Take Away Line
Good governance, along with its great governance and weak governance counterparts, is only partly a describable condition – and in this blog we have a go at that – but it is also an outcome from a set of processes to help a board discern how well it is doing and responding to these signals. A good board is perhaps then an awakening board, a board that is actively getting in touch with itself and its environment, with the result that it does good things for its organisation’s bottom lines. That rare phenomenon, a great board, goes beyond that, drawing deeply to exploit so much more of its potential in ways that are unique but outstanding.
Bad to Good to Great
In thinking about a piece on great governance, I would really like to write about all the many boards I’ve seen boards that have practiced great governance. But I haven’t seen many. Flashes of brilliance from time to time perhaps, but most boards, even really quite good boards, are just working at it, trying to get better at what they do for the interests of their beneficiaries or beneficial owners. Greatness by its nature is rare; good and good enough are however more common, so to get to great, let’s do a little journey, starting with poor, stopping at good and finally peeking into the far away, but bright light of great.
A Starting Point
A previous blog (‘The Danger of Ignorance or why Good Corporate Governance is important’) spoke about the centrality of stewardship in the role of a board: boards are required to be stewards not only of their own organisations but also act in some sense as custodians for the sake a broader, collective social notion: public trust. Being a steward in this way, however, isn’t just a state (of being a board member); rather, it’s an activity that requires board members to ensure their organisations are led well, exercising their duties by making sure the organisation:
- Has direction
- Is resourced appropriately
- Is held accountable for delivery
- Has regard for public trust and confidence
Organisations’ boards that do not manage to execute their roles in this way can be described as weak – and here’s an example.
Things were coming to a head. A new chair had been appointed, more or less against the wishes of many then at the top of the organisation, but on the insistence of the regulator and with the support of increasingly concerned lenders. His brief was to turn round or dispose of the social housing organisation in question. He knew the reports being presented to the board lacked credibility: did they mask poor reporting systems, poor operational performance or poor executive behaviour? Or all three? And the board was fractious.
At his second meeting – the previous chair having stood down following the first meeting – any glow that some might have been felt for a ‘white knight’ was clearly over, and those whose futures may have been in doubt were kicking up. One particular rabble-rousing non-executive board director, who lost no opportunity to object to everything, while puffing up his own sense of self-importance, tore into the new chair, exaggerating his statements with the aim of polarising further an already fractured board.
The chair sat for a moment and listened. The room was tense. Would the new man take him on? Eventually, he calmly said how shocked we was at the disorderly nature of board proceedings, how ‘domestic’ board conduct had become, and how the hopes and aspirations of the thousands of members of the local community who rely on the organisation’s services were being severely held back by the very board that was designed to give their organisation its leadership. While what he said was obviously true, it had never quite been said like that before. In fact, it had never quite been said at all.
There was more, but the point was the way in which the new Chair simply played back what he saw; he held a mirror up to the board and, for some at least (not our rabble-rouser), a dawning sense of how bad it had become started to become apparent. There was no fix at this point, but there was the beginning of a painful awakening, as a system began to realise how closed it had become and, in that isolation, lost touch with what is important and how to do things reasonably well.
Bad governance is when the ‘not-OK’ becomes normal and, uncomfortably perhaps, accepted and inhabited. As with many a ‘closed system’ this tendency reinforces itself. As a consultant, so many of the boards I see that are not working well, have allowed themselves to become cut off – from each other, from the outside, and, sometimes, cut off even from their own organisations.
As we feel our way towards good governance, it’s perhaps easier to look first at what often is going on when bad governance is taking place.
Let’s unpack our last scenario a little. We can describe the key features of this organisation’s governance under three headings: what they did, how they worked together and who was in the room (Figure 1).
Figure 1: The ‘what’, the ‘how’ and the ‘who’ of a very poor performing board
An external person might be able to make these observations, but the critical point here is that this board was, neither collectively nor even individually, able to do so. They were in other words an unaware board. They could be a good but unaware board – there are examples of this! – but in this case, they were unaware and poor: a fatal combination. They were unaware that they were not spending their time doing the right things, that they were not working well together in terms of their structure and their relationships, and that they didn’t have the right team or a practice of working to recruit and nurture the right team.
A first step was, as we saw at that meeting, to face the reality and become a little more aware of how stuck they were.
A Framework for Looking at Good Governance
So, the beginning of the search for good governance starts with inquiry: how good are we?
