I became a CEO in my mid-20s, at a very young age, albeit for an organization still in start-up.
Friends have always kidded me that it must have been nice not having a boss for all but a handful of years during my long ago concluded four-decade career.
But I always had bosses. They were governing boards of rotating directors to whom I was accountable that always included a member or two who didn’t understand or accept that a board only gives direction as a whole, not as individuals.
Even a chair person couldn’t give direction without direction provided by the board as a whole. Often the most difficult transition for some board members is from the managerial or owner role in their own organizations to one of oversight as part of a group.
Unfortunately, few of us are vetted for even minimal attributes and skills, such as critical and strategic thinking or how to run a meeting before being appointed or elected to governing boards.
An article in the current issue of Harvard Business Review about where boards in general fall short, made me think back to how fortunate I was to have so many great board members given the agendas of some individuals and how and why they were appointed.
Only 16% of the directors surveyed thought the boards they served on understood the dynamics of the industries in which their organizations were involved and only 22% believed their boards knew how their organizations created value.
The community destination marketing organizations (DMOs) that I served were especially complex because they function as intermediaries between external stakeholders and internal stakeholders including a whole sector of different industries.
That a board member comes from one of the front line stakeholder industries is no guarantee they will understand the overall sector, let alone the transcendent purpose of visitor-centric economic and cultural development: to broaden the local tax base while guarding unique sense of place inherent to the communities they serve.
This is why being teachable is an important attribute for potential governing board members.
As the authors note, the two codified core aspects of fiduciary responsibilities of board members include loyalty to the organization, “placing the organization’s interest ahead of one’s own,” which includes outside special interests.
The other is prudence, ensuring that “the proper care, skill and diligence is applied to business decisions.” The authors note that there is nothing to suggest that the “role of loyal and prudent directors” is to pressure management to maximize” short term interests.
Yet, in my experience, this is what special interests relentlessly seek. Examples of this in community destination marketing organizations are when elected officials or facility managers try to pressure a DMO to substitute short term objectives such as subsidizing groups to use certain facilities or to fill hotel rooms or and seats near term.
The far more valuable strategic purpose of a DMO is to safeguard a communities indigenous sense of place and to fuel the overall local business climate so as to broaden the tax base.
This generates far greater overall revenues than if used instead to merely close the short term operating deficits of a few public or private facilities.
Organizations with self-appointed boards, unless the nomination process is truly democratic, as in the first two organizations I led, can still be rife with directors there to serve their own interests or those of cronies or cabals.
But publicly appointed boards, such as those I worked under the last half of my career, have their own set of challenges, especially as happened to several of the boards to which I answered, when an elected official or two deliberately pushed the appointment of a board member they hoped would undermine the organization from within.
What would lead a public official to do this? Avarice.
Unfortunately, very little attention is paid in government to generating revenue, which many officials believe comes only by raising the rate of taxation. Instead, they spend nearly all of their time focused on spending, or dividing up the pie or even worse shell games.
This is how elected officials or administrators can come to see the short term, such as eliminating the operating deficit on a facility that was always expected to run a deficit as more important than spending that amount on marketing the overall destination which would generate a return of six times that amount.
But short term thinking is not unique to elected governing boards. It is the same strategic failure that forces many publicly traded companies to sacrifice long term value for short term payouts.
The authors of “Where Boards Fall Short” contend that board members must focus on long term strategy. They further state that “what matters most is the quality and depth of the strategic conversations that take place.”
Unfortunately, being strategically inclined is rarely, if ever, given consideration when appointing members to governing boards probably because fewer than 14% of Americans are strategically inclined.
The word inclined is used because this is a talent, a propensity, more than a skill, making it difficult to learn or teach. I suspect, when they are strategically inclined, CEOs spend far more than the 1% to 3% of the time most CEOs do on average with strategy.
Unfortunately, the same is probably true of many governing boards, where members arrive late, leave early and complain about prep time to read materials and reports prior to the meetings, let along delve into strategic conversations.
Appointing or electing governing board members is as great a responsibility as serving on one. Here are a handful of important attributes to keep in mind:
- 30% of the entire workforce in America is truly engaged. Half just show up and go through the motions. Nearly 20% are troublemakers.
Rarely is someone who is disengaged in other areas of their life going to suddenly become engaged as a member of a governing board. Make being engaged a pre-requisite to appointment.
Beware of organizations who seek benchwarmers. Appoint board members who are strategically inclined and who will be eager students of the organization’s mission and environment.
- Recalibrate the size of governing boards. Experts now believe the size of a non-profit board functions best with five members. Poor governance increases with board size.
- Appoint board members who reflect the values of the organizations. If that is fund-raising, appoint fund-raisers. If that is volunteerism, appoint activists. If that is being information driven, appoint members who understand and appreciate analytics.
- Appoint members who understand and embrace ethics and compliance not people who see ethics only as a boundary to be skirted. There is a reason compliance is no longer housed in legal departments in corporations.
Most importantly, appoint people to governing boards who are or can be in synch with an organization’s culture, values and mission, who want to move it forward, not pull it back, and who know how to resist special interests including their own individual interests.