What do organizations demand of governing

Governance as Leadership

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Governance as Leadership Reframing the Work of Nonprofit Boards

RICHARD P. CHAIT

WILLIAM P. RYAN

BARBARA E. TAYLOR

John Wiley & Sons, Inc.

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This book is printed on acid-free paper. ∞

Copyright © 2005 by BoardSource, Inc.All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photo- copying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through pay- ment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax 978- 646-8600, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, 201-748-6011, fax 201-748-6008.

This publication is designed to provide accurate and authoritative informa- tion in regard to the subject matter covered. It is sold with the understand- ing that the publisher is not engaged in rendering professional services. If professional advice or other expert assistance is required, the services of a competent professional person should be sought.

Wiley also publishes its books in a variety of electronic formats. Some con- tent that appears in print may not be available in electronic books. For more information about Wiley products, visit our web site at www.wiley.com.

Library of Congress Cataloging-in-Publication Data:

ISBN 0-471-68420-1

Printed in the United States of America.

10 9 8 7 6 5 4 3 2 1

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We collectively dedicate this book to the memory of Judith O’Connor.

In addition, we offer these personal expressions of gratitude:

In memory of Henry W. Sherrill, my governance guru.

Richard Chait

To Sue, Nick, and Peter, for governance respite. William Ryan

Always for David. Barbara Taylor

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vii

Contents

about boardsource x about the authors xi preface xv acknowledgments xxv

chapter 1 First Principles 1 Principle One: Nonprofit Managers Have Become Leaders 2 Principle Two:Trustees Are Acting More Like Managers 4 Principle Three:There Are Three Modes of Governance,

All Created Equal 6 Principle Four:Three Modes Are Better Than Two or One 8

chapter 2 Problem Boards or Board Problems? 11 Problems of Performance 12 From Problems of Performance to Problems of Purpose 15

Some Official Work Is Highly Episodic 17 Some Official Work Is Intrinsically Unsatisfying 18 Some Important Unofficial Work Is Undemanding 20 Some Unofficial Work Is Rewarding but Discouraged 22

The Challenge of Reform 23

chapter 3 Type I Governing: Fiduciary 33 Type I Governing 34 The Type I Mental Map 38 The Type I Board 40 Assessing the Problems 45 Conclusion 49

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chapter 4 Type II Governing: Strategic 51 Nonprofits Enter the Marketplace 52 Boards and Formal Strategy:A Type I Approach

to Type II Work 54 Strategic Disillusionment 56 Strategic Thinking: Beyond a Type I Mindset 62 Governing in Type II Mode 65 The Evolution of Strategic Governance 66 Processes and Structures for Type II Governing 68 Implementing Strategy 75 Why Not Just Types I and II? 76

chapter 5 Type III: Generative Thinking 79 The Power of Generative Thinking in Organizations 80 Inside the Black Box of Generative Thinking 82 Toward Generative Governing 89

Leadership as Governance: Executives Displace Trustees 90 Governance by Default:Trustees and Executives Disengage 93 Governance by Fiat:Trustees Displace Executives 94 Type III Governance:Trustees and Executives Collaborate 94

Can Boards Do It? 99

chapter 6 Type III: Generative Governing 101 Using a Type III Mental Map of the Organization 104 Recognizing Generative Landmarks 107

Generative Landmarks 107 Embedded Issues 108 Spotting “Triple Helix” Situations 109

Working at the Boundary 111 Working at the Internal Boundary 111 Working at the External Boundary 115

Looking Back:The Future in the Rear-View Mirror 116 Deliberating and Discussing Differently 119

The Cardinal Rule: Suspend the Rules 120 Promoting Robust Dialogue 124

Mind the Mode 130 The Payoffs 131

viii CONTENTS

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chapter 7 Working Capital That Makes Governance Work 137

Intellectual Capital 142 Reputational Capital 146 Political Capital 150 Social Capital 155 Capitalizing on Trustees 161

chapter 8 Where to Next? 163 Is the Game Worth the Candle? 163 Diagnostics 167 “Attractive Nuisances” 174 A New Covenant 179 Coming Full Circle 181

references 183

index 189

CONTENTS ix

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x

About BoardSource

BoardSource is the premier resource for practical informa- tion,new ideas, and leadership development for board members of

nonprofit organizations worldwide. Through highly acclaimed

programs and services, BoardSource enables nonprofit organiza-

tions to fulfill their missions by helping build strong and effec-

tive boards.As the world’s largest, most comprehensive publisher

of materials on nonprofit governance, BoardSource offers a

wide selection of books, videotapes, CDs, and online tools.

BoardSource also hosts a biennial Leadership Forum, bring-

ing together governance experts, board members, and chief

executives of nonprofit organizations from around the world. In

addition to workshops, training, and our extensive Web site,

BoardSource governance consultants work directly with non-

profit leaders to design specialized solutions for organizations of

all sizes working in diverse communities around the world. For

more information, please visit www.boardsource.org, e-mail

mail@boardsource.org, or call (202) 452-6262.

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xi

About the Authors

richard p. chait

Richard Chait, a professor at the Harvard Graduate School of

Education, has studied nonprofit governance for more than 20

years. He has coauthored two books on the subject, Improving the

Performance of Governing Boards (Oryx Press, 1996) and The Effec-

tive Board of Trustees (Oryx Press, 1993), as well as numerous arti-

cles including two in the Harvard Business Review, “The New

Work of Nonprofit Boards” (September/October, 1996) and

“Charting the Territory of Nonprofit Boards” (January/February,

1989). Chait also conducts research on faculty work life and aca-

demic leadership, most recently editing a volume on The Ques-

tions of Tenure (Harvard University Press, 2002).

Dr. Chait is a member of the Board of Directors of

BoardSource and a trustee and member of the executive com-

mittee of the governing board of Wheaton College (MA).

He was previously a trustee of Goucher College (MD) and

Maryville College (TN). Chait has served as a consultant to the

boards and executives of more than a hundred nonprofit organ-

izations, particularly in education and the arts. In 2004, he was

named one of Harvard University’s “outstanding teachers.”

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william p. ryan

Bill Ryan is a consultant to foundations and nonprofit organi-

zations and a research fellow at the Hauser Center for Nonprofit

Organizations at Harvard University. His work focuses on non-

profit organizational capacity, primarily among human-service

organizations. He has explored how several forces—including

nonprofit access to capital, foundation grantmaking practices,

competition with for-profit firms, and nonprofit governance—

shape the capacity of nonprofits to deliver on their missions.

Ryan is author or coauthor of a number of articles on these

topics, including “The New Landscape for Nonprofits” and

“Virtuous Capital:What Foundations Can Learn from Venture

Capitalists” (both in Harvard Business Review), as well as High

Performance Nonprofit Organizations (John Wiley & Sons, 1999).

Before beginning his consulting practice in 1993, he worked in

urban planning for nonprofit and government agencies in New

York City.

barbara e. taylor

Barbara Taylor is a senior consultant with the Academic Search

Consultation Service, a nonprofit executive search firm whose

clients include colleges, universities, and education-related non-

profits. Until 1996, Taylor was, for twelve years, director and

then vice president for programs and research at the Association

of Governing Boards of Universities and Colleges, an organiza-

tion that serves trustees of higher education institutions.

