Critical Elements for Board Effectiveness

The concept of good governance is moving toward mainstream awareness.

A recent blog, entitled “Strong Culture and Leadership Critical for Nonprofit Board Strategic Success,” appeared in Huff Post Business and applied some concepts gleaned from for-profit boards to the nonprofit sector.

First and foremost, it reminds us that all boards — for-profit and nonprofit — face similar challenges in their own development.  Board culture and leadership might well be the most critical elements in ensuring board effectiveness, yet they also tend to be the most taken for granted.  Neither is easy to assess nor cultivate and nonprofit boards, in particular, often hesitate to effect change among their own.  As Nancy Axelrod, founding CEO of BoardSource and keynote speaker at our recent conference, noted, “They’re dying of nice.”

Among the numerous opportunities for nonprofit board development presented by the author, two stand out for us:

First, the concept of “lead directorship” — introduced to ensure independent board leadership in response to the Sarbanes-Oxley Act of 2002 — is intriguing in a new context.  Contrary to for-profit boards, which sometimes appoint their CEO’s to board chairmanship, it is not acceptable for a nonprofit chief executive also to chair the board.  The board chair, then, is already an independent director who can serve as facilitator of board process.  Still, the lead director role might be best executed by an effective chair of the governance committee who, in a perfect world, can serve as “safeguard” of board process, structure, and function.

The other major concept that resonated for us was acknowledgement that cultural change at the board level requires a “succession of strong, proactive board chairs.”  No doubt boards need to be led, held accountable, and supported in embracing their full range of responsibilities.  The right board chair can raise the bar, but a lax culture will not necessarily hold it up for his/her successor.  Building the right mechanisms for board succession, evaluation, and more are increasingly important in ensuring board effectiveness, again suggesting the governance chair and board chair are essential partners in the process of fostering board success.