Building an Exceptional Board of Directors

1. Building an Exceptional Board of Directors Continuing Studies at University of Wisconsin - Madison Presented by Frank Martinelli The Center for Public Skills Training

2. Board Development: CORE ACTIVITIES • CONTINUOUS: • Team Involvement • Education and Learning Board Assessment (or Reassessment) & Benchmarking Board Development Action Planning Board Development Plan Implementation

3. Board Governance: Fundamental Assumptions • Distinction between governance and management. • “Ends” and “means” distinction. • Clarity and agreement about who does what.

4. Leadership for Board Development • Critical role of . . . • Full Board. • Board Development Committee. • Board President and Executive Director.

5. Board Development As A Leadership Development Process

6. A Leadership Development Process • Nominations and recruitment -- the process of identifying the right individuals to meet the needs of the board helping them understand their roles and responsibilities, and convincing them to become part of the board. • Orientation -- the steps taken to give new board directors the information they need to carry out their roles and responsibilities effectively. • Training -- the regular, ongoing efforts to build new skills and knowledge among the existing board directors to enhance performance.

7. A Leadership Development Process • Evaluation -- the annual task of evaluating individual board director performance as well as the effectiveness of the board as a whole. • Recognition -- the ongoing process of recognizing the work and accomplishments of board directors to the work of the board and to the organization.

8. Profile of An Effective Board • Effectiveness in terms of individual board leader development (previous slides). • Effectiveness in terms of qualities or characteristics. • Effectiveness in terms of collective board performance.

9. Profile of Effective Nonprofit Board Leadership • Visionary and future-focused. • Entrepreneurial spirit. • Risk-takers. • Effective communicators. • Systems thinkers. • Community connected. • Diverse. Source: The Center for Public Skills Training

10. Board Responsibilities • Set the mission and strategic vision. • Select the executive. • Support the executive and review performance. • Ensure effective organizational planning. • Ensure adequate resources. Source: BoardSource

11. Board Responsibilities • Ensure stewardship of resources. • Monitor impact of organization’s programs and services. • Enhance the organization’s image. • Assess its own performance. • Support public policy and advocacy efforts.

12. The Dynamic Board McKinsey & Company

13. The Board’s Core Responsibilities • Shape mission and strategic direction. • Ensure leadership and resources. • Monitor and improve performance. Source: McKinsey & Company

14. Shape Mission And Strategic Direction • Clarify mission and vision. • Participate in and approve strategic and policy decisions.

15. Ensure Leadership and Resources • Select, evaluate, and develop CEO. • Ensure adequate financial resources. • Provide expertise and access for organizational needs. • Build reputation of the nonprofit.

16. Monitor and Improve Performance • Oversee financial and risk management. • Monitor organizational performance and ensure accountability. • Improve board performance.

17. Key Environmental Factors Impacting Focus of the Board • Life stage of an organization. • Skills of CEO and staff. • Stability and adequacy of income. • Changes in underlying social issue. • Changes in competitive or philanthropic landscape.

18. Board Effectiveness Enablers • Careful decisions on board size and structure • Actively managed board composition • Inspired board and committee leadership • Simple administrative practices and processes made routine

19. Twelve Principles of Governance that Power Exceptional Boards BoardSource

20. The Difference Between “Responsible” Boards And “Exceptional” Boards

21. “Responsible” Boards • Capable and dutiful in carrying out its responsibilities. • Understands its fiduciary obligations. • Approves strategic plans and budgets. • Regularly reviews financial statements. • Evaluates the chief executive annually. • Participates in fundraising.

22. “Exceptional” Boards • Operates on a higher level -- “more” and “different.” • Members give more and differently: • Time spent more wisely, skills and social networks better leveraged, and treasure more strategically deployed. • Measure organizational impact and evaluate their own performance, discuss and debate issues, and open doors and make connections.

23. Governance as Leadership Richard Chait, William Ryan & Barbara Taylor

24. Three Modes of Governance • Fiduciary mode: key question -- "How are we doing?" • Strategic mode: key questions -- "What are we doing?" "Where are we going?" and • Generative mode: key questions -- "Why are we doing this?" "What are the possibilities?"

