S3: “Boards and Magical Thinking”

Oh hey there. We hope you’ve enjoyed our posts about governance so far. In the office, we’ve been working on a program where we share weekly information about governance that we think is share-worthy. The commentary is provided by one of our Governance Consultants, Sonia Stamm, and compiled into an S3 format; source, summary and significance.

Step 1: Read the Source

Step 2: Read the Summary

Step 3: Read the Significance

Step 4: Share it with your colleagues, friends, family, neighbors, etc.

We think this short format is easy to digest and incorporate into your weekly routine. We plan to post these on Thursdays or Fridays and hope you enjoy them as much as we do.

Presenting the first S3:

Source

Boards and Magical Thinking (Kathy Ridge), Nonprofit Quarterly, July 2, 2014

Summary

Case studies show that nonprofits begin to “get into trouble” most at hands of their boards, which either tacitly agree or don’t sufficiently challenge strategic decisions about direction.  They might tout mission inadvertently at the expense of sound business practices, then rely upon “hope” as a strategy.

The author reminds board members that no leader brings everything, so the board must remain conscious of CEO strengths and vulnerabilities in order to complement them.  The board also must assume true responsibility for the organization’s financial performance and create tools for benchmarking, assessing, and analyzing the right information to ensure organizational success.

Significance

Good reality check about why board engagement matters, yet how easy it is for boards to focus on the wrong things.  Boards that rely on an  effective CEO or Executive Director sometimes abdicate their part of the partnership, believing that the organization is in good hands.  While that might be true, the CEO’s “hands” are meant to implement the vision and strategy, not define it in a vacuum.  Boards also must resist the tendency to focus on operations (which can be instinctive for board members who bring management expertise) and turn toward true governance instead.  Similarly, the board must be engaged in reviewing the right data to extract meaning (about impact, implications, sustainability), not just good feelings from it.