Dr.Taylor is the author or coauthor of eight books, including

Improving the Performance of Governing Boards (Oryx Press, 1996);

Strategic Indicators for Higher Education (Peterson’s, 1996); and The

xii ABOUT THE AUTHORS

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Effective Board of Trustees (Oryx Press, 1993). She has also pub-

lished numerous papers, book chapters, and case studies concer-

ning governance, strategic planning, and institutional financial

condition, including the Harvard Business Review articles,“Charting

the Territory of Nonprofit Boards” and “The New Work of the

Nonprofit Board.” She has consulted with more than 100 non-

profit organizations on issues of governance, board-CEO and

board-staff relations, and organizational assessment and plan-

ning.Taylor is a trustee emeritus of Wittenberg University.

ABOUT THE AUTHORS xiii

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xv

Preface

Turn back the clock to 1986. One of the authors had an audience with a then education editor of the New York Times

as part of a larger effort to kindle media interest in a study this

researcher had just launched on college boards of trustees. Less

than five minutes into the presentation, the editor interrupted

to proclaim,“Governance is a yawner.What else are you work-

ing on?”

Today, governance has become a front-page story propelled

by a steady flow of articles on acquiescent and negligent corpo-

rate boards, and unbridled (and often unethical) CEOs.A com-

posite picture emerges that depicts boards of directors as insular,

incestuous, and derelict. Nonprofit boards are under attack as

well. Just within the last year, for instance, there have been noto-

rious accounts about self-serving boards of family foundations,

a university board that bungled a presidential search at great

embarrassment and great cost ($1.8 million to settle with the

president-elect), and a prominent independent school board

that paid its headmaster a salary most outsiders regarded as inde-

fensibly excessive.

In the wake of these various scandals, it is safe to say that

almost everyone acknowledges the importance of governance,

at least in theory.What is less clear is whether and how to make

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governing boards important in practice. BoardSource (formerly

the National Center for Nonprofit Boards) has been at the

forefront of these issues with a particular emphasis on feasible,

valuable steps that trustees and CEOs can take to improve in-

stitutional governance.We were invited by BoardSource to con-

sider whether nonprofit governance could benefit from fresh

ideas as a complement to the organization’s work on best prac-

tices. It is this topic, not governance mischief, which is the focal

point of this book. In particular, we were motivated by four

questions:

1. Why is there so much rhetoric that touts the significance

and centrality of nonprofit boards, but so much empirical

and anecdotal evidence that boards of trustees are only

marginally relevant or intermittently consequential?

2. Why are there so many “how-to-govern” handbooks,

pamphlets, seminars, and workshops, but such widespread

disappointment with board performance and efforts to

enhance board effectiveness?

3. Why do nonprofit organizations go to such great lengths

to recruit the best and brightest as trustees, but then per-

mit these stalwarts to languish collectively in an environ-

ment more intellectually inert than alive, with board

members more disengaged than engrossed?

4. Why has there been such a continuous flow of new ideas

that have changed prevailing views about organizations

and leadership, but no substantial reconceptualization of

nonprofit governance, only more guidance and exhorta-

tion to do better the work that boards are traditionally

expected to do?

After many twists and turns, detours and dead ends, these

four questions precipitated this book, one product of a larger

xvi PREFACE

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Governance Futures Project under the aegis of BoardSource

and the Hauser Center for Nonprofit Organizations at Harvard

University.

The book combines two familiar stories—one about leader-

ship and the other about governance—into a new story about

governance as leadership. Strangely enough, governance and

leadership have not been linked before, almost as if each con-

cept has a magnetic field that repels the other. (And remember

that it is like poles, not opposites, that repel.) Nonprofits have

organizational leaders and volunteer trustees.The former lead,

the latter govern.We offer a different formulation: governance

as leadership.

one river, not two streams

A vast intellectual enterprise—with thousands of trade and

scholarly books and hundreds of professional development pro-

grams—has popularized the leadership story, generated new

theory, and inspired new practices. The leadership story has

many contributors: academic disciplines and professions as var-

ied as psychology, sociology, political science, management, and

education; reflections of successful practitioners; analyses of case

studies; and comparative studies across cultures and nations.

From these multiple sources, society has gained a far more

sophisticated and complicated appreciation of leadership.At the

very least, leadership is no longer viewed simplistically, based

upon a single style, model, or aptitude (for example, intelli-

gence, forcefulness, persuasiveness, or charisma). Instead, leader-

ship has become a dynamic, multidimensional concept.

Similarly, the perfect organization was once defined as a

smooth, efficient bureaucracy. Notions are more nuanced now.

Both scholars and practitioners recognize, for instance, that

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organizations are also cultures (Deal and Kennedy, 1982), polit-

ical systems (Baldridge, Curtis, Ecker, and Riley, 1978; Julius,

Baldridge, and Pfeffer, 1999), dynamic organisms (Morgan,

1997), and open systems within a larger, competitive environ-

ment (Scott, 2003). Organizations also can be described meta-

phorically, for example, as theater (Bolman and Deal, 1997),

organized anarchies (Cohen and March, 1974), learning organ-

izations (Senge, 1990), loosely coupled systems (Weick, 1976),

and cybernetic systems (Birnbaum, 1988a).

Now think about the language and metaphors of gover-

nance.They are notably impoverished, a sure sign that the fer-

tile conversations about leadership and organizations have not

yet incorporated governance or addressed the implications for

boards. Currently, there is a narrow conception of boards as

instruments of accountability and conservators (and sometimes

suppliers) of tangible assets. The available images are mostly

operational (for example, fiduciaries or authorizers) or unfavor-

able (for example, rubber stamps or micromanagers).There is no

intellectual ferment that reconsiders trusteeship in light of new

knowledge about leadership and organizations, as if, by analogy,

breakthroughs in genetics had no relevance to the practice of

medicine. In fact, trusteeship—conceptually and practically—

seems to be remarkably unaffected by several generations of

learning about leadership and organizations.

Most literature on trusteeship can be fairly categorized as

either prescriptive or hortatory. There is little, if any, vibrant

debate about what constitutes governance. The floor seems

open primarily to relatively lifeless discussions about how to

govern. Rather than challenge fundamental and popular

notions—the very method that has advanced knowledge about

leadership and organization—the tendency with governance

has been to clarify and codify conventional practice.The con-

xviii PREFACE

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versation centers more around lists of “dos and don’ts” than

around compelling or competing concepts of governance.While

the concept of leadership has been illuminated, the concept of

trusteeship has remained comparatively dim.

Given the very different epistemologies of leadership (and, by

extension, organizations) on the one hand, and governance on

the other hand, one might never guess that both stem from the

same conceptual headwaters. Leadership theory runs swift and

deep, the river banks crowded with animated commentators

and interested observers. Governance theory trickles along the

shallower backwaters; it attracts little notice and even fewer

devotees. One stark statistic highlights the disparity: Barnes

& Noble (Barnes & Noble, 2004) lists 27,220 books with the

keyword “leader”or “leadership,”compared to 2,349 with the key-

word “trustee,”“trusteeship,” or “governance”—a 12:1 ratio.

Despite the differential output, leadership and governance are

closely related, and the more clearly this linkage is seen, the

brighter the prospects will be for better nonprofit governance.

