Rein in Smithsonian Business Ventures

PPPA 6034 Managing Nonprofit Boards

Session 6

Board Development and Reform

Key Topics

 

Building a board team

Board self-assessments

Board reform

 

Enlisting and Engaging Board Members

Enlistment process – criteria,

expectations, who invites

Orientation

The board book

Meeting formats: what matters most

(versus show and tell)?

Meeting planning and consent agendas

Ted’s board

Committee structure

Self assessments, retreats

Board culture – role of the chair

 

 

3

 

Some Causes of Board Dysfunction

False consensus bias

Social loafing

Groupthink

Social conformity

 

 

 

SOURCE: Trower, 2013

 

Principles of Board Thinking (Trower, 2013)

Metacognition – ability to analyze one’s own thought process (necessary to strike balance between existing world views and rethinking core assumptions)

Hedgehogs versus foxes – Hedgehogs view the world thorough one single lens; foxes draw on a large body of experience

Boardroom lions versus humble hounds – Lions relentless for change; hounds spend a lot of time on metacognition

Trower: Board needs a mix of hedgehogs and foxes, lions and humble hounds

Obstacles to critical thinking: fear of being wrong; being certain; diagnosis momentum; loss aversion; delusions of human rationality; framing

 

Five Dysfunctions of a Team Patrick Lencioni

 

Resolving Board Conflicts (Terry’s Hierarchy)

Purposes

 

Power

 

Structure and procedure

 

Resources

7

 

Board Self Assessments

BENEFITS

Move from micromanagement to focus on governance

Build more engaged board

Develop board teamwork

 

TIMING

Transition from working board to staff leadership

Transition in CEO or board chair

Passive, low-performing board

Strategic planning process

Disagreements or controversy

 

 

Board Self Assessment Options

Regular meeting (board improvement segment)

 

Mini-assessments (surveys)

 

Formal assessment/governance audit

(survey, consultant, retreat)

 

Individual Board Member Assessment/Evaluation

Board member letter of agreement/contract

Periodic or annual

On end of term

Self-evaluation and peer evaluation

Board chair assessment (by board members or consultant)

 

 

 

 

 

Various Assessment Instruments

 

 

AGB board self study

 

McKinsey assessment

 

Initiating and Managing Board Change

Identify champions and co-conspirators

(role of the chair)

 

Board-led [but CEO role (explicit or behind the scenes)?]

 

Strategic recruitment

 

Board education (articles, speakers, etc.)

BoardSource

AGB

Create task force or governance committee

 

Blue-ribbon commission or committee

 

Consultant

 

 

 

Trouble! Two Well known cases of board reform

 

 

 

American Red Cross – 2006

 

 

Smithsonian Institution – 2007

ARC Case, 2006

 

Why undertaken

Perceived performance failures after Katrina, Congressional criticism

Methodology

Held governance summit with experts, appointed 7-member panel to undertake governance audit

Focus of audit

Size and composition of board; organization and functioning of committees;

roles of board and management; audit practices

Key issues

Charter designate board chair as “principal officer,” confusion with President role

Charter says board “manages,” led to involvement in operations

Chapter reps on board (30 of 50) had chapter rather than national perspective

 

 

ARC Recommendations

Amend bylaws to clarify board role as strategic and governance oversight

Clarify that the board “oversees” management, does not manage

Focus board meetings on in-depth discussions

Reduce board size from 50 to 12-20

Change to self-perpetuating board; government officials to become advisory council rather than ex-officio members of the board

Redefine Nominating Committee as Committee on Governance and Board Development, to do regular assessments

Board gets to recommend board chair for appointment by POTUS

Say that board elects CEO (in past was nominated by chair, elected by board)

Redefine committees

Strengthen whistleblower and audit policies

Define Regional Chapters to oversee local chapters

Clarify role of local boards

ARC governance website

 

 

Smithsonian Governance Review, 2007

 

Why undertaken

Controversy over spending by previous Secretary, Congressional pressure

Methodology

Formed governance committee and independent review committee

Focus of review

Accountability and governance best practice

Key issues

Flow of information to the board

Access of CFO, General Counsel, and IG to the board

Audit, whistleblower, board oversight

 

Smithsonian Recommendations

Clarify role of Chancellor (U.S. Chief Justice) and chair of the board

Board to meet more regularly

Revise committees

Refine process for executive compensation

Nominating Committee to become Governance and Nominating Committee

CFO attend board meetings, have direct access

Annual public forum, increase input to the board

Rein in Smithsonian Business Ventures (to follow same policies on expenses)

Create dedicated staff office to support the board

Smithsonian governance website

(See also various GAO reports available on Web)

Closing Humor

 

 

 

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