By Eugene Fram Free Digital Image
Board cultures can be difficult to modify or change in for-profit and nonprofits. A recent McKinsey study demonstrated the strength of the board culture in three different levels of board operations—ineffective, complacent and striving. * Differentiated achievement seems to be largely dependent on four behaviors. (See bold type.) Centered on my experiences, they can be applied to nonprofit boards. At the least, the behaviors can motivate considerations for board modifications.
• There is a culture of trust & respect in the boardroom: Study data showing respondents’ agreement with the statement: 39% of ineffective boards; 66% of complacent boards and 88% of striving boards.
Trust and respect are also critical for nonprofit boards, but they are probably more difficult to achieve for several reasons. First, nonprofits are often seen as lacking efficiently and effectiveness because they operate on smaller budgets and are often housed in marginal physical facilities. In addition, a long-standing nonprofit tradition is for board members to become directly involved with operations. This leads to external perceptions of nonprofits needing managerial support.
Boards will trust management to a higher degree when managers can demonstrate they have the necessary abilities to meet challenges with care and insight.
Finally, nonprofit boards are less homogeneous in terms of director backgrounds since they represent a much broader base of society.
• Board & management-team members constructively challenge each other in meetings: Study data showing respondents’ agreement with the statement: 44% of ineffective boards; 53% of complacent boards and 76% of striving boards.
Nonprofit board environments are not well known for being challenging, but the potential really stands out in the for-profit sector—striving boards are about 31 points ahead of ineffective ones on this behavior. But with nonprofit board members being comprised of volunteers, this will require a huge cultural shift. “Going along to get along” is a common mantra in the nonprofit sector. Few nonprofit board member, through rigorous discussion, possibly leading to “no” votes, want to be the cause of internal conflict.
• The chair runs meetings efficiently and effectively: Study data showing respondents’ agreement with the statement: 37% of ineffective boards; 56% of complacent boards and 69% of striving boards. Among dozens of nonprofit boards with which I have interacted, the chairperson’s views receive a great deal of deference to avoid conflict. But note that there is value in choosing a chair who can lead meetings in an efficient and effective manner—69% of striving directors thought this a factor of success versus only 37% of those on ineffective boards.
• Board members seek out relevant information beyond what management provides, to deepen knowledge: Study data showing respondents’ agreement with the statement: 31% of ineffective boards; 59% of complacent boards and 62% of striving boards.
The tenor of the Sarbanes-Oxley Act (2002) called for for-profit directors to seek information beyond that which management provides. Again, note the wide data differences between ineffective and striving. In my experiences with nonprofit boards, the openness of management to having board members interact with staff below the C-Suite levels varies significantly. Some are open to it. Others who fear that such contact will lead to “end-runs”–staff will take grievances directly to board members. Since transparency and openness are board values in the 21st century, every nonprofit should have provisions for board members to seek information below the C-Suite level.
* http://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/toward-a-value-creating-board Note: The study does not list the criteria used to determine the three categories—ineffective, complacent, striving.