It is in this spirit that we treat governance and leadership not

as separate stories that shape two distinct areas of practice, but as

two intertwined plot lines in a much larger story about modern

nonprofit organizations.We do not invent new theories about

leadership or organizations; rather, we use these theories as cat-

alysts to produce new concepts and practices about nonprofit

governance. We turn next to who might find this larger story

and these new notions of interest.

target audiences

All three authors of this book are students of governance, con-

sultants to boards, and trustees of nonprofit organizations. And

at one time or another, we all worked as full-time administra-

PREFACE xix

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tors in not-for-profit institutions. Based on these experiences,

we can explore governance from several angles and address the

interests and concerns of people in all four of these roles.

While we aim to engage the interests of scholars and board

consultants, the target audiences for this book are the nonprofit

trustees, CEOs, and senior staff who meet Donald Schon’s def-

inition of reflective practitioners: people who “often think

about what they are doing, sometimes even while doing it”

(1983).These individuals, Schon continues:

turn thought back on action and on the knowing which is implicit in action . . . There is some puzzling, or troubling, or interesting phenomenon with which the individual is trying to deal.As he tries to makes sense of it, he also reflects on the under- standings which have been implicit in his action, understandings which he surfaces, criticizes, restructures, and embraces in further action (1983).

In other words, this book will appeal most to nonprofit trustees

and executives inclined not just to do governance, but to under-

stand it as well—not to gain knowledge for its own sake but

because they realize that a better understanding of governance

leads to governing better. This, in turn, circles back to deeper

understanding.As David Smith observed in Entrusted:The Moral

Responsibilities of Trusteeship, effective boards “must become a

reflective community of interpretation” where trustees “can and

do talk seriously about organizational purpose” (1995) and, we

would add, about the nature of governance. Conversely, trustees

and staff who regard governing as little more than bright peo-

ple using common sense and doing what comes naturally prob-

ably need read no further.

This book takes trustees and trusteeship seriously.We believe

that board members want more than simple recipes for better

xx PREFACE

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trusteeship (for example, strengthen standing committees),

deserve more than menus of maxims (for example, the board

sets policy that management implements), and need more than

a governance maven’s advice du jour (for example, place the

organization’s mission statement on the back of business cards

for trustees). Based on extensive personal experience with non-

profit boards throughout the sector, we are confident that

trustees, with remarkably few exceptions, can understand and

apply new thinking about governance. Governance does not

need to be oversimplified; most board members—as professionals,

executives, or community leaders—have already demonstrated

the ability to grasp new ideas and handle complex situations.

Perhaps the greatest value will accrue to boards of trustees

that read this book in tandem with their organization’s CEO

and then consider together what changes would improve the

quality and centrality of institutional governance. Boards and

CEOs are intertwined and interdependent. And while power

struggles between the board and the chief executive officer

may grab the headlines, more collaborative governance part-

ners generally grab the brass ring. We do not advance here

more precise delineations of the relative power and exclusive

provinces of boards and executives. Countless efforts to do so

have yielded either no fruit or bitter fruit because attempts to

redistribute formal authority between the board and the CEO

usually precipitate a zero-sum stalemate. However, initiatives to

expand leadership opportunities for the board and the CEO, as

we propose, promote better governance. At worst, challenges

will not arise when a board or a CEO has too much authority,

but rather when an organization has abundant sources of

leadership to tap—a problem most nonprofits would welcome

gladly.

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We address this book to the not-for-profit sector at large, not

at any one particular segment such as arts, education, environ-

ment, health care, or social services. While there certainly are

differences among nonprofit organizations, for instance, history,

mission, markets, strategy, and scale, the fundamental nature of

governance and the essence of trusteeship are quite similar, if

not universal, to the sector.Therefore, we write to a broad audi-

ence: nonprofits with volunteer boards and a professional staff.1

structure of the book

This book is divided conceptually into three parts.This and the

next chapter provide a backdrop that sets the stage to view gov-

ernance as tantamount to leadership. The next four chapters,

which constitute the second part, describe the three modes of

governance which, taken together, constitute governance as

leadership. The first two of these four chapters cast familiar

scenery in a new light as we discuss the fiduciary and strategic

modes of governing.The next two place the generative mode,

a less familiar concept of trusteeship, at center stage. In the final

section of the book, we shift from ideas to action, and focus on

practical, constructive steps that boards can take, with senior

staff, to work effectively in the generative mode and to add

greater value to the institutions they govern.

xxii PREFACE

1The book does not address all-volunteer organizations and political associations. We also do not consider policies, laws, and regulations de- signed to demand better governance from nonprofit boards. While we appreciate the value (and limitations) of that approach, we focus on inter- nally generated efforts boards can take toward the same objective: improved governance.

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Chapter 1 outlines four “first principles” that emerged as

important premises and pervasive themes of the book. We

urge readers to start here as these ideas underlie all the chapters

that follow.

Chapter 2 confronts and redefines the problems with non-

profit boards. Whereas most literature on trusteeship addresses

the problem of inadequate performance of boards, we treat this

as symptomatic of a very different and more critical challenge:

a problem of purpose.

Chapter 3 examines the most basic work of the board: the

fiduciary mode. We consider the need to do fiduciary work,

while avoiding the trap of becoming a fiduciary board, mired in

the most traditional mode of governing. This chapter suggests

that there is more to governing than stewardship of assets and

more to fiduciary work than most boards appreciate.

Chapter 4 concerns the strategic mode, or the board’s work

vis-à-vis organizational strategy. We start with the more con-

ventional view—boards as overseers of formal strategy—and

then propose more consequential work where standard struc-

tures and processes are modified in order to focus the board on

strategic thinking and action.

Chapter 5 introduces the concept of generative work—work

that provides a new sense of the problems and opportunities at

hand. We discuss the power of generative work and three

processes by which to do it. The chapter makes the case that

generative work, usually subsumed under the rubric of leader-

ship, actually constitutes the essence of trusteeship—work best

performed by the board in concert with the CEO.

Chapter 6 marks the transition from concept to practice,

from generative work to generative governance. Here we pres-

ent a set of integrated approaches to move up the generative

PREFACE xxiii

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curve where boards can do more work of greater import.

Governing in the generative mode means looking for clues,

operating at the organization’s boundaries, framing issues, en-

gaging the collective mind of the board in robust discussions,

being forensic as well as futuristic, and tracking unconventional

indicators of organizational performance.

Chapter 7 identifies the most valuable asset mix that trustees

can contribute to governance as leadership. The chapter dis-

cusses four forms of capital—intellectual, reputational, political,

and social—that trustees offer, and suggests how to generate and

deploy this capital at a high rate of return to the organization.

In the final chapter, we offer executives and trustees some

advice for starting their work with governance as leadership.

Because most organizations are not starting with a blank slate,

these final thoughts sketch the challenge of integrating gover-

nance as leadership into the organization’s current structures

and culture.

xxiv PREFACE

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xxv

Acknowledgments

Quite simply, without the late Judith O’Connor, then CEO and President of BoardSource, there would have been no

Governance Futures Project and no book entitled Governance as

Leadership. Judy recognized the need to infuse nonprofit gover-

nance with new concepts. She assembled the project team,

acquired the necessary resources, and offered invaluable advice

and constant encouragement.

