Is this why your board is dysfunctional?
A high-performing board begins with the board understanding and knowing what its purpose is.
I know that may sound a little obvious, but many boards and board members hold conflicting views on what purpose the board is serving. It’s something that is never talked about. And it’s usually left for everyone to figure it out. Worse still is the assumption that we all ‘get it’ and are on the same page.
And then we wonder why there’s dysfunction, with everyone pulling in a different direction and championing their own agendas.
What, then, is the purpose of a board? What is the purpose of your board?
When answering this question, there are two primary areas for your conversation to focus on:
- the board’s governance requirements, and
- the organisation’s requirement of the board.
Let’s dig a little into each of these areas.
The board’s governance requirements
Universal: These largely refer to director’s duties and responsibilities under the relevant legislation. These duties are truly becoming universal as much of the legislation such as the Corporations Act and state-based incorporated associations Acts (including other types of corporate structures like co-operatives) have essentially the same directors’ duties (with slight changes for the different vernacular used to describe those individuals in governance positions and how they are described as a cohort. This article explains these a little further).
Specific: These refer to the various duties, responsibilities, and requirements that exist as a result of the industry, type, and size of organisation that you are governing. Think about the differences in legal requirements that would exist between an airline and a local sport club. Those are two extreme examples, but they clearly demonstrate the point.
Importantly, part of your universal governance requirements includes you knowing and understanding what your universal and specific duties and responsibilities are AND that you are maintaining compliance with them.
The organisation’s requirement(s) of the board
There is no one right way for a board to be and do its work. Beyond the board’s governance requirements, the role a board serves in an organisation is largely driven by what the organisation needs from the board and its members at a point in time (usually here-and-now and the near-future [1-3 years]).
In an HBR article, David A. Nadler provides a comprehensive overview, and assessment tools, on how the organisation’s requirements helps inform the board of its purpose.
Having a deep understanding of what is the organisation facing in the current and near-term future will help the board to know how engaged (or not) it needs to be.
What role is the board playing and how engaged the board needs to be considers the bench strength that exists (or not) within the organisation and on the board.
Knowing this, what the board needs to focus on and prioritise becomes obvious. Next, attention shifts to setting up the supporting infrastructure to get that work done. We cover this in future articles.
It’s worth noting that what drives this work is the right mindset: the ability for rigorous introspection. A board’s governance and operating environment is not static; therefore, the purpose and role of a board is something that needs to be defined and re-defined over time. Developing your self-analysis muscle, individually and collectively, will enable this process to become easier and far less emotional.