Written By Contributing Writer Brian Cavanagh, CEO, Calibrate
In this uncertain and unpredictable climate, Charity board trustees need to reimagine their purpose and reposition around governance and leadership, especially policy formulation. Historically, it has been left to the CEO/Executive team to devise policy, with a general reluctance for boards to get involved in policy formulation
Why is this the case? Policy formulation, according to Bob Garratt, is the least understood component of a trustee’s role. He identifies four components of policy formulation: purpose, vision and values, emotional climate, and culture.
Yet, in the context of policy formulation, it is for boards to decide the extent of their involvement. At the very least, that should ensure that the four components referred to above are the basis for any policy formulation, especially around purpose and values.
Trustees should be better at recognizing both of their roles. Governance as leadership should be regarded as the ‘day job’. Bringing together the leadership expertise of the board and CEO/team, using generative thinking, improving the quality of decision making and, flowing from that, better governance. It also explicitly places trustees in a leadership role.
Governance as leadership was first popularized by Chait et al. It depicts a model of fiduciary and strategy duties as a responsibility of the whole board, what he termed ‘generative thinking.’
Generative thinking changes the dynamic of a board. A co-design approach to strategy and policy formulation creates opportunities for better ideas – and has the advantage of enabling trustees to become involved at the beginning of the process. Similarly, because both executives and trustees are represented at the beginning of the process, accountability and ownership are shared, thus making decisions more stickable.
But this also means confronting some uncomfortable truths. In most charities, the CEO/team generate the thinking. As the policy environment becomes more complex, greater reliance is placed on the CEO/team, which can have the effect of displacing the trustee leadership role.
Why does this happen?
Most boards are on the outside looking in. And whilst several boards do generative work some of the time, most boards are not organized and equipped to do this work. Which can lead to boards adopting a managerial version of governance, reacting to issues that the CEO/team presents to them. Failure to see beyond the immediate, boards become bystanders. Whilst this does not apply to all boards, even where there is discussion and debate, this is often restricted to the priorities of the CEO/team.
The board modifies on the margins, but substantively the CEO/team finds solutions to what they see as the charity’s problems are ratified by the board. And whilst these may be solutions, they come from a narrow perspective, whereas a wider board purview might have produced more long-term and effective strategies.
In contrast to the scenario outlined above, where the board surrenders their power, there is an equally destructive approach which is best described as governance by default. In this situation, no generative thinking and far less generative work take place. The vacuum is filled by CEO/team designed strategies, development campaigns and advocacy on behalf of the charity. ‘Mission creep’ by the executive team into the areas for which the board has both a role and a responsibility. Either way, it is an abdication of trustee leadership.
Facing The Challenges
So, if Chait et al. term generative thinking central to governing, why not give all the generative work to boards? Yet, if boards do all the generative work, they move from bystanders to implementers. Boards imposing their views on CEOs is unlikely to be acceptable for long. The reality is that most boards recognize that the CEO has a pivotal role in generative work and, because of their wider roles and networks, are well positioned to do it.
This can sometimes lead to tensions with the board. CEOs may have more effective networks leading them to bypass the board to engage with key decision makers. This can lead to accusations that the CEO is supplanting the role of the board. Yet, at the same time, the CEO can regard the board as having too narrow a focus on holding them to account rather than addressing wider strategic perspectives or their own performance and engagement.
Neither party is satisfied. As a result, there can be pressure on the Chair to reclaim that territory from the CEO on behalf of the board. However, what is really required is a step change – namely, trustees focusing on governance and leadership. it has the capacity to improve the quality of governance, and offers boards a way to value their own contribution
The Benefits Of Governance As Leadership
The governance as leadership approach regards generative thinking as a shared endeavour. It goes a significant way to rebalance the relationships between the board and the CEO/team. It also assists in managing the boundaries between the Chair and CEO. This has the added advantage of preventing micro-managing or micro-governing.
Such an approach avoids a tussle between the board and the CEO as to who should engage with key stakeholders. Instead, by combining their own ‘circles of influence’ together, they are more likely to be effective together.
In relation to policy formulation, such an approach can be successful when the board is clear about where and when it wants to get involved. And whilst more involvement often results in better outcomes, it may be that the board does not want to get involved on a particular occasion.
Without ascribing magical properties to generative thinking, it means the areas where board trustees have chosen not to become involved, or conversely, expect to have a lead role, do not become contested arenas. Suddenly, there is sufficient space and responsibility for everyone to perform to the best they can be.
It is precisely for these reasons that reframing the governance and leadership of boards as the generative approach is, as Chait et al. contend, the best model for governing a charity.
About the Author:
Brian Cavanagh has over 25 years of experience in governance and leadership in the public sector in Scotland. He is the CEO of Calibrate, a mentoring consultancy specializing in strategic leadership and board governance for the charity sector in the UK and Ireland: #Governing with Purpose, @BrianCavanagh.