We were the beneficiaries of wise counsel from others as

well, especially the Project Advisory Group, which included:

Christine Letts and Mark Moore of the Hauser Center for

Nonprofit Organizations at Harvard University, Judith Saidel

from the State University of New York at Albany, and Marla

Bobowick from BoardSource.We also profited from instructive

conversations with an array of noted theorists on leadership,

organizations, and nonprofit governance: Alan Altshuler, James

Austin, L. David Brown, Marion Fremont-Smith, Howard

Gardner, Steven Greyser, Daniel Halperin, James March, Henry

Mintzberg, Gareth Morgan, Charles Nesson, Jeffrey Pfeffer, Fred

Schauer, Frances Van Loo, and Christopher Winship. Early in the

project, we convened some very wise practitioners to “test

drive” a “concept car” we had designed. Based on the sage advice

we received from Susan Dentzer,Thomas Gottschalk, Raymond

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Henze III,Thomas Jarom, Harold Jordan, David Nygren, Roger

Raber, and Gary Walker, we returned to the drawing board with

many improved ideas.

Early in our efforts to reassess the problems and potential of

boards, we gained from the insights of the participants in the

California Board Summit, cosponsored by BoardSource and

the California Management Assistance Partnership. A group of

experienced consultants to nonprofit boards assisted us in a sim-

ilar pursuit: Mike Allison, Bob Andringa, Nancy Axelrod, Mike

Burns, Denise Cavanaugh, Paul Connolly, Bruce Lesley, Chuck

Loring, Fred Miller, Richard Novak, and Michela Perrone.

We are especially indebted to Jared Bleak, a recent doctoral

student at the Harvard Graduate School of Education and now

Dr. Bleak. Jared somehow managed to chronicle the two dozen

or so disorderly discussions we had as a team over the life of the

project. He also made important substantive contributions to

our deliberations, tracked down scores of references and, not

least, always made sure we, quite literally, had food for thought.

Jared did all this with unfailing excellence, diligence, good will,

and sharp wit.

As we approached the deadline for the manuscript, we were

fortunate to enlist Megan Tompkins, an unusually able and

meticulous graduate student at the Harvard Graduate School of

Education, to fill in the blanks on many references and citations.

Finally, we are grateful for the generous support of The

David and Lucile Packard Foundation,The Atlantic Philanthro-

pies, the Surdna Foundation, and the W.K. Kellogg Foundation.

xxvi ACKNOWLEDGMENTS

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1

First Principles

We present here a set of first principles—basic premises that underlie the chapters that follow. Much like the overture to a

Broadway show that can only be written after the composers

have finished the score, we developed these principles toward

the end, not the start, of the work that produced this book.

These were not preconceived notions that generated predeter-

mined content.To the contrary, this chapter appears first but was

actually written last. We were only able to discern some first

principles retrospectively because the propositions emerged as

we discussed and drafted the other chapters. Only then did we

notice some familiar refrains.

There are two ironies here. First, we maintain in Chapter 5

that organizations discover “emergent” strategies as well as

design “deliberate” or planned strategies. Strategies, in effect,

sneak up on organizations much as first principles sneak up on

authors. Second, we contend in Chapter 5 that effective gover-

nance rests heavily on a board’s capacity for retrospective “sense-

making”—acting and then thinking,making sense of past events

to produce new meanings.We arrived at a new construct, gov-

ernance as leadership, by writing and then reflecting, reframing,

and revising—and by rethinking where governance stands today

and why.While we never expressly intended to do so, the way

chapter 1

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we worked and the sense we made of governance echo the leit-

motif of this book.The four principles summarized here distill

recurrent themes and foreshadow arguments amplified in other

chapters. To return to the analogy of the Broadway musical,

these synopses are a medley, not the score.

principle one: nonprofit managers have become leaders

Nonprofit managers are not what they used to be, and most

board members would probably respond “Thank goodness.”

Historically, the stereotypical image of a nonprofit administrator

was a well-intentioned “do-gooder,” perhaps trained as a social

worker, educator, cleric, artist, or physician.The most successful

practitioners—utterly unschooled about management, finances,

investments, strategies, labor relations, and other “real world”

realms—reluctantly, and sometimes accidentally, assumed greater

managerial responsibility and eventually ascended to the top

of the organization.Yesterday’s naive nonprofit administrator or

executive director has become today’s sophisticated president

or CEO, titles that betray changes in the stature, perception, and

professionalism of the positions. (Likewise, staff have become

“line officers” with such businesslike titles as vice president of

marketing, strategy, technology, or knowledge management.)

Many executives have earned graduate degrees in nonprofit

management from reputable universities; even more have

attended executive education seminars and institutes on these

same prestigious campuses. More important, nonprofit execu-

tives have acquired what formal education alone cannot confer:

standing as organizational leaders (a status often underscored by

the compensation package). As a result, trustees, employees,

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clients, and donors expect far more of nonprofit CEOs today

than a genial personality, moral probity, managerial acumen, and

a passionate commitment to the organization’s social mission.

Stakeholders, in a word, expect leadership.

Constituents expect nonprofit CEOs to articulate clearly

and persuasively the organization’s mission, beliefs, values, and

culture. Both the process and the substance should galvanize

widespread commitment toward these ends. With input from

stakeholders inside and outside the organization, leaders are

expected to shape agendas, not impose priorities; to allocate

attention, not dictate results; and to define problems, not man-

date solutions. These expectations we now have for leaders

closely resemble conventional notions of governing.

In the not-for-profit context, governing means, to a sub-

stantial degree, engaging in these very activities. In theory, if not

in practice, boards of trustees are supposed to be the ultimate

guardians of institutional ethos and organizational values.Boards

are charged with setting the organization’s agenda and priori-

ties, typically through review, approval, and oversight of a stra-

tegic plan. Boards are empowered to specify the most important

problems and opportunities that management should pursue.

If this logic holds, as we contend, then many nonprofit execu-

tives are not only leading their organizations, but by practicing

this new version of leadership, they are actually governing them

as well.

The transition from nonprofit administrators to organiza-

tional leaders has been almost universally heralded as a positive

development.Almost everyone touts the value of leaders and, in

any case, that is not at debate here. If, however, managers have

become leaders, and leadership has enveloped core elements of

governance, then a profound question arises: What have been

FIRST PRINCIPLES 3

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4 GOVERNANCE AS LEADERSHIP

the consequences to boards as the most powerful levers of gov-

erning have migrated to the portfolio and purview of leaders?

principle two: trustees are acting more like managers

While nonprofit managers have gravitated toward the role of

leadership, trustees have tilted more toward the role of man-

agement. The shift has occurred because (as described in the

Preface) trusteeship, as a concept, has stalled while leadership, as

a concept, has accelerated.The net effect has been that trustees

function, more and more, like managers.

This will no doubt strike many as an unlikely claim since the

number one injunction of governance has been that boards

should not meddle or micromanage. Despite this oft-repeated

admonition, much of the prescriptive literature on trusteeship

actually focuses squarely on operational details: budgets, audits,

facilities, maintenance, fundraisers, program reviews, and the

like.To discharge that work, most boards structure committees

around the portfolios of line officers: finance, development,

government relations, program evaluation, and customer/client

relations, for example. Moreover, management competence typ-

ically ranks high on the list of desired attributes of prospective

trustees. Nonprofits usually want a Noah’s ark of professional

experts.As a result, many boards resemble a diversified consult-

ing firm with specialties in law, labor, finance, marketing, strat-

egy, and human resources. Constructed and organized in this

way, boards are predisposed, if not predestined, to attend to

the routine, technical work that managers-turned-leaders have

attempted to shed or limit.

