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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
While boards acknowledge they bear ultimate responsibility and accountability for their organizations' affairs, governance quality is often far from optimal. The High- Performance Board offers pragmatic and candid advice about what your board must do to maximize performance and contributions. The authors provide sixty-four principles designed to help your board achieve peak performance. They describe every principle in detail and present best practices and practical applications for each one. Each section of the book concludes with a board check-up-a set of questions that can be used to assess your board in light of the principles. A quick read for busy board members, this book is the ultimate board "drivers' manual."
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Veröffentlichungsjahr: 2015
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Table of Contents
Cover
Title
Copyright
Dedication
Figures and Check-Ups
Preface
About the Authors
1: Governance Basics
The Principles Behind the Principles
Getting Started: Basics
2: Obligations
Means and Ends
Getting Started: Obligations
3: Functioning
Responsibilities
ENDS
MANAGEMENT
Getting Started: Executive Performance
QUALITY
Getting Started: Quality
FINANCES
Getting Started: Finances
SELF
OTHER FUNCTIONS BOARDS CAN PERFORM
4: Functioning
Roles
Getting Started: Roles
Board Functioning, Overall
5: Structure
Getting Started: Structure
6: Composition
Getting Started: Composition
7: Infrastructure
Getting Started: Infrastructure
8: Transforming Your Board
Characteristics of Benchmark Governance
Assessment
Principle-Based Governance Practice
Resource A: The Sixty-Four Principles
Resource B: Illustrative Board Policies
Resource C: Sample Committee Charters
Resource D: Illustrative Board Chair Position Description
Resource E: Illustrative Governance Principles
Resource F: For Further Reading
Index
End User License Agreement
List of Illustrations
1: Governance Basics
Figure 1.1. Key Determinants of Governance Quality.
Check-Up 1.1. Basics
2: Obligations
Figure 2.1. Governance Work.
Check-Up 2.1. Obligations
3: Functioning: Responsibilities
Check-Up 3.1. Ends
Check-Up 3.2. Executive Performance
Check-Up 3.3. Quality
Check-Up 3.4. Finances
4: Functioning Roles
Figure 4.1. Types of Board Policy.
Figure 4.2. Board Policy Form.
Figure 4.3. Board Decision Form.
Figure 4.4. Board Oversight Process.
Figure 4.5. Oversight Reporting Format.
Figure 4.6. Optimal Allocation of Board Meeting Time.
Check-Up 4.1. Roles
5: Structure
Figure 5.1. Centralized Governance Structure.
Figure 5.2. Decentralized Governance Structure.
Figure 5.4. Board Work Mapping in Decentralized Governance Structures.
Check-Up 5.1. Structure
6: Composition
Check-Up 6.1. Composition
7: Infrastructure
Figure 7.1. Board Meeting Minutes Format.
Check-Up 7.1. Infrastructure
8: Transforming Your Board
Figure 8.1. Your Board’s Practice Profile.
Check-Up 8.1. Putting Things Together
Guide
Cover
Table of Contents
Begin Reading
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The High-Performance Board
Principles of Nonprofit Organization Governance
Dennis D. Pointer
James E. Orlikoff
Copyright © 2002 by Dennis D. Pointer and James E. Orlikoff.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 750-4744. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 605 Third Avenue, New York, NY 10158-0012, (212) 850-6011, fax (212) 850-6008, e-mail: [email protected].
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Jossey-Bass also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books.
Library of Congress Cataloging-in-Publication Data
Pointer, Dennis Dale.
The high-performance board: principles of nonprofit organization governance/Dennis D. Pointer, James E. Orlikoff.—1st ed.
p. cm.—(The Jossey-Bass nonprofit and public management series)
Includes index.
ISBN 0-7879-5697-X
1. Nonprofit organizations—Management. 2. Boards of directors. I. Orlikoff, James E. II. Title. III. Series.
HD62.6 .P66 2002
658.4'22—dc21
2002001090
HB Printing 10 9 8 7 6 5 4 3 2 1
FIRST EDITION
The Jossey-Bass Nonprofit and Public Management Series
Figures and Check-Ups
Figures
1.1. Key Determinants of Governance Quality
2.1. Governance Work
4.1. Types of Board Policy
4.2. Board Policy Form
4.3. Board Decision Form
4.4. Board Oversight Process
4.5. Oversight Reporting Format
4.6. Optimal Allocation of Board Meeting Time
5.1. Centralized Governance Structure
5.2. Decentralized Governance Structure
5.3. Illustrative Decentralized Governance Structure
5.4. Board Work Mapping in Decentralized Governance Structures
7.1. Board Meeting Minutes Format
8.1. Your Board’s Practice Profile
Check-Ups
1.1. Basics
2.1. Obligations
3.1. Ends
3.2. Executive Performance
3.3. Quality
3.4. Finances
4.1. Roles
5.1. Structure
6.1. Composition
7.1. Infrastructure
8.1. Putting Things Together
Preface
Governance is important work. How—and how well—it’s done has significant consequences for nonprofit organizations, their clients, and the communities they serve.
