“Which governance style is for us?”

The question many people ask about governance models isn’t the one they should be asking. The way I often hear the question, people think the choice is between policy boards, management boards and working boards. Their question usually is, “Which type of board should we have?” as if these types are mutually-exclusive choices.

Degree of board delegation

Rather than listing governance styles as mutually exclusive options, I think it is better to think of a continuum based on the degree of delegation by the board to staff. The practical difference is that this model recognizes that all boards are policy boards. The question isn’t “Should we be a policy or management board?” but “Given that we are a policy board, how much of management and doing do we want to do?” Another way to ask the question is “Where do we draw the line between board and staff responsibilities?”

Directors may wear several hats

Circumstances will in most cases dictate how much is delegated to staff. If there are no staff members (whether paid or volunteer), the board members will have to do the work themselves. But the board isn’t really doing the work because the board members take off their governance hats and put on their volunteer hats. They step out of their governance role and into their volunteer worker role.

The concept of the same people fulfilling multiple roles is really well explained in a book  by Michael Gerber called The E-myth Revisited. This isn’t a governance book, but it has a lot to say about board members. The “E” in the title stands for “Entrepreneur” and the myth Gerber refers to is that all you have to do to have a successful business is know how to do the work of the business.

His example is a woman who loves to bake and who decides to open a bakery business.  Gerber’s point is that although she knows how to work in the business (baking), to be successful she will have to make the transition to working on the business (marketing, finance, strategy etc.) and will likely have to hire someone to do the very thing she so much loves to do: bake the goods! But before she can afford to hire a baker, while she is baking and running the business, she must recognize that she has two roles: baker and director. The director directs and the baker bakes. Just because a director also happens to be a baker doesn’t mean the director’s role or the board style is different. The fact that they happen to be the same person just means they have to be clear about which ‘hat’ they are wearing at any particular time.

In another example, Gerber has a group of shareholders run a business with just themselves as the workers. At the board table they are all equal. But one is responsible for marketing, another for finance and another for operations. If at the moment they are all helping with operations, one board member has a management hat on and the others have worker hats on. They are no longer equals in this situation. The three workers report to the manager. This does not at all affect their equal status as directors.

The governance model must match the circumstances

Let’s apply this to governance. All boards have to set policies, so every board is a policy board. But on some boards the directors might have more than just their director’s hat to wear.

If there are no staff members to delegate to, the directors must do all the work themselves and make all the management decisions too. People call this a working board, but the board and its style really hasn’t changed. Sometimes what they might think is their board meeting is really a management meeting. And when they are working, the board isn’t working; the people who serve as directors are. They are volunteer employees rather than directors at this point. A working board really means the workers are drawn from the board members. The fact that directors are also workers has nothing to do with governance style. It’s simply the result of a decision not to recruit beyond the board members for staff (whether paid or volunteer).

If the board has a staff but still wants to make some operational decisions, then it might delegate all the work and some of the management responsibility to staff, but retain decision authority for, say, adding/deleting programs and hiring/firing employees. This is a policy board with some management responsibilities, which many people call a management board. It should still understand when it is meeting as a governing board (setting policy) and when it is acting as a management board (applying policy to operational decisions).

And if there is a capable staff that is trusted by the board, then the board can afford to delegate all management responsibilities and all the work to staff. This situation suits what people usually call a policy board.

One level of delegation is not necessarily better than another. The question is, “What are the organization’s circumstances and how much do they allow the board to delegate?” Does it have staff? Is it prepared to let them make management decisions? Questions like these will help policy boards decide where to draw the line between board and staff responsibilities.

The choices are not mutually exclusive because there are many scenarios where there could be a mixture of all three board styles. A small church might have a pastor and a secretary but no one to look after the property. So the board might delegate the work of pastoring a church to the pastor (as either a policy board or a management board) but be a working board when it comes to property maintenance. In this case, the board could have a property committee to do the work.

Is the degree of delegation a helpful continuum for determining what kind of board you have? Do you have other ways of categorizing governance styles?  Let me know what you think.

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Thoughts on “Which governance style is for us?”

  1. Mark Petersen

    This is very helpful. You are right: all boards must deal with policy. The extent that they move beyond policy to operations is where to draw the line.

    I think it is likely that in smaller organizations there is a blurring of the lines. As an organization matures, expands, etc, its board (hopefully) matures along with it to eventually focus more exclusively on policy, leaving the business of running the organization to the CEO, as it should.

    Your analogy of the baker-entrepreneur is good, and let’s apply it to the pastor of the local church. He or she is great at pastoring, at motivating, at caring, at public speaking, but we shouldn’t assume he/she is capable of directing the organization. Some pastors may have governance capability, but it’s not taught in seminary and we shouldn’t assume a pastor should automatically assume the business of governing.

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  2. Richard Biery

    This blog is useful in that it points out the vital importance of role clarity, which permits the discerning board to realize whether it is involved in a management activity or not at any specific moment. It can then decide how to separate those roles as is discussed.

    However, I would rather state that all (governing) boards should be policy boards – should have a distinct and single board voice – its policies, but I would not say most board are policy boards in practice; the vast majority of boards (I have served on over 30 boards of all types and consulted to over 100) are passively reactive – reacting to management reports and requests or outside forces – auditors, the IRS, banks, an accrediting organization, etc. If they have any policies they are even ad hoc and reactive! (The joke in governance is that boards make policy by accident.) The board shows up with the agenda done by the chief executive (and maybe blessed by the Chair), they react to the reports before them and attempt to ask “good questions,” as an HBR article recommended. There is no leadership in reacting to reports. They can’t tell when they slide from governing into management because they have never defined their role as trustees.

    Governing is a distinct role (and legal responsibility), and managing, as we use the term today, is another. A board should always be sure it is first governing; then if it has time and necessity dictates, it changes venue and roles to manage if it must, as is illustrated in the blog. In that venue it is a management team. (Which is the way most church boards behave – as a super management team, attempting to coordinate and mediate between missions, programs, finance, worship, kids, youth, adult ed, etc. and never getting around to govern!)

    It all starts with understanding governance and the directors’/trustees’ first duty and role.

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  3. John Pellowejpellowe Post author

    Thanks for your contribution Dick. You hit the nail on the head!

    Christian agencies usually have volunteer directors who are not direct beneficiaries of their services (unlike a local church) and who rarely interact with each other between board meetings. Consequently they are not as aware of the trends and issues affecting the ministry as the paid staff are, and they often rely heavily on paid staff to set the agenda.

    I think this is where more training in pure governance would be helpful.

    As always, your insights are jewels!
    Blessings,
    John

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