With sophisticated leaders at the helm of nonprofits, a sub-

stantial portion of the governance portfolio has moved to the

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executive suite.The residue remains in the boardroom.This sur-

prise twist in the story line suggests that the real threat to non-

profit governance may not be a board that micromanages, but a

board that microgoverns, attentive to a technical, managerial ver-

sion of trusteeship while blind to governance as leadership.

This quandary of migratory governance could be viewed as a

winner-take-all joust between the CEO as the leader and the

board as a source of leadership. Or the problem could be framed

as a zero-sum contest in which trustees must forego the “bread

and butter,” canonical components of governance (for example,

finances, facilities, strategy, and development) in order to reclaim

from executives a significant measure of influence over the

most potent facets of governance (for example, mission, values,

beliefs, culture, agendas). However, the formulation of gover-

nance as leadership provides a more affirmative and constructive

approach that expands the pie, provides more occasions and

levers for leadership, and enhances the trustees’ value to the organ-

ization. Just as significantly, governance as leadership enhances

the organization’s value to trustees. Board members will become

more fulfilled and less frustrated as opportunities multiply for

meaningful engagement in consequential issues. Toward that

end, governance must be recast from a fixed and unidimensional

practice to a contingent, multidimensional practice with three

distinct yet complimentary modes. In other words, governing is

too complicated to reduce to simple aphorisms, however seduc-

tive, like “boards set policies which administrators implement”

or “boards establish ends and management determines means.”

Although new when applied to governance,“complexity” is

now routinely accepted in other realms. In fact, “complexity

science” (Zimmerman, Lindberg, and Plsek, 1998) and “com-

plex systems” (Scott, 2003) have already entered the lexicon of

organizational behavior. There are two obvious analogues to

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6 GOVERNANCE AS LEADERSHIP

governance. First,“intelligence” once denoted analytical horse-

power. Then, Howard Gardner introduced the concept of

“multiple intelligences” (1983) which conceptualized personal

competence as a varied repertoire. Intelligence could be denom-

inated as linguistic, logical, spatial, kinesthetic, musical, inter-

personal, and intrapersonal.1 Second, leadership over the years

has been (almost sequentially) associated with certain physical

attributes and personality traits, then with power and influence,

then with specific realms of expertise (for example, interper-

sonal skills, analytical skills, financial acumen), and then with

particular activities (for example, planning, decision making).

Now both theoreticians and practitioners realize that effective

leaders are “cognitively complex” (Birnbaum, 1992), that is,

able to think and work effectively and concurrently in multi-

ple modes: for instance, as managers, entrepreneurs, politicians,

visionaries, analysts, learners, icons, and culture makers.

Effective leaders move seamlessly from mode to mode as

conditions warrant. Executives do not simply learn one mode

or even two and then employ that mode regardless of the situ-

ation. Regrettably, trustees often do just that.

principle three: there are three modes of governance, all created equal

We posit that there are three modes of governance that com- prise governance as leadership:

• Type I—the fiduciary mode, where boards are concerned

primarily with the stewardship of tangible assets

1Gardner (1993) later proposed naturalist, spiritual, and existential intelli- gence and Goleman (1995) popularized “emotional intelligence.”

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• Type II—the strategic mode, where boards create a strategic

partnership with management

• Type III—the generative mode, where boards provide a less

recognized but critical source of leadership for the organi-

zation.

When trustees work well in all three of these modes, the board achieves

governance as leadership.

Each type emphasizes different aspects of governance and

rests on different assumptions about the nature of organizations

and leadership. However, all three types are equally important; each

fulfills vital purposes.Types I and II are, at present, the dominant

modes of nonprofit governance; Type III is the least practiced

(see Exhibit 1.1).

Type I constitutes the bedrock of governance—the fiduciary

work intended to ensure that nonprofit organizations are faith-

ful to mission, accountable for performance, and compliant with

FIRST PRINCIPLES 7

Governance as

Leadership

Ty pe

I

Fi du

ci ar

y Type II

Strategic

Type III Generative

exhibit 1.1 governance as leadership: the governance triangle

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relevant laws and regulations. Without Type I, governance

would have no purpose. If a board fails as fiduciaries, the organ-

ization could be irreparably tarnished or even destroyed.Type II

concerns the strategic work that enables boards (and manage-

ment) to set the organization’s priorities and course, and to

deploy resources accordingly. Without Type II, governance

would have little power or influence. If a board neglects strat-

egy, the organization could become ineffective or irrelevant.

Types I and II are undeniably important forms of governance.

However, boards that only oversee assets and monitor strategy

do work that is necessary but not sufficient to maximize the

value of governance (generally) and the value of trustees (more

particularly).

As one moves through the chapters that follow, it may appear

that we assign greater importance to the generative mode or, at

a minimum, that we position Type III as the first among equal

modes. In truth, we assert no hierarchy of modes, and we do not

advocate that boards abandon or neglect Types I and II.To the

extent that we elevate Type III to prominence (and we do

devote more attention to Type III), we do so not because Type

III trumps I and II, but because the generative mode is less rec-

ognizable to nonprofit trustees and executives than the other

modes and thus requires more elaboration.The disproportion-

ate attention owes to the relative novelty, not the relative worth,

of Type III vis-à-vis Types I and II.

principle four: three modes are better than two or one

A board’s effectiveness increases as the trustees become more

proficient in more modes. If the term “triple threat”—high

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praise for an athlete—did not carry a negative connotation

when attached to governing boards, we would adopt this phrase

to convey the idea that exemplary boards perform skillfully in

all three modes. Instead, we make do with “tri-modal.”

In any case, a board that excels in one mode (or two) but

flounders in another one (or two) will add far less value to an

organization than a board that ably executes all three.Trustees

quick to exhort the staff to outwit, outwork, and even out-

spend the competition might consider an additional tactic:

outgovern the competition. The greatest comparative advantage

will accrue to “tri-modal” boards. In order to create more value,

boards of trustees need to “cross-train” so that the “muscle mem-

ory” of one mode does not dominate to the detriment of the

others. (This is one reason why world-class weightlifters are

usually inept basketball players.) When boards overemphasize

one mode to the exclusion of others (a common problem), the

net results are worse, not better, governance.

The majority of boards work most of the time in either the

fiduciary or strategic mode. These are comfortable zones for

trustees. Nonetheless, many boards neither overcome the inher-

ent challenges that Types I or II pose nor capitalize on the occa-

sional leadership opportunities that fiduciary and strategic

governance present.As a result, some of the board’s potential to

add value goes untapped, despite the trustees’ familiarity with

the mode. However, there may be an even steeper price to pay

if boards overlook or underperform Type III work because,

unlike Types I and II where there are moments for leadership,

the generative mode is about leadership. It is the most fertile

soil for boards to flower as a source of leadership.

