Lessons From Being on A Board –
The Nonprofit and For-Profit Kind
As different as the subject matter might be, the reality of my experience suggests that there are common characteristics for any Board, having seen both good and bad.
Clarity of mission seems such a simple principle, but for both commercial and non-commercial organisations, it can be challenging. Market events or global crises can often have an impact on the mission, and without a steady focus on the ultimate objectives, Boards and wider organisational leadership can either start to drift or be overwhelmed by the tactical, at the cost of the strategic. This is where a Board can add significant value – allowing the operational mechanics to turn, whilst supporting the organisations leadership with the longer-term mission.
I saw this acutely before and during the global financial crisis, when commercial organisations rapidly began to lose sight of any prior-agreed mission (or in some cases; set of principles) and lurch from crisis to crisis. Some Boards were caught asleep, particularly in financial services, having abdicated responsibility over the years of growth and profit, for good governance and accountability. In the US, the problem was exaggerated by a particularly conflicted role of a single Chairman and CEO.
In the nonprofit world, in my experience, the reverse trend is underway. There has always been a stronger ‘EQ’ focus at Board level, but now there is growing recognition of the need to balance the ‘EQ’ with the demand for skills (‘IQ’). The best Boards in this sector have secured this balance. It’s also important to ensure, when you’ve secured the IQ and the EQ around the same table, that you don’t then create a series of sub-committees where you divide yet again. Yes, good governance requires different skill sets to take leadership in their respective areas, but a good Chair will make sure that the IQ and EQ is blended even within this sub-structure.
It is also important to recognise a vital difference: shareholders. The Board of a commercial organisation is not simply responsible to the leadership and employees, it’s accountable to the shareholders – and, often, this is a rather binary relationship focused on the maximisation of profit. In nonprofits, as the name suggests, the Board has a responsibility for a more equitable group of stakeholders; staff, users, doners, charitable recipients, etc. It’s often part of a much wider eco-system of stakeholders, and as distinctive a focus as profit might be, a nonprofit purpose can be even more compelling and demanding.