Over the last twenty years we have served on numerous boards, consulted with thousands of boards, conducted research on boards, and written scores of books and articles about boards. We have profound respect for the significant contributions they make. The vast majority of nonprofit organization board members are talented and committed individuals who devote large amounts of time and effort to their roles.
Yet the performance and contributions of most boards are far from optimal.
We will have far more to say about this in Chapter One and throughout this book, but the reason is simple: very few boards base their governance on a set of explicit, precise, and coherent principles. In this book, we provide such principles, drawn from the vast literature in addition to our own consulting work with boards over the past twenty years.
A tremendous amount is known about the process of governing and what boards can do to dramatically improve their effectiveness, efficiency, and creativity in ways that enhance organizational success. And this knowledge, when employed, really does work. Here is one example from the commercial sector:
CalPERS, The California Public Employees Retirement System, is one of the largest pension funds in the country. In 1995 –1996 it asked three hundred companies in its equity portfolio to consider adopting formal governance principles. CalPERS staff issued report cards and formulated and distributed a set of model—that is, benchmark—principles. (If you would like to see the latest version, log on to their Web site at http://www.calpers-governance.org.) A Wilshire Associates study of the “CalPERS effect” examined the performance of sixty-two companies over a ten-year period. Results indicated that whereas the stock of these companies trailed the Standard & Poors 500 Index by 89 percent in the five-year period before implementing CalPERS governance principles, the same stocks outperformed the Index by 23 percent in the five years after they were adopted, contributing approximately $150 million in additional returns to the Fund annually.
It is estimated that about half of the nation’s largest commercial enterprises have adopted formal governance principles in some form (Trustee Magazine, July/August, 1998). Yet this is not common practice in the nonprofit sector.
Who Should Read This Book
This book is written from a point of view and has an agenda. Because we believe “principle-based governance” can significantly enhance board performance and contributions—and organizational success—our objective is to stimulate and facilitate the adoption of this approach in nonprofit organizations. The book is targeted at board members and executives who are committed to improving governance practice. This is not “governance-lite,” it is a serious book for serious people who are willing to make a significant investment in their board’s and organization’s future.
What This Book Offers
This is a practical, how-to book. It provides
A model of governance,
which serves as the framework for
Chapters Three
through
Seven
Sixty-four principles of high-performance governance
(and associated practices) for improving your board’s performance and contributions
Getting started recommendations
to help your board begin adopting the principles
Check-ups
for assessing the extent your board presently employs the principles of benchmark governance
Guidelines
for transforming your board and implementing principle-based governance
Uses of This Book
A comprehensive overview of nonprofit organization governance for newly appointed board members
A “best practice” refresher for experienced board members
An exemplar of what a truly great board looks like
A blueprint for transforming your board … designing and implementing specific principles of governing that will dramatically improve its performance and contributions
A template and set of specific criteria for rigorously assessing the quality of your board’s governance quality
Charles Darwin presented a novel notion: in challenging environments where resources are scarce, if an organism has even a tiny edge over others, this advantage is amplified over time. He noted, in Origin of the Species, that a few grains of sand in the balance determine who thrives and who dies. Principle-based governance can tip a nonprofit organization’s balance toward success.
This book provides an explicit, comprehensive, and coherent set of governance principles. The most basic principle is that the high-performance board appreciates the importance of governance and takes its work seriously. It devotes the necessary time and effort to governing, and it governs on the basis of agreed-to and explicit principles.
The high-performance board meets its fiduciary obligations by identifying key stakeholders and understanding their needs and expectations. It constantly represents, advances, and protects stakeholder interests, deciding and acting on their behalf, and ensuring that the organization’s resources and capacities are deployed in ways that benefit them.
The high-performance board fulfills its responsibility for organizational ends (destination) by formulating a precise, detailed vision of what the organization should become—at its very best—in the future. It also specifies key goals that must be accomplished for the vision to be fulfilled, and makes sure that management develops strategies that are aligned with goals and the vision.
The high-performance board fulfills its responsibility for executive performance by specifying the CEO as its only direct report. It plans for CEO succession, undertaking an effective recruitment and selection process when the position of CEO becomes vacant. It specifies its expectations of the CEO and assesses the CEO’s performance annually, providing feedback to improve that performance. It adjusts the CEO’s compensation based on performance review results, and it is prepared to terminate the CEO’s employment, should the need arise.
