Better Board Governance. Is it the same for both business & nonprofit organizations?
Both Board Source in 2010 and the Charted Global Management Accountant (CGMA) in 2012 have issued reports on improving board governance. The former group focuses on nonprofit boards and the latter focuses on business boards globally. Both the nonprofit and business organization reports listed the following prime areas for board improvement or focus:The CGMA reportcalls for improved strategy development & risk analysis; better boardroom behaviors; better relationships between board & management. The Board Source report asks for improved focus on strategy, with less emphasis on operations; more board commitment, engagement, & attendance; better self-assessment, recruitment & development
Although the CGMA report does not differentiate the types (strategic vs. operational strategy) the “risk oversight” notation can indicate there is a need for greater board focus on long-term strategy. For nonprofit boards, the strategic side of planning is often neglected. There has been a decades-long board culture support for directors’ involvement in operational decisions, often leading to board micromanagement and less strategic interest.
Poor boardroom behaviors are specified in the Board Source report, but it can be hypothesized that many of the misbehavior patterns are also found within business boards. This is surprising since most of the business directors are independent ones who receive compensation.
Although the Sarbanes Oxley Act strongly suggests that business directors develop interpersonal relationships with managers to better understand organization operations, it doesn’t seem to be happening on an international basis, according to the CGMA analysis. Relatedly, for nonprofits, there seems to be a need for more board self-assessment and development that can quietly highlight inadequate relationships.
There are certainly differences between nonprofit and for-profit boards in terms of mission, vision and values, but both boards appear to need to improve in the same way operationally.
Note: Only 8% of the Board Source Sample was international respondents. For an independent conclusion that is similar, see pp 239-240 (2011) of the third edition of Policy vs. Paper Clips.