive content of the subject area within which decisions are choices will have to be made.

I wrote about the Duty of Care, Duty of Loyalty and Duty of Obedience of board members in a previous blog post that can be found HERE.

 

I’ve also talked about creating job descriptions for potential board members in previous blog posts.  Have you thought about creating a set of interview questions to ask your prospective new board members?  This is where you may want to go back to the skill set and attributes comments above for specific examples.

 

Remember, these new board members will be with the organization for the next six years, if you’re like most chambers who have two year terms renewable for three terms, and picking the right ones is key to your and your organizations success!

For more resources on board governance go HERE.

Why Strategy and Foresight Are Not the Same Thing

I wrote about this subject in a previous blog post that can be found HERE.

This post is based on a session I attended with Jeff De Cagna, a leader in the field of Foresight in the association community.

Strategy vs Foresight:

Strategy plan vs strategy learning!  Both are about intentional learning.

Strategy process (36 months) should be done by the under 40 members, more than just your board, think your YPG groups.

Foresight practice (84-months) should be done by the over 40 members - what could the world look like in 2027?  Prepare for plausible futures for the benefit of our successors.

That is the responsibility of your board.  And by the way, you need to have some “under 40” folks on your board too!

He went on to talk about the attention challenge of our boards!

• Concentration - getting decision-makers to stay focused on the difficult questions.
• Curiosity - get decision-makers to devote their attention on a transforming world.

What’s the major difference of the two?

He talked about the 70-20-10 rule of time spent by boards on the future, work of the board, what’s going on now is based on current practices.  Jeff argues your board should be spending 90 to 95 percent of its time on the future.

Your chamber needs to be able to pivot from a legacy organization vs being able to transition.

He goes on to talk about the “Duty of Foresight,” as an addition to the Duty of Care, Duty of Loyalty and Duty of Obedience responsibilities of boards that I’ve blogged about before HERE.

ACCE’s Horizon Initiative: Chambers 2025, in my mind, is a product of Foresight, but the deal is you have to continue to look at it and update as you look to the future in at least 10-year increments.

He ended with a few statements on how we must question orthodox beliefs, build new capacity, and design next practices (this is not about best practices).  Best practices are based on the past!

For more information on the study of Foresight by ASAE go HERE.

Guide to Governance

I recently attended a class on governance for chambers and associations with Bob Harris, CAE.

The following are my notes.  It was hard to keep up with Bob, he was giving tips and best practices in a rapid-fire presentation.

Here we go!

Best Practices:

• Conduct an annual orientation for your Board of Directors with governing documents reflected in your minutes.  What a great way to protect yourself.
• Make sure they know their fiduciary responsibility – Duty of Care, Duty of Loyalty and Duty of Obedience.  For a previous blog post on that subject go HERE.
• Protections of the board (4)

o   D&O - Directors and Officers insurance

o   Incorporated

o   Indemnification

o   Volunteer immunity

• Put your mission statement on the back of your Board of Directors tent cards at your meetings.  Also, it should always be on your meeting agenda too!
• When selecting board members, he used these words in what to look for “time, talent and treasury.”  I have always said “passion, intellect and money.”  We’re saying the same thing!
• Average size board is 15
• Chambers typically meet once a month, he suggested try meeting every other month.
• Associations generally meet three times a year.
• What’s your tag line?  Vision.Value.Voice. – not a bad start to build on!
• Ex-officio members appointed to board because of their position somewhere else - bottom line, you’re on the board or not?  I am not a fan of ex-officio members and I’ve stated that multiple times on this blog.
• 2015 California law doesn’t allow non-voting ex-officio board members.
• If you send the Mayor (ex-officio member) your agenda, it just became public.
• Your 990 is your only public document.

Tips on good board governance:

• Board sets policy, staff implements that policy
• Board should be concerned on issues beyond their term.
• How many committees do you have?  Committees should match up with your strategic goals (i.e. four goals, four committees).

He ended with a review of our governing documents:

• Articles of Incorporation (contract with state)
• Mission (purpose of existence)
• Bylaws (relationship to members)
• Policies (interpretation of governing documents)
• Strategic Plan (roadmap of organization GPS goals, priorities, strategy)
• Annual Budget

And a final statistic, 9% of your budget should be spent on technology based on research by (ASAE and ACCE).

Board Selection: What’s Your Role?

If you’re like most other chambers you’re selecting one sixth of your board each year.

That statement is based on a typical board appointment of two years, renewable for three terms.

Does that sound familiar?

Ok.  Now what role do you play in identifying or selecting new board members.

