Corporate and nonprofit boards haven't always been perceived as different creatures. As John Gillespie and David Zweig write in their recent book on mismanaged boards, Money for Nothing, the 1986 speech "Governance Is Governance" by Target Corp. cofounder Kenneth N. Dayton has inspired association and business leaders alike.
But with many boards losing their way in recent years, a refresher on best practices may need to go on the agenda. Gillespie offers five points to consider.
1. Let the outsiders in. Organizations with boards full of people who come from the same industry are cultivating blind spots and groupthink, says Gillespie: "If you get a good mix of people and backgrounds and perspectives on a board you can get a much healthier organizational leadership as a result. The problem is that too many boards lack that kind of diversity because they're self-selecting entities."
2. Make room for disagreement.Board meetings, Gillespie says, should avoid checking boxes and instead make time for "thinking through and rethinking how the money is being spent, what the organization is accomplishing, whether the executives running it are doing their jobs or have been there too long, who's being asked to be in the boardroom." If not, "then you should have some red flags flapping in your face saying that we're not focusing on the right things."
3. Tighten the ranks.Many philanthropic nonprofits build large boards to cultivate a large fundraising base, but that's often a recipe for weak or wayward governance. "If you're going to have a group that's effective, it seems to be that the eight-to-12-member range seems to work for group process a lot better than having something where you've got 20-plus board members."
4. Don't call your annual report "transparency." "That's really a PR document about how great things are going," says Gillespie. To truly open up, executives and volunteer leaders need to find other venues. "I think using the internet and other means to directly inform and solicit opinions and thoughts from the constituents of organizations is something that doesn't occur enough now and certainly ought to."
5. Get diverse. "A lot of nonprofit [boards] are known as being male, pale, and stale," Gillespie says. "There's a study that said you should really have at least three women on a board so that they don't get marginalized, and be sure they're not ones who are overcommitted to other boards. They bring an ability to ask tough questions more than men in a lot of cases and also have a tendency to think about some of the other stakeholders, the employees, the customers, the communities that are affected by the organization."