Updating, revising and rethinking your organization’s governance activities might not be the easiest project, but it’s a critical component of ongoing due diligence. Clearly, the best time to examine governance structure is when an organization is healthy, its activities are aligned and advancing strategic priorities. In fact, organizations should consider a governance review as part of the CEO’s and Board’s ongoing due diligence process.
But many boards only examine their governance structure when they are forced to look at it (for example, if their organization fails to perform or is in the midst of a crisis). Consider a governance review as a “preventive”
“If an organization’s governance structure isn’t right, nothing else will be right,” said Phil Lesser, Ph.D., CAE and vice president, Bostrom Consulting.
Lesser and colleague Barton Tretheway, CAE and managing partner, Bostrom Consulting, worked with a client (a large organization in the hospitality industry) to streamline its governance structure and improve engagement of volunteers and staff alike.
Start with a Strong Team and Clear Direction
Bostrom Consulting assembled a strong, well-rounded team that agreed on goals and process. On the client side, senior leadership and staff provided knowledge about the organization’s culture, needs and priorities; Bostrom Consulting brought its expertise and experience in governance and building sustainable organizations.
Next, Bostrom Consulting outlined its four-step process:
- Assess the organization through interviews with board, staff and volunteer leaders to gain an understanding of the current and desired situation;
- Develop recommendations;
- Present recommendations to the Board and incorporate feedback and
- Create an integrated communications plan to introduce the new structure (and its benefits) to staff, board and volunteers.
Assessment Uncovers Areas for Improvement
As the team conducted the assessment, it identified:
- Lack of structure in the organization’s network of committees; the organization included several “rogue” committees that might not have been created with a clear purpose in mind
- An Audit Committee embedded within the Finance Committee (the two should be separate)
- Committee reporting structure
- A governing body involved in operational and administrative issues
- Committee goals not aligned with the organization’s strategic plan
Clearly, there was room for improvement to help this organization enhance a governance structure based on best practices and Bostrom Consulting’s expertise.
Bostrom Consulting analyzed the assessment results and developed recommendations to create a governance structure that was integrated with and would advance the organization’s strategic plan. Among the recommendations:
- Implement a consistent committee structure and set a committee charge. Define the role and parameters of committees, subcommittees and task forces.Consider the needs (and time constraints) of volunteers; younger volunteers may be more likely to serve on a task force, which has a defined task and timeframe.
- Redefine the committee reporting structure to help re-focus the board on strategic rather than programmatic issues.
- Create new committees: separate committees for audit and finance; create a leadership committee and incorporate a nominating committee within it. A leadership committee’s responsibilities include board succession planning and ongoing identification and training of volunteer leaders.
- Establish a board service agreement which outlines the responsibilities (fiduciary and otherwise) of each board member, who signs the agreement annually.
- Clarify the role of the organization’s governing body to focus on strategy and policy rather than the business of the organization.
After the team developed and presented these recommendations, its final task was to examine the organization’s bylaws, the basic agreement between members/stakeholders of an organization regarding how the organization should be governed.
“Good bylaws are a basic agreement between members or stakeholders of an organization and should not contain significant detail,” said Tretheway.
“Unfortunately, some organizations have a tendency to memorialize minor policies or procedures in bylaws which detracts from their original intent and effectiveness,” he said.