I’ve written many times in the past that you want three things from a board member:

• Passion
• Intellect
• Money

The other piece of the puzzle that many have written about in the past is getting the right skill-set on your board.  I couldn’t agree more!

What does that mean?

In the simplest of terms, do you have a lawyer, CPA, educator, transportation expert, workforce, economic development and technology experts, etc. on your board?  Do you have diversity as it relates to size of businesses, geography, ethnic and yes, all age groups in the workforce (Boomers, Gen X, Gen Y and now Gen Z)?  All can contribute and play a vital role in the conversation.

The more diverse your board the greater the conversation.  Embrace it!

Now back to your role in identifying and selecting new board members.  If you don't, you should have a file in your desk drawer of potential new board members.  Are you grooming new board members by asking them to serve on committees or task forces first?  If not, you should.  What a great training ground for future board participation.

What you don’t want is a board made up of what I’ll call, “friends of friends.”  Whether you’re officially on the nominating committee or not, you at least can fill the pipeline with quality candidates.

That’s the CEO’s role, at a minimum, in the volunteer selection process.  For more information on board management go HERE.

Good luck!

Chairman/CEO Partnership

Yes, I said partnership in the title.  At the end of the day, if you don’t have a partnership with your chief volunteer, you’re not in a good place.  Not for you and not for the organization.

We all know that the board, led by the Chairman, sets the policy and direction of your chamber, but it is the CEO that implements that policy with his or her staff.

The strength of the relationship between the Chairman and CEO will have a direct impact on the success of the chamber and its program of work.  You must have open and regular communication with your board Chairman.

And then there’s – Trust!

Without it you will have no partnership.  You must both come from a place where you trust each other.  You both need to be accountable for the work of the chamber and its success!

The CEO gets a new Chairman every year.  And each year that can bring new challenges and opportunities in the relationship between the two.

The Chairman and CEO should always stay focused on the two being aligned, focused and share the same vision for the Chamber.

For resources on the Chairman/CEO partnerships go HERE.

Elements of Good Governance

I was recently reading the 2020 ASAE’s Board Brief and was fascinated by the chapter on governance and the research done by their Foundation on the subject matter.

The data’s interesting and they broke it down into the following areas:

Policies and Procedures – make sure your manuals are well documented and followed.

Structure and Function – what is the size of your board and is it working as well as how man board meetings are you conducting a year?

Diversity Goals – do you have a plan and are you tracking your progress?

Self-assessment – are you surveying your board members and asking how they feel about their participation and effectiveness?

Performance Evaluation – do you have a formal reporting mechanism to your board or membership of the results?

Goal Setting – do you set goals (think scorecards) as a way of tracking your goals?

Preparation and Training – are you conducting that board orientation for new board members outlining their responsibilities: Duty of Care, Loyalty and Obedience (which I’ve written about before and can be found HERE)?  And are you giving outside training on how to read a nonprofit’s financial statements?

For the original source for the article go HERE.

Good Board Governance - Part II

Now let’s have a discussion about the difference and importance of both indemnification and director and officers insurance.

Indemnification - most if not all organizations indemnify their board of directors for any financial liability for serving on the board.  The indemnification clause usually is stated in the bylaws.

It also goes without saying that the board member will be indemnified as long as he or she did not do anything illegal or acted in bad faith.

Check your bylaws to see if your chamber board members are indemnified.

Director and Officers Insurance - most know this as D&O insurance which protects your board members from any lawsuits concerning legal activities.  And it is common knowledge that these claims and lawsuits are generally employee based.

And as stated in The Perfect Board book on page 80, these types of claims or lawsuits can be wrongful termination, sexual harassment, copyright/trademark infringements to name a few.

The bottom line, make sure you have the indemnification clause in your bylaws and you are providing (any paying) for D&O insurance.

For a legal resource go HERE.

Good Board Governance

In my opinion, and in the opinion of many, the fundamentals of good board governance starts with duty of care, duty of loyalty and duty of obedience that each member of your board must understand.

For a quick review:

Duty of Care - as a board member it is imperative that you do your homework on the board materials prior to the meeting so you can fully participate in the discussion and make informed decisions.

Duty of Loyalty - as a board member you must take your business hat off and put the hat of the organization on and do what’s best for the organization, not your business.

Duty of Obedience - as a board member you must stay true to the mission of the organization and not get involved in things that are not part of your articles of incorporation  or bylaws.

Speaking of bylaws, that is the governing document that your board and members must follow.

The other legal aspects of a board and their governance process that must be followed are the adherence of a quorum for each meeting, a process to conduct those meetings, and the creation of minutes of the meeting to reflect the boards intent in setting policy for the organization.  And by the way, the handling and storage of those minutes.