Chapters 3 and 4 on Types I and II challenge boards to do

better at what boards normally do; no one should discount the

FIRST PRINCIPLES 9

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value of continuous, incremental improvements as applied to

trusteeship. By contrast, Chapters 5 and 6 on Type III invite

(some might say compel) boards to invent new governance

practices. Taken together, all three modes encourage nonprofit

trustees and executives to combine ideas and practices, some

familiar, others novel, into a new approach: Governance as

Leadership.

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11

Problem Boards or Board Problems?1

There is no question that the nonprofit sector has a board problem. Frustration with boards is so chronic and widespread

that board and troubled board have become almost interchange-

able.When we describe boards it is often to distinguish one bad

one from another: Letterhead board or micromanaging board?

Founder’s board or rubber-stamp board? And when a nonprofit

executive says,“I have a really good board,” savvy listeners know

this often means “I have a compliant board.” The confessions

of board members are equally disheartening. Many find serving

on boards to be an exercise in irrelevance, summed up in two

questions many trustees ask themselves: “Why am I here?” and

“What difference do I make?” Of course, there is more at stake

than boredom. The board appears to be an unreliable instru-

ment for ensuring accountability—the outcome society most

wants from it. Behind every scandal or organizational collapse

is a board (often one with distinguished members) asleep at the

switch. And while it is true that a board is behind every high-

chapter 2

1Parts of this chapter were published in The Nonprofit Quarterly, Summer 2003.

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performing organization, it is often along for the ride, cheering

and boosting the work of the executive and staff.

A cottage industry (in which the authors toil) has emerged to

help nonprofits deal with these problems. Training programs,

consulting practices, academic research, and practical guide-

books all promise a way out of the morass.Virtually all of these

solutions are based on the same diagnosis of board problems.

And because a solution can be no better than the diagnosis that

precedes it, we start in this chapter with the diagnostic consen-

sus of the board-improvement field.We conclude that the field

has been working on the wrong problem, or, more precisely,

that we have mistaken a part of the problem for the whole. In

order to develop better solutions, we need a better picture of

the problem.

problems of performance

Most diagnoses in the board-improvement field focus on three

prevalent problems of performance. First, both board members

and analysts have long believed that the common dysfunctions

of groups—rivalries, domination of the many by the few, one-

way communication, and bad chemistry—prevent effective

deliberating and decision making by boards. The father of the

nonprofit board-improvement industry, General Henry M.

Robert, found disorderly discourse to be the biggest problem

facing the boards and associations he served in the nineteenth

century. Some dominated the discussion, conversations were

endless, or both. With intimidating detail, he tried to remedy

these group-dynamic problems with the now famous Robert’s

Rules of Order (Robert III, Evans, Honemann, and Balch, 2000).

Our conception of successful group work has changed over the

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years. Rather than parliamentary procedure, we are more apt to

encourage free-flowing discussions and to try team-building

exercises that promote trust, commitment, and collaboration.

But the group-dynamic diagnosis remains.

Second, board members are frequently faulted for being dis-

engaged.They are faulted for not knowing what is going on in

their organizations and for not demonstrating much desire to

find out.Attendance at board meetings is often spotty and par-

ticipation perfunctory.The disengagement problem has inspired

its own hackneyed images:“no-show trustees” and board mem-

bers who “check their brains at the door.” Analysts have sug-

gested a variety of carrots and sticks to improve the situation.

The idea of paying nonprofit trustees, though rarely practiced,

is periodically proposed. Some organizations try to increase psy-

chic and social rewards, with more opportunities for gratifying

contact with clients, more interesting social interactions with

fellow trustees and donors, and (occasionally) more direct ben-

efits like favored treatment for family and friends. In recruit-

ing, some boards actually encourage the disengagement they

later lament: They promise prospective board members that

there will be little work to do, in the hope that low expectations

will attract more prospective board members. Policy makers and

legal analysts have argued that the solution lies outside the board

room.Some argue that if laws were changed to make board mem-

bers personally liable for a wider variety of organizational fail-

ures, then trustees would pay more attention. Others argue the

opposite—that liability discourages service on nonprofit boards,

and that trustees should be shielded from such risks (“Volunteer

Protection Act of 1997,” 1997).

But a third problem—more than any other—has captured

the imagination of the board-improvement field and inspired

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14 GOVERNANCE AS LEADERSHIP

many common solutions. In this diagnosis, boards do not per-

form well because they do not know what their job is.When

we discussed with 28 nonprofit governance consultants their

recent engagements with troubled boards, 19 characterized the

client’s problem as ignorance of or confusion about roles and

responsibilities. Dozens of analysts have offered one version or

another of an “official job description” for the board.This pre-

scriptive literature can be distilled into five functions:

1. Set the organization’s mission and overall strategy, and

modify both as needed.

2. Monitor organizational performance and hold manage-

ment accountable.

3. Select, evaluate, support, and—if necessary—replace the

executive director or CEO.

4. Develop and conserve the organization’s resources—both

funds and facilities.

5. Serve as a bridge and buffer between the organization and

its environment; advocate for the organization and build

support within the wider community.

This roles-and-responsibilities approach to board performance

has obvious appeal. With the problem defined as confusion

about roles and responsibilities, the solution becomes clarity,

and the holy grail becomes an unambiguous official job de-

scription. Ironically, in most work environments, the specificity

of job descriptions increases as one descends the organization

chart.Yet, here, nominally at the top of the organizational pyra-

mid, trustees and executives seem to think that nonprofit

organizations need only specify the board’s role to cure the

board’s problem. In effect, boards can codify their way out of

board problems.

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The official job description is a reasonable point of depar-

ture to address the problems of new boards or inexperienced

trustees. Even more established boards, with members who

should know better, can drift into seductive but random activ-

ities that create little or no value for their organizations. Re-

visiting the official job description probably helps them, too.

But the frustration with nonprofit boards, and of nonprofit

board members, is not about inexperience.The bigger problem

is the disappointing performance of mature boards with sea-

soned members.These are talented individuals and experienced

trustees; their feeble performance is therefore especially dis-

heartening. The conventional problems of performance—

particularly confusion about roles and responsibility—offer an

inadequate diagnosis.

from problems of performance to problems of purpose

We contend that another problem looms behind these problems

of performance: a more fundamental problem of purpose. Some

advocates of the roles-and-responsibilities approach inadver-

tently acknowledge the problem of purpose when they reason

that the board must be important since it endures as an institu-

tion.“The widespread existence of boards,” wrote Cyril Houle,

“means they must possess values which are apparently essential

to modern life. It will therefore be useful to assess the reasons

why boards are important” (1960).The very formulation of this

approach raises a troubling question. If the board is so impor-

tant, why is a whole literature required to explain why it is so

important? What if one of the central problems plaguing the

board is not, in fact, uncertainty about its important roles and

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16 GOVERNANCE AS LEADERSHIP

responsibilities, but rather a lack of compelling purpose in the

first place? We maintain that many board members are ineffec-

tual not just because they are confused about their role but

because they are dissatisfied with their role.They do not do their

job well because their job does not strike them as worth doing

well. In other words, we believe that board members them-

selves—in asking “Why am I here?” and “What difference do I

make?”—have offered the best diagnosis of all.