The high-performance board fulfills its responsibility for quality by recognizing that product and service quality and client satisfaction are essential to the organization’s success. It develops an explicit and precise working definition of quality and then specifies a set of quality indicators and associated standards. With those standards in hand, it reviews management plans for managing and continuously improving both quality and client satisfaction.
The high-performance board fulfills its responsibility for finances by formulating key financial objectives, ensuring that management develops budgets that lead to accomplishing financial objectives, and specifying a set of financial indicators and associated standards. It also ensures that necessary financial controls are in place.
The high-performance board performs its core roles by formulating policies regarding its responsibilities that convey its expectations and directives. It makes decisions regarding matters requiring its attention and input, and it oversees (that is, monitors and assesses) key organizational processes and outcomes.
The high-performance board has an appropriate structure. It is right-sized, having between nine and nineteen members unless there is a compelling reason for a smaller or larger group. Where the organization has multiple boards, it explicitly specifies each board’s authority, responsibilities, and roles. It has the right number and type of committees to support and facilitate its work—and it precisely specifies its authority vis-à-vis those committees, so that the board governs and committees perform governance staff work. It specifies the objectives, functions, and tasks of its committees, requiring them to develop annual work plans. It also reviews the need for, and functions of, all committees each year, and periodically assesses the overall governance structure and modifies it if necessary.
The high-performance board has the right composition. It proactively designs and manages its own composition, recruits and selects new members on the basis of explicit criteria, and has an effective new member orientation process. It specifies expectations of members and ensures that members do not represent narrow interests or constituencies. It has fixed member term lengths and limits. It assesses the performance and contributions of individual members. It includes the CEO as a voting member of the board, but ensures that ex officio and inside members hold no more than 25 percent of the board’s seats.
The high-performance board has the necessary infrastructure in place. It has an annual governance budget and adequate staff support. It formulates annual governance objectives, employs a formal agenda planning and management process, and ensures board meetings are conducted in a way that optimizes their effectiveness, efficiency, and creativity. It makes sure that the presiding member is carefully selected and understands the role of the chair—and performs it effectively. It has a plan to continually develop board competencies and capacities, holds annual or semiannual retreats, and periodically assesses board performance and contributions, employing the results to engage in action planning that improves governance quality.
Before fully developing these principles, it’s useful to consider several important caveats:
Nonprofit organizations and their boards are an extremely diverse lot. Some are very large—national in scope, with resources in the billions that rival those of Fortune 500 companies, and with huge staffs. Wearing tailored suits, their members convene in specially designated board rooms and sit in leather chairs around walnut tables. Others are small—they serve locally focused organizations with tiny budgets and have little (and in many instances, no) staff support. The board arrives wearing jeans and sweatshirts, and meetings are held in a staff office or member’s home. Such differences are simultaneously both superficial and consequential.
All nonprofit boards have identical obligations (addressed in
Chapter Two
) and must do the same type of work to meet them (described in
Chapters Three
and
Four
). They must appropriately configure their “anatomy” and “physiology” (the topic of
Chapters Five
through
Seven
) to perform this work effectively, efficiently, and creatively. Accordingly, there are a set of generic principles of governing that transcend an organization’s characteristics, circumstance, and situation.
Nonetheless, governance context—particularly an organization’s size—matters. Some of the principles are clearly not applicable to some boards. For example, many very small nonprofit organizations may not have management staff. Accordingly,
principles 13
through
20
in
Chapter Three
will not be relevant to them. Other principles might be either impractical or difficult to fully implement. For example,
principles 43
and
44
deal with committees, and some boards don’t have or need them (yet the tasks described must be performed by members meeting as a whole). Likewise,
principle 63
deals with board retreats, and an organization that lacks the resources to hold a retreat won’t make use of the principle.
Rather than engaging in lengthy and cumbersome qualification of each principle, we rely on each reader to assess which are applicable to his or her specific board and which are not. Principles are general guidelines that must be tailored to specific circumstances, employing situational knowledge and judgment. We will provide principles, you supply the knowledge of your organization’s and board’s situation and liberal doses of judgment.
Additionally, when it comes to mounting governance improvement initiatives, large organizations can deploy more resources. They can assign staff and hire consultants to aid and abet the process in ways that dwarf those available in smaller and less well-endowed organizations. As a consequence, the board of a small, resource-strapped nonprofit organization will have to go slower, target change efforts at implementing a narrower range of principles, and rely totally on internal capacities in doing so.