Quorum - as stated in your bylaws, but usually it is a majority of the total number of board members (i.e., if you have a board of 21, then 11 would make a quorum.  If you don’t have a quorum, you can’t do business as a board and you must cancel the meeting.

Roberts Rules of Order - it’s important to have order when conducting board meetings to stay focused on point and your agenda.  Most boards use the Roberts Rules of Order in conducting their meetings.

Minutes - the official recording of the meeting which should start with the date, time and location of the meeting.  Remember, it is not necessary to capture every word that is spoken during the meeting.  It is important to identify who is in attendance and who is not.  Report on the discussion of a particular agenda item and any action (vote) that took place.  And by the way, those minutes need to be kept indefinitely since they are an official document of your organization.

If the above items are not understood by every board member, it is imperative that you conduct regular board orientations to remind your directors of their role and responsibilities.  I would have something in writing that they can take home that they can use as a reminder during their board tenure.

A fully informed board of directors of their role and responsibilities are critical to the success of your organization.

Review your orientation documents today!

For resources on good board governance go HERE.

Good Board Governance

Is your board strategic versus operational?

Board meetings should be used to have strategic discussions on big issues facing your chamber and community - a shrinking main street, workforce, economic development or infrastructure projects, etc.

Use your consent calendar for all operational reporting - reporting on membership, annual meeting, etc.

And if I could add an additional thought, pick board members with an eye towards their intellect, passion and money (put another way, a decision-maker within a company).

Communications is key from CEO to Board - setting expectations, weekly or monthly calls or communications is a great way to keep your board informed of your organizations activities. I would definitely have a weekly call with your Chairman of the Board.

Getting the right mix on the board - skill set, diversity (gender, race, age, size of company, geography, etc.) and experience with issues you may tackle in the future (i.e., buying a building, embarking on a capital campaign, deciding if you want to start a PAC). 

Trust - you must have trust or you have nothing.  We all know how CEO’s get fired, they get cross ways with the board and it generally starts with a trust issue!

New Board member orientation - set the expectations!  By the way, you should already have a set of criteria that your nominating committee uses to select board members.

I recently read an article that described selecting board members should be conducted like a search firm - you go out and get what you want, not like an HR shop where you’re picking from who raised their hand to volunteer.  Something to think about?  That’s probably the best way you can take your board in a strategic direction if you’re not there yet!

And one additional thought.  Are you surveying your board members after each meeting?  This would be a great way to reemphasize the role of the board as being strategic not operational.

Always remember, it’s about relationships.  Build one with your board and board chair for a successful partnership!

3 Tips for Building a Solid Governance Structure

Don’t get overwhelmed with your governance structures.  Keep them simple.

Here's three that most have:

• Board of Directors;
• Standing Committees (i.e. finance, membership, government affairs, education); and
• A Task Force for anything else since Task Force’s expire after their work is done.

And use these three different entities to showcase your volunteers and it’s a great proving ground for leadership in your governance structure moving forward.

What do I mean by that?

• A rock star on a Task Force might be invited to join a Standing Committee in the future;
• A Standing Committee rock star may be asked to join the Board;
• A rock star Board member may be asked to chair a Standing Committee; and
• And those Standing Committee chairs might rise to the leadership positions on the Board (i.e., vice chair, incoming chair and eventually chair).

Just a thought!  But at least you’ll have a track record of their leadership skills over a period of time.

That’s a recipe for success in any governance structure.

For more resources on governance from the Free Management Library go HERE.

And don't forget to create a scorecard for your board.  You can go HERE to find a blog post on that subject!

Nonprofit Governance

On a recent plane trip across the country I had the opportunity to read a lengthy article by John Carver and Miriam Carver, titled Carver’s Policy Governance Model in Nonprofit Organizations.

I wanted to share my take of the article and encourage you to read the original HERE.

A few key concepts that hit home for me and I'd like to share with you were:

• Trade associations are owned by their members - chamber’s that means your small business owners own the chamber, not you, not the community.
• The Board as a body speaks for the ownership, not individual board members.
• The Board has one employee, the CEO. The board only speaks to the CEO, not staff.
• Boards should not just approve committee reports but use these documents as a basis for the board to make decisions (i.e. policy) on behalf of the organization.
• Board meetings are not about going over the past. Board meetings should be about large decisions and the future of the organization.

Do yourself and your chamber a favor and take the time to read this article and make your own notes and observations for further discussion with your board.

Read the entire article HERE.

It’s a great read!