This diagnosis is more illuminating if one asks not just whether

boards are vulnerable to problems of purpose but where. Is the

problem with the board’s most important, official governing

work? Or with less important, unofficial work? If governance is

the use of authority to set an organization’s purposes and to

ensure it serves those purposes effectively and efficiently, then it

follows that some of what boards do is not actually governing.

Informal coaching of a CEO, advising and troubleshooting with

staff outside of board meetings, volunteering on the front lines

of service delivery—boards might perform these functions, and

they might inform a board’s governing, but they are not gov-

erning per se.They represent unofficial, though not unimpor-

tant, work.

Even among the board’s official governing assignments, it is

possible to deem some duties more essential than others. To

make this distinction, it helps to ask which duties one can imag-

ine a board delegating entirely—either to staff or consultants—

and still claim to be governing the organization. Farming out

fundraising and community relations (both of which are often

shared among staff, consultants, and celebrity ambassadors) does

not threaten governance in a fundamental way. But a board that

outsources mission setting or management oversight is highly

problematic, as troubling as a government that puts legislating or

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judicial sentencing out to bid along with trash hauling and

street cleaning.Yes, it is all government or, in this case, gover-

nance. But some is more essential than the rest.

With these distinctions in mind, we can offer a refined diag-

nosis: Boards are vulnerable to problems of purpose both in

their official and their unofficial work. As result, it is not just

trustee satisfaction that is at risk but also effective governing.

Consider four manifestations of the purpose problem:

Some Official Work Is Highly Episodic

Most people take little account of the fact that much of the offi-

cial work of the board is highly episodic. There is not, thank-

fully, always a CEO to hire or fire, or a major question of mission

to consider. Yet board members meet at regularly prescribed

intervals as if there were always important governing work to do.

In most fields where important work is episodic, practitioners

do not insist (or pretend) otherwise. Effective fire companies are

not always fighting fires; fire departments put their downtime to

good use—engaging in training, maintenance, and fire preven-

tion.The same cannot be said for boards.

By denying the episodic reality of governing work, boards

back into a problem of purpose. If there are no urgent matters

of governance before the board, meetings are devoted to pre-

senting routine committee reports. To ward off this boredom,

many organizations have begun over-relying on the board’s role

as strategy maker—cramming the agenda with as many inter-

esting strategy questions as possible. Many boards now expect

agendas replete with “bet-the-company” questions.To meet this

demand for strategic content, staff sometimes inflate routine

issues into questions of strategy. Before long, board members

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and staff alike begin to equate meeting with governing. It is at

these meetings where everything comes wrapped in strategy,

but where little or nothing truly important is at stake, that board

members start to wonder,“What difference am I making?”

Ironically, the most valued contributions of board members

often come during downtime—when there is no indispensable

governing work to do. For example, we frequently ask board

members to think about a “no-board scenario” by posing the

following question: “What would be the single gravest conse-

quence to your organization if your board did not meet or

conduct board business in any way for a two-year period?”The

most common responses are the loss of fundraising capacity,

loss of good advice or expertise, and loss of contacts in the

community. Over the course of these two hypothetical years

without a board, few people fear the result will be mission

drift, strategic blunder, or a compromising of core values.They

acknowledge, in effect, that the board’s essential governing

work is episodic, but that it does other important work in the

interim. Unfortunately, the structure and culture of most

boards precludes this acknowledgement:Trustees keep right on

meeting, even as they are disappointed by the lack of meaning

in their work

Some Official Work Is Intrinsically Unsatisfying

Not all of the board’s governing work is episodic. Overseeing

and monitoring the organization’s managers—to spot problems

or malfeasance—is ongoing and critically important.The “mon-

itoring and oversight” duty in the official job description is

really a response to the fundamental legal demand that society

makes of boards. By law, boards are to be responsible to the

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broader community for what their organizations do—and espe-

cially for what they do wrong. The law demands that boards

meet their “duties of loyalty and care,” which means focusing on

norms and standards of minimally acceptable behavior. In effect,

trustees are tasked to prevent trouble rather than promote suc-

cess. But their method for doing this compounds the problem

of purpose: Routine oversight is hardly engaging.

In fact, a job designed primarily for oversight violates virtu-

ally all we know about motivation. Board members, in partic-

ular, join organizations because of the meaning the affiliation

provides.They identify with and want to support the mission,

cause, or values of the organization (Taylor, Chait, and Holland,

1991). Who has ever been moved to join a board thinking, “I

really want to hold this organization to account?” But this is, of

course, a good part of what the job demands.And while people

might agree to join in order to affiliate with a mission, they are

more apt to participate when they can see the results of their

work and the opportunity to have influence. Here again, over-

sight activity is a disappointment. Oversight is more looking

than finding. And the work of looking is often technical—

scrutinizing budgets, financial statements, or construction plans—

and often tedious to boot. It is as if eager Peace Corps volunteers

arrived at their posts only to find their main job was to ensure

that foreign aid was not misspent.

In effect, by constructing their job around the fiduciary work

of oversight, nonprofit organizations have placed board mem-

bers in a position akin to that of a substitute teacher.As an insti-

tution, the substitute teacher works effectively. It assures school

administrators and parents that children who might run amok

in the absence of a teacher remain under control. But the work

of the substitute teacher is singularly unattractive.Adherence to

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minimum standards—not trying to teach, but merely trying to

keep order—is as (or more) challenging than actually teaching.

It is also far less rewarding. Board members suffer from this sub-

stitute’s dilemma. Society has essentially asked trustees to keep

order.As a result, board members become disengaged.The more

disengaged they become, the less likely trustees are to ensure

accountability—the very reason we created boards in the first

place. By asking for a little, we get even less.

If the problem of purpose is most acute with the board’s

official governing work, it is tempting to conclude that looking

for unofficial work might provide sufficient appeal to keep

board members engaged in their essential governing work.And

to some extent, this is what boards commonly do. But this path

to meaningful engagement is blocked on two fronts.

Some Important Unofficial Work Is Undemanding

Some of the board’s most important unofficial work does not

really depend on the efforts of individual board members, and

therefore does not provide them with opportunities for mean-

ingful engagement. This partly explains why boards can be so

important to their organizations yet so unrewarding for their

own members.This type of work poses for board members the

predicament of the monarch in a modern, democratically gov-

erned state.While the institution of the monarchy helps create a

national identity, reassures and unifies the country in times of

crisis, marks important events through ceremony, and develops

the tourism economy, the individual monarch deserves little

credit for any of these results. And to the extent that the work

involves endless ribbon cuttings, award ceremonies, and grand

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parades, there is not much stimulation either. Boards and board

members are similar in at least three respects:

First, a board can create legitimacy for an organization. Unlike

the business sector, where stakeholders can judge a corporation

by financial performance, observers in the nonprofit sector tend

to rely on a number of proxies to determine what constitutes a

good organization. Potential funders, clients, and even employ-

ees look at an organization’s board—especially if it is a distin-

guished one—as evidence of legitimacy.They are far more apt

to ask “Who is on your board?” than “What does your board

do?” Board members need not do anything to create legiti-

macy—beyond lending their names to the organization’s letter-

head and occasionally attending a public function or official

event associated with the organization. The board’s very exis-

tence creates legitimacy.

