Canaries in the Board Room – Early Warning Signs of Governance Dysfunction

Is there a “canary” in our organizations that succumbs to the lack of governance oxygen the way canaries were used in coal mines to warn miners that they were loosing oxygen while they still had time to take corrective measures?  The answer is “yes”!

What Is Governance-Oxygen?

At a minimum it’s time.  It’s time to focus on the organization’s future — that time beyond the current operational year and the plan and budget beyond the current year.

Two Such Canaries

First, is the condition of imbalance between the strength and functioning of board and chief staff officer (CSO).  In an upcoming issue of the Harvard Business Review, Robert M. Fisher, Ph.D. will have an article appear that, among other important topics, discusses the relationship of board and the chief staff officer (CSO) as a system.  Fisher discusses in his article the characteristics of strong and weak boards and CSOs and what can be done under the various combinations of these characteristics.

I mention Fisher’s article to recognize his important notion of the “system” that the board and CSO comprise, but to also emphasize that while governance is the domain of the board of directors, the board’s ability to provide governance can be severely compromised if a weak CSO is present.

So, the first canary I’d like to identify is an imbalance between board and CSO, specifically where there’s a strong board and weak CSO.  I do not mention weak board and strong CSO, or weak board and weak CSO because it should be obvious that a weak board, regardless the condition of the CSO, is simply not capable of providing governance.

At the risk of oversimplifying Fisher’s point, he discussed the board-CSO system in terms of stability.  Obviously, where both parts of the system are equal, there’s high stability.  The strong-strong balance having positive stability and the weak-weak balance having the kind of stability more akin to rigor mortis.

The fact that a strong board would have hired a weak CSO is itself a warning sign that the board’s critical decisions do not result in success.  What more important decision can a governing board make than hiring the right chief of staff?  The byproduct of this first mistake should be obvious — a board can be no more effective at governance with a weak CSO than a bicycle can have a smooth and reasonably effortless ride with one flat tire (or at least in need of air).

The second canary is how the board actually spends its time.  An audit of board agendas and meeting minutes might be very revealing.  How much time does a board spend on history vs. the future?

History –

Board meetings are often devoted to reviewing reports about:

  • Finances and financial performance
  • Program activity reports
  • Meeting attendance and participation
  • Membership trends about new and non-renewing members

This is appropriate for oversight.  But if the reports are merely an accounting of numbers with no analysis for the future, then these reports are simply reporting history.  These reports should be prepared and submitted, but they may be more appropriate for reading before a meeting for background and not to take up valuable board time during a meeting to discuss what can be clearly stated in written reports.

The Future –

Boards that do not discuss and debate the significance of current reports on the organization’s future are starving themselves of governance-oxygen.  For example:

Finances and Financial Performance — Does the current financial report contain implications for the future.  If there are unexpected trends in revenue or expenses does the board know what’s causing them?  Do these deviations point to risks or opportunities for next year and beyond?

rogram Activity Reports — Are programs being supported as expected?  If not, might this suggest some fundamental departure from a program’s basic assumptions for success?  Are there mid-term adjustments that should be made and what impacts might those adjustments have on next year’s performance of these programs?

Meeting Attendance and Participation — Are there more or less attendees at meetings than anticipated?  If so, why the deviations?  Are meeting appraisals being collected from attendees and do these appraisals provide any insights to what members may want in future meetings?

Membership Trends — Often there’s more concern about membership attrition than about growth.  Both deviations are important to understand.  Boards should certainly understand why members are leaving.  Is it because of some external factor in a trade association’s market segment or in a society’s profession, or because the organization’s actual or perceived value-proposition is outdated or not being communicated effectively?

What Can Be Done to Increase Governance-Oxygen?

The right balance for a particular board and organization between current and future time may be unique to each organization.  I would suggest that over the course of a year a board should spend at least 50% of its time on the future.  That will vary from meeting to meeting, and whether an organization is in start-up mode vs. a more mature state.  It would also be affected by whether or not an organization is facing a crisis at the moment.

Perhaps the following questions are the most useful to ask about how your board spends its time:

 

  • Are we regularly dealing with a crisis?
  • Does the board feel that it has to make decisions with less information or understanding about a situation than it would like?
  • Is valuable board meeting time spent listening to reports and analysis that could be captured in written reports and reviewed in advance of the meeting?
  • If written reports are prepared and distributed in advance, do they contain assessments about the potential impacts in the future?
  • Does board meeting time include identification of learning that the board needs to undertake to be prepared to make future decisions with a sufficient amount of information?

Board time is a non-renewable resource — waste it and it’s gone forever.