25. Board Assessment Process • Guidelines for assessment. • Effective assessment tools. • Review samples.

26. An Effective Assessment Process • Enthusiastic support board leadership. • Based on a set of standards or best practices that characterize effective board performance. • Formal process conducted on a regular, agreed-upon basis. • Written assessment tool that all board directors complete is the centerpiece. • Plan to use the results to set goals, implement and measure improvement.

27. Board Assessment Samples • MAP Assessment • UWEX Assessment • GLA CB Assessment excerpt • McKinsey -- Short, Mid, Long Forms • CPST Visionary Board • 12 Principles of Exceptional Boards • 10 Questions • 20 Questions

28. Why Boards Fail

29. Why Boards Fail • Ineffective recruiting process. • Members lack understanding of the organization and their roles. • Micro-managing. • No well-planned rotation of members. • No way to eliminate non-productive members.

30. Why Boards Fail • Too small. • No well-planned orientation for new and old members. • No strategic plan. • No process for assessment. • No functioning committee structure.

31. Board Development: Proven Practices

32. Proven Practices • Clearly define roles and responsibilities. • Align key board processes with strategic plan. • Just-in-time board orientation. • Effective meetings: Consent agenda and other tools. • Committee effectiveness.

33. Proven Practices • Organizational dashboard. • Board leadership succession plans. • Board assessment. • Board governance committee. • Incorporate strategic deliberation into every board meeting

34. #1 Clearly Define Roles and Responsibilities • Clarity re: management and governance. • Written individual board and committee descriptions that are current. • Maintain clarity re: board policy and oversight functions. • Ensure that current job description is in place for the executive director.

35. Board Job Description • Attend all regular board meetings. • Serve as an active committee member. • Support fundraising activities. • Prepare in advance for board policy and decision-making. • Attend the annual board planning retreat.

36. #2 Align Key Board Processes With Strategic Plan

37. Link Board Recruitment with Strategic Plan • Review the strategic plan. • Identify the skills, knowledge and relationships needed by the board to advance the strategic plan. • Set clear recruiting priorities.

38. Align Committee Structure with Strategic Plan • Review committee structure as part of strategic planning. • Align committees with plan. • “Leaner is better”. • Use task forces and workgroups in place of standing committees.

39. #3 Just-in-time Board Orientation • An advance program of orientation and training to prepare new board members to hit the ground running. • Focus on the strategic plan. • Speed up the learning curve. • Increase confidence and productivity of new board members.

40. #4 Consent Agenda • Expedites routine business at a board meeting. • Eliminates the need to vote separately on many of the routine items. • Frees up time to address critical matters.

41. #5 Committee Effectiveness • “Fewer is better”. • Written committee descriptions. • Aligned with strategic plan. • An effective chair. • Members thoughtfully appointed. • Mix of board and non-board members. • Accountable to the board. • Well-run meetings.

42. Annual Committee & Board Meeting Calendar • Fosters attendance and participation. • Improves decision-making. • Promotes coordination and increases productivity.

43. #6 Organizational Dashboard • Increases effectiveness of board decision-making. • Displays up-to-date information about key performance indicators. • Corrective action can be taken before - not during or after - a crisis erupts.

44. #7 Board Leadership Succession Plans • Identify critical leadership positions. • Scout board leadership talent for the future. • Written plan for fostering and developing future board leadership.

45. #8 Board Member Assessment • Periodic assessment of board member and committee performance. • Board meeting feedback form. • Board follow-through. • Relate findings to board nominations process.

46. #9 Governance Committee • Continuous focus on identifying, preparing and recruiting future board leaders. • Plan board education including new member orientation, ongoing training and board retreats. • Assess board, chair, individual directors, and board meetings. • Annually review governance practices and recommend changes.

47. #10 Incorporate Strategic Deliberation Into Board Meetings

48. Strategic Deliberation • Use values and vision as the basis for dialogue on emerging issues. • Use vision as frame-work for decision-making. • Read, listen and look for future trends. • Provide opportunities to share information at board meetings.

49. Development of Board, Committee and Member Action Plans

50. Preparing for Action Planning • Assure board understanding and commitment. • Board Development Committee in place. • Retreat event to analyze assessment results and develop action plan.