Transparency and Trust in an Age of Governance Tension

tecker_how_to December 4, 2017 By: Glenn Tecker

In today’s heated political environment, where long-established board member practice norms are increasingly questioned, boards that communicate their substantive deliberations on important issues will win trust.

Association governance has always involved a precarious balance between the competing expectations of corporate and political cultures. The tension between these two dimensions of association governance appears to be becoming more acute in today's heated political environment.

The political dimension of the representative governance model is based on the desire for decision makers to have access to the various perspectives present within a membership with shared purpose but often diverse opinions.

Traditionally, attention has been given to ensure a direct or indirect voice in governing bodies for definable segments of an association’s membership. Sometimes representativeness is achieved through an electoral process; other times, it’s through thoughtfulness exhibited by an appointing body. In either case, most association governing boards operate with some sensitivity to the constituencies of interests represented around the table.

The corporate dimension of the representative governance model is built on the obligation of corporate board members to observe the three fiduciary duties of care, obedience, and loyalty. Of particular note in the dynamic between political and corporate responsibilities is the duty of loyalty. This is a legal obligation of any member of any for-profit, public, or nonprofit corporate board. It requires board members to think, discuss, and decide on the basis of what is in the best interest of the organization.

Many association board members have learned how to navigate the tension between these two dimensions. They work to ensure that the views, values, and interests of the group they represent are recognized, understood, and appreciated during deliberations. Then, they proceed to examine the issue and make a decision based on the long-term best interests of the enterprise as a whole. We refer to this as a “representative of” governance philosophy as opposed to a “representative for” philosophy.

Recently, I have been observing a significant shift in the balance of the competing values of corporate and political governance at a number of associations. For years, the corporate culture tended to dominate: It was widely accepted that board members should support a board decision that was properly rendered. Similarly, it was also accepted that board members must maintain confidentiality when an individual’s rights or the organization’s interests might be compromised.

On controversial issues, where transparency is appropriate, the board needs to be the first to communicate what it considered when making its decision.

Over the past year, an increasing number of CEOs, especially those in professional associations where elections determine board membership, have reported to me the following issues:

  • Board members refusing to sign blanket confidentially agreements.
  • Board members rejecting the notion of the board speaking with one voice once a decision is made.
  • Board members maintaining an obligation as an elected representative to dissent or lobby against board decisions with which they disagree.

These dilemmas, which demonstrate a shift to a more political culture, are complex for CEOs, and the impact on association effectiveness can be disastrous. The situation can be exacerbated when no guidance is provided in bylaws or policy or the governing body is unwilling to risk the consequences of enforcing expected behaviors.

And given our easy access to nearly-instant communications, a board member who is openly protesting a board decision can exercise a disproportionate influence on member opinion. Because of this, a political and process problem quickly becomes a communications nightmare.

An assertive communications strategy is often required to avoid the appearance of disrespecting a particular board member, accusations that the board is ignoring alternative views, or allegations of a cover-up. Being assertive does not mean suppressing dissent. An assertive strategy is planned and routine.

Often, the best response is a clear and concise explanation of the rationale for the decision being protested. I find that when such explanations have become an expected and routine part of a board’s conversations with association members, the consequences of a negative board member’s behavior can be effectively mitigated.

Communicating due diligence as a routine practice can also serve as preventive maintenance. Especially on controversial issues, where transparency is appropriate, the board needs to be the first to communicate what it considered when making its decision. It needs to disclose what it took into account regarding:

  • the needs, wants, and preferences of its stakeholders
  • conditions, trends, and projections about the future
  • the capacity and strategic position of the organization
  • the decision’s ethical implications
  • alternatives that were considered and their advantages and disadvantages, and why the selected option was preferred.

Boards that communicate what they considered in their deliberations on important issues where confidentiality is not legally required will demonstrate the credibility and legitimacy of the process and will earn members’ trust. It may be that in today’s politically volatile climate, your communications strategy needs to treat transparency about the rationale for a decision as a necessity, not just a nicety.

Glenn Tecker

Glenn Tecker is chairman and co-CEO of Tecker International, LLC, in Yardley, Pennsylvania.