Similarly, the board provides managers what organizational

theorists call “sense-making opportunities” simply by meeting (see

Chapter 5).The mere prospect of a board meeting—where little

or nothing may actually happen—forces managers to prepare

written and oral reports that make sense of organizational events,

recent challenges, and data about performance. Management

must be able to communicate to the board an integrated and

sensible account that describes and interprets the organization’s

situation. Presumably, a more inquisitive board will compel man-

agers to be better sense-makers, but the mere occasion of board

meetings goes a long way by itself. A board meeting could be

canceled at the last minute and something good—more thought-

ful and focused management—would still have resulted.

As an entity, the board also encourages vigilance by managers.

Nonprofit executives often say, “The board keeps me on my

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toes” or “I can feel the board looking over my shoulder.”As use-

ful as this is to the organization, keeping managers “on their

toes” is not likely to be engaging for board members, any more

than state troopers find it stimulating to park at the side of

the road because their mere presence slows traffic.Troopers can

keep drivers on their toes while they themselves are literally

asleep at the wheel.

Some Unofficial Work Is Rewarding but Discouraged

If official work is too episodic or tedious, and if some unofficial

work is more institutional than personal, board members have

the option of participating in other, more gratifying unofficial

work. Boards of new organizations, even organizations with

full-time staff, participate routinely in much of the hands-on,

day-to-day work of the organization. As a result, they know

why they are there and what difference they make. In doing this

work,however, board members are repeatedly reminded that they

must not cross the line into “micromanaging” or “meddling.”

The rules about what constitutes permissible board work are

somewhat mysterious. Fundraising, advocacy, and community

relations make the short list of official duties, but human-

resource management and program development do not.Why?

It is true that organizations can never have too much money or

influence, or too many friends. Board members are often good

at fundraising and community relations; they generally perform

these roles ably and willingly. But these are not, as we suggested

earlier, absolutely essential governing duties. Board members are

not uniquely qualified for this work; managers often perform

both functions alongside board members.Why, then, are trustees

not guilty of meddling in these instances? Probably because

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they keep board members busy outside the organization, where

they are far less prone to interfere with the work of managers

and staff. More than a coherent theory about the division of

policy and administration, the rules of board engagement seem

to be rooted in an understandable desire on the part of man-

agement to assure a measure of professional discretion and even

autonomy, and to have trustees marshal resources for the organ-

ization to do what management intends.

Our diagnosis of the problem as purpose makes the situation

look much worse than the more prevalent diagnosis of per-

formance. In our analysis, boards may know what to do, and do

it reasonably well, but in the end they are derailed by the mean-

inglessness of what they do.Worse, it is not that some inciden-

tal parts of the job happen to be tiresome now and then:The

problems of purpose are most acute when the board’s key gov-

erning work is involved.And the option of promoting engage-

ment by giving boards more unofficial work only raises other

problems of purpose.

the challenge of reform

If the problem is purpose, then the diagnosis begs for a new and

improved official job description—one that assigns boards a

more attractive array of tasks and might even inspire new ways

of organizing those tasks into new board structures.This is pre-

cisely what we need to resist.

A task-and-structure approach is fraught with risks. First, a

more appealing set of tasks might lead to busier, even happier

boards, but not necessarily to better governed organizations.

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Not everything a board does or can do is governing. And our

goal should not be busier boards but rather more effective gov-

erning. Second, focusing on board tasks tends to encourage the

microgoverning that has marginalized many boards in the first

place. Tasks are prescribed and performed. So the more easily

board tasks can be specified and the more routinely they can be

performed, the more likely they are to represent a technical,

managerial version of governance.Third, as virtually any work-

place experience confirms, task clarification does not always

promote effectiveness. Can any of us name the job where we

succeeded primarily by focusing diligently on our job descrip-

tion? In fact, is there a better indicator of imminent failure than

the sight of someone studying his job description for guidance?

Creating structures to coordinate board tasks has similar lim-

itations. An organizational chart or, in this case, a board’s com-

mittee structure, does answer important questions about who

has authority over what issues and who has responsibility for

what tasks. But organizational charts hardly ensure effective

work. One might study them to see how organizations hope to

work, but not to see how they actually work, much less how well

they work.

Nevertheless, the task-and-structure approach remains appeal-

ing for understandable reasons. If the answer to board problems

is not in enumerating clearly delineated tasks and building fixed

committee structures around them, then the search for better

boards might force us into very murky territory: relying on

board members’ personal judgment, artistry, or wisdom. If assem-

bling naturally gifted or richly experienced board members is

the only way to improve boards, then our prospects for large-

scale change—with 1.5 million nonprofit organizations currently

in place and more forming every year—soon look bleak.

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But because the task-and-structure approach also offers a

circular logic, it is hard to envision alternatives to it.Together,

task and structure seem like the sum total of governance.They

supply good answers to our most important governing ques-

tions:What is governing? And how does a board do it? In re-

sponse, boards tend to envision governance as the sum of discrete

goal-setting or oversight tasks—hiring and firing, planning,

reviewing, evaluating, and so on—structured as a series of com-

mittees. These tasks and structures explain how to govern, by

which we mean how to use authority to (a) set an organization’s

goals and purposes and (b) ensure the organization’s resources

are deployed efficiently and appropriately. There seems little

need to look beyond task and structure and no clue about where

to start if a board wanted to.

An alternative logic begins to emerge if we ask a different

question. In addition to asking “What is governing?” we can ask

“What is it we’re governing?” In other words, do the types of

governing that boards practice work for the types of organiza-

tions they have? The idea of an organization–governance gap

surfaced when we sought advice on governance problems from

trustees, executives, consultants, and researchers. Some of them

suggested that current board structures might be a bad fit for

today’s nonprofit organizations. To overstate only a little, the

idea that we govern today’s nonprofits with the same model

introduced nearly 400 hundred years ago to govern Harvard

College, their colonial forerunner, troubled these observers.

They cited the emergence of entrepreneurial organizations,

interorganizational alliances, and multicorporate forms (for ex-

ample, nonprofits with subsidiaries), and argued that these new

organizational structures might require new board structures

for governing.

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The nonprofit governance literature has long recognized

another gap—a gap between the demands of an organization at

a particular point in its life cycle on the one hand and the com-

position of and governing approaches of its board on the other.

The board of a young organization, according to this analysis,

faces challenges that boards of older organizations do not, like

establishing the legitimacy of the organization and launching

fundraising efforts to help it survive the first fragile years of a

start-up.These developmental and structural gaps pose an impor-

tant question.What do organizations demand of governing?

In this spirit, we want to explore another potential gap—one

between our mental maps of organizations and the governing

modes we use. While no one refers to a formal theory of the

modern organization to get through the day, we do consult our

own personal theories of organization in order to navigate the

work world.These are the assumptions, beliefs, convictions, and

hypotheses that help us make sense of what happens in the

organizations where we work.These personal theories are like

the “mental maps” that sociologists study to understand people

based on the way they depict their neighborhoods. A good

street map will tell us what we need to know about a neigh-

borhood’s layout, but the mental maps of local residents tell us

what people value in that neighborhood and how they inhabit

it.When residents draw their own maps, we can learn from the

boundaries they choose and the landmarks by which they nav-

igate. Some organize their environment around churches,

others around restaurants. Some place the border of their own

neighborhood and adjacent ones based on demographics, oth-

ers set boundaries based on subway lines.

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