Reading this book, you may well feel overwhelmed by all the things your board can and should do to improve its performance and contributions. Don’t be! This approach to governance improvement can produce significant results when focused on implementing a limited set of principles; a full court press is ideal but not necessary. This is a map for an entire journey that you might want to take. Begin with the first steps, have modest initial goals, don’t obsess on what’s left to be done, and celebrate wins as they come. Just keep at it and enjoy the trip.
The High-Performance Board
is the product of what we have learned over the years from our fellow board members, clients, and consultant colleagues. They have been our teachers, and we are indebted to them. We dedicate this book to nonprofit organization board members; servant leaders and volunteers who make tremendous contributions to our society’s well-being.
March 2002
Dennis D. Pointer
Dennis D. Pointer & Associates
509 Midway Street
La Jolla, CA 92037
206-499-1289
www.benchmarkgovernance.com
James E. Orlikoff
Orlikoff and Associates, Inc.
4800 S. Chicago Beach Drive, Suite 307N
Chicago, IL 60615-2054
773-268-8009
www.americangovernance.com
About the Authors
Dennis Pointer and James Orlikoff are among the nation’s most highly regarded governance consultants, speakers, researchers, and writers. They collaborated on Board Work, published by Jossey-Bass in 1999, winner of the James A. Hamilton Book of the Year Award from the American College of Healthcare Executives.
Dennis D. Pointer has worked with over 400 clients. His firm, Dennis D. Pointer & Associates, provides governance consulting, retreat facilitation, assessment, redesign, and development services to nonprofit organizations, commercial corporations, and government agencies. He is also vice president of American Governance and Leadership Group LLC. The author of five other books and over seventy articles, Dr. Pointer holds the John J. Hanlon Endowed Chair at San Diego State University. Prior to joining the SDSU faculty in 1991, he was the Arthur Graham Glasgow Distinguished Professor at the Medical College of Virginia. From 1975 to 1986 he was affiliated with the University of California, Los Angeles, where he served as associate director of the UCLA Medical Center and professor and chairman of the Department of Health Services Management, School of Public Health. While at UCLA, Dr. Pointer was a senior research fellow at the RAND Corporation. He is a visiting professor at the University of Washington School of Public Health and Community Medicine. He received his Ph.D. from the University of Iowa and B.Sc. from Iowa State University.
James E. (Jamie) Orlikoff is president of Orlikoff and Associates, Inc., a firm specializing in governance improvement and leadership development. He is also executive director of the American Governance and Leadership Group LLC, which provides educational conferences, on-site programs, and consulting services for boards, board members, and other leaders. Mr. Orlikoff is the national adviser on governance and leadership to the American Hospital Association and former director of the organization’s Division of Hospital Governance. In these various capacities, Mr. Orlikoff has worked with over six hundred organizations to strengthen their governance effectiveness and efficiency. He is the author of ten books and over a hundred articles, and was the founding editor and publisher of the Health Governance Report, a bimonthly newsletter on leadership issues and trends for board members. Mr. Orlikoff received his M.A. from the University of Chicago and B.A. from Pitzer College in Claremont, California; he sits on the Pitzer College board.
1Governance Basics
There are approximately 3.5 million boards in the United States. This may seem an unbelievable figure until one considers that most commercial corporations, nonprofit organizations, and government agencies have them.
This book focuses on nonprofit governance, although many of the principles presented here can be employed by boards in other sectors.
Are Nonprofit Organizations and Their Governance Really Different?
The answer is both yes and no. Here are just a few illustrations:
The purpose of nonprofit organizations is public benefit—but the terms public and benefit are defined in a wide variety of ways. As a consequence, nonprofits are granted special privileges; subjected to distinctive laws, regulations, and reporting requirements; and often exempted from certain taxes.
Commercial corporation boards must satisfy shareholders, all of whom want essentially the same thing: a return on their investment. Nonprofit boards must meet the expectations of diverse stakeholder groups, each of whom may have very different (and even conflicting) interests.
Nonprofit organization board members are volunteers who have no direct economic interest in the success of the organizations. They don’t own stock and are typically not compensated for their service.
Yet, even given such differences, the fundamental obligation and work of all boards is essentially the same. This obligation is addressed in the next chapter.
Boards bear ultimate authority and accountability for an organization’s affairs. They are responsible for everything an organization is, does, and becomes. Governance is an activity, an action word; it is what boards do. The essence of the verb to govern is being a steward and trustee of an organization’s resources and capacities.
Governance is a team sport. Boards exercise collective influence; their members have no individual power. Boards exist only when they meet, that is, “between raps of the gavel.” Members may disagree, they can (and should) debate and argue about issues, but if they are going to decide and act, they must do so together.
