Wednesday
June 27
2012

Mirjam Schöning and Abigail Noble

Part III: Getting the Most Out of Your Board

Editor’s Note: This is the third and final post in a series of articles focused on developing and strengthening corporate boards for social enterprises. Part one is here and part two is here.

If designed and managed correctly, a corporate governance board,strengthens, not weakens, the leadership of a social enterprise and helps to ensure the success of the social enterprise.

In last week’s post, we discussed the first step: creating the right governance board for your social enterprise. The focus of this post is on managing the board once it is created.

Useful boards are only possible when they have the right information. The leadership team of the social enterprise must position the board members to make valuable contributions by first on boarding the board members to the mission, vision, strategy, operations and culture of the enterprise, and second by providing regular reports and salient updates. While new board members often have the desire and capacity to contribute their expertise and experience to the social enterprise, they will not be able to provide constructive support and oversight without having the relevant context and specific updates. We recommend that the board members meet the social enterprise core team to understand the organizational culture and daily operations from the perspective of those responsible for implementing the strategy and board decisions. When the board is familiar with the core team, they are better able to ask the right questions before making a decision, more thoroughly understand the cultural and operational facilitators and obstacles pertaining to any decision, and have a greater chance of troubleshooting potential problems and surfacing future risks. (See the guidebook for a template for board updates and reports).

Productive boards arise when the culture of the board is well curated. The chairman of the board, along with the social enterprise leadership team should focus on creating a productive culture for the board interactions. Creating the right board culture is essential, as it will increase the commitment and value of board members to the organization. This is particularly important when board members are diverse in perspective and opinion on critical decisions of the social enterprise. We recommend that the board adapt and adhere to specific rules of order, establish a culture of active listening and respect for different perspectives, actively encourage divergent or contrarian perspectives to create a productive dialogue, and commit to arriving at a mutually agreed upon decision through productive dialogue that is in the best interests of the social enterprise. (See the guidebook for best practices in meeting management and building a diverse team).

Effective boards result when there is clarity around roles and responsibilities. There should be clarity and mutual understanding of the roles and responsibilities within the board, and between the board and management team. On a general level, boards serve two primary responsibilities: support and oversight, in four specific ways. First, boards act as sparring partners for the management team. Second, board members provide access to their networks for the management team. Third, board members are ambassadors for the mission of a social enterprise and thus provide advocacy and legitimization. Fourth, board members oversee and ensure the operations and administrative functions are well run and the business is sustainable. (See guidebook for tasks boards should perform over the life cycle of the social enterprise, and for delineation of roles between chairman of the board and management team). While the roles and responsibilities of the board pertain to the support and oversight of the social enterprise, it is the management team’s responsibility to ensure that the board decisions are implemented. Likewise, the board should not get involved in the implementation of the day-to-day operations but rather oversee the results of these operations. It is important for the board not micro-manage the management team, and also for the management team to respect the board’s role in offering strategic support and also in oversight of the management of the social enterprise.

Boards continue to be high performance when there is a regular and open process of evaluation, and when the boards are responsive to incorporating feedback. Board members often assume that good intentions, the right information and relevant expertise lead to effective governance. However, this is not always the case for myriad reasons. Boards should conduct a rigorous and regular self-assessment process as well as receive feedback from the social enterprise management team. Given that board members desire their contributions to be meaningful, social enterprise management teams should feel comfortable offering feedback to the board on what is working well and what is not. (See pages 25-31 of the guidebook for an example of a board self-assessment questionnaire).

Here, we would like to share a few guiding questions to help leaders in social enterprise while working with their governance boards:

  • Is your board telling you what you want to hear or what you need to hear?

  • Is there a good balance of support and oversight provided by your board?

  • Is there a clear delineation of management and board membership as well as of the tasks of the respective bodies?

  • Are you aware of conflicts of interests that your board members might be facing?

  • Do you have a policy in place on how to treat conflicts of interest?

  • Do you provide your board with appropriate information to enable them to make informed decisions?

  • Do you have a rule on how to treat exceptions (e.g. how to pass resolutions in case of emergency)?

The full guidebook takes the reader from the basic steps of deciding who and how to recruit and select board members, to creating a high-performance board customized to the needs of a social enterprise. We invite you to download this free resource and welcome your feedback and comments.

The authors would like to thank Ann-Kristin Achleitner and Judith Mayer of the Technical University of Munich, and Andreas Heinecke of Dialogue Social Enterprise for their contributions to the guidebook.

Categories
Entrepreneurship
Tags
business development, governance, social enterprise