And at this point a difficulty emerges, because there are so many good practice standards, so much advice, it’s hard to work out. A helpful way in is to turn around our table of complaints, above, into a table of what good might look like in their case. Here it is (Figure 2).
Figure 2: A sketch of what good governance is like
So, a good board spends its time well, working on the things that are most important; it is structured and has processes in place as well as functional relationships to facilitate good governance, and it has the personnel and the means to support and develop its people to deliver their best.
But of course, many of the points in Figure 2 beg more questions. What does ‘shared clarity’, ‘tight control’ or ‘right for the organisation’ mean in practice? While we will return to develop these ideas in future blogs, we can at least begin to see that a good board, even a good enough board will be actively working on these things and have a set of reasonably thought through responses.
The Conscious Board
Our example of a poor board didn’t become poor by design; everyone thought they were doing as well as they could. True, all the skills weren’t present and true, the awareness of things slipping didn’t seem to be there. But more important than that was the absence of the skill to be able to say, ‘hold on a moment, we need to reflect here about how we’re doing…’, and to challenge how things are, to prick the carapace of resistance to self-examination. To be able to talk about how things are is the critical skill that marks a good board from a poor one, because it’s it marks the conscious board from the sleep-walking board.
This problem is not rare. Think about it: without performance appraisals or customer feedback, or continuous professional development, who does easily know how they are doing? And when you’re at the top, which a board is, it’s all the harder to appreciate how well you’re doing, simply because no-one is going to tell you.
The answer? The answer is a simple one, but often hard to do and it’s the same answer for all people at the top: you seek feedback and you learn the skills of reflecting on that feedback and putting it to good use.
Boards need mechanisms of feedback and they need to grow the tricky skills of, as it’s called in the psycho-trade: ‘dialoguing’ – a system talking to itself, about itself, in order to learn. Dialoguing is how we improve our learning skills. Just as in most training courses, there is a reflection point within the learning group to consider not just what was learnt but how you are feeling, what you think of the programme and how you would do things again, etc. Dialoguing. A supremely important collective skills for boards. Arguably, the most important skill.
From Good to Great
There are many good boards ‘doing’ governance well and providing the leadership their boards need most of the time. What marks them out is a habit that goes something like this (Figure 3).
Figure 3: The Process a Learning Board Adopts
So, good boards are spending an appropriate amount of time, chasing their own ignorance about what they do, how they do it and who they are (the three key topics in our schema).
And chasing one’s own ignorance is exactly what the now well-known ‘Johari Window’ model tries to capture (Figure 4). In this idea, we are attempting to increase self-awareness, or in this case collective-self-awareness, by exploring the zones, which are currently hidden, to us. Such striving is the hallmark of a good board and, from my observation, the boards that are committed to exploring the ‘Blind Spots’ are the good ones; those that are actively also moving towards the ‘Unknown’ zone are the rare ones that can earn the accolade ‘great’. And a great board is the one that achieves exceptional results for their organisation.
Figure 4: Exploring the hidden zones of a board via a Johari Window
A Process, not an Endpoint
Research back in 1998 compared organisational performance with the governance model used by boards. Interestingly, it showed that no single model was more effective than any other. However, what did mark out the more effective organisations (with higher organisational performance) what they had adopted a specific governance model or approach. It seems the very process of being more conscious or deliberate about governance delivers the impact on the bottom lines, not which approach is used.
So, the approach of both good and great boards is like this (Figure 5)
Figure 5: the Relationship between Governance and Organisational Performance
What great boards seem to do is to go further than this and not just adopt ‘good practice’, but create great and often unique practice by exploring and deploying more of the unknown and uncharted collective potential.
- Would you describe your boards as good, weak or great? Why?
- What feedback does your board have about its performance?
- How discerning is your board about deploying the feedback it has available for development purposes?
 This is a schema taken from Treading the Boards: A Self-Assessment Framework for Board Performance (Housing Corporation, 2001) of which I was the lead author: currently out of print, but please get in touch if you want a pdf
 Do Intentional Efforts to Improve Boards Really Work? The Views of Non-Profit CEOs, Jeffrey L. Brudney and Vic Murray, Non-Profit Management and Leadership 8,4 Summer 1998. http://onlinelibrary.wiley.com/doi/10.1002/nml.8403/abstract
 See Treading the Boards: A Self-Assessment Framework for Board Performance (Housing Corporation, 2001) of which I was the lead author: currently out of print, but please get in touch if you’d like a pdf.