What Healthy Boards Look Like

Toward Better Governance

You're newly elected to serve on a board, wondering what your new role entails. Or maybe you're leading a non-profit or a church, navigating your relationship with the overseeing board or elders. Perhaps you chair a board in need of a refresher on purpose and direction. Or you might even be wrestling with a dysfunctional board situation, looking for a new day to dawn. Whatever your vantage point, let's think about what healthy boards look like.

Seven key choices shape most boards over time. Each of them below presents a stark contrast. These contrasts are found in board decisions, both minor and monumental, that mold the board's trajectory and its relationship with the organization it oversees.

Governance vs. Management

If we distilled the primary role of a board down to one word, it would be "governance." This involves establishing mechanisms to ensure an organization's proper functioning across various domains crucial to its overall health and success. But defining governance precisely is challenging. It's often easier to recognize when a board gets off course, slipping into management territory. Management tasks should be delegated to those hired for the purpose, while governance focuses on broader, strategic decisions. Many other facets of board functioning stem from this primary temptation toward management. Healthy boards consciously remain in the governance lane.

Key Questions:

"Are we delving too deeply into management tasks, neglecting broader systemic questions that could prevent similar issues in the future?"

"Is our discussion encroaching on the executive director's domain? Perhaps our focus should be on bolstering the structure around them to ensure success and accountability."

Strategic Direction vs. Directing Action

Boards drift off course when meetings become platforms for directing action steps between meetings. An excessive focus on directing action indicates a failure to think about broader strategic aims. If the executive director, pastor, or CEO is coming back to each board meeting to report on all the steps he took that the board wanted done the last meeting, then things are way off track. Healthy boards prioritize setting direction over dictating these action steps. Organizations lacking strategic clarity or long-term plans are most tempted by the false feelings of accomplishment that micromanagement brings. They mistake incremental action for substantial progress.

Key Questions:

"Should we entrust the pastor with the details and instead focus on overarching goals for the year? Let's instead ensure she has accountability for implementing steps towards our shared vision."

"Are we dedicating sufficient time to discussions about our future trajectory? While the CEO provides strategic leadership, shouldn't we offer key input for him and refine the organization's direction?"

Empowerment vs. Decision

Board decisions do hold great weight, but some boards overburden themselves with unnecessary decision-making. A preoccupation with centralized decision-making hampers empowerment. As I've said in another article, one of the most consequential decisions we can make is to decide who decides. Determining which person or group should make decisions in a domain in an ongoing way is the most powerful decision a board can make, and is the essence of true empowerment from the board.

Key Questions:

"Before making this decision, should we clarify who holds decision-making authority in the future? Perhaps we shouldn't monopolize the decision-making."

"Could we delegate this frequently-made decision to the finance committee, while retaining board oversight through their reports?"

Future Vision vs. Tactical Reaction

Dysfunctional boards are habitual over-reactors. They tend to react hastily to situations that develop, oscillating between extremes based on immediate circumstances. But healthy boards adopt a forward-looking stance, leveraging crises as opportunities for strategic adaptation. Instead of erratic reactions, they maintain a steady focus on long-term vision. Rather than being tossed about in the turbulent waters of organizational leadership like fishing boat, the best boards have the stability of a battleship. When storms blow, the board might adjust a few degrees here and there, without over-compensating. Keeping an eye on the horizon not the surging waves, healthy boards have a steady hand and even keel.

Key Questions:

"While we address this issue, should we also consider its implications for our long-term vision and organizational philosophy?"

"What lessons can we draw from this situation to refine our future trajectory? Do we need to adjust our vision or reinforce existing goals?"

Enacting Policy vs. Enforcing Policy

Most people have the same reaction to the word "policy" that they do to the word "committee" or "root canal." However, a weird thing happens when people get on a board, as they sometimes transform into policy wonks overnight. Previously carefree, winsome, and funny people can find themselves uttering the dreaded phrase, "We've never done it that way before." Boards can become fixated on policy enforcement, deviating from their role as policy creators. Policies serve as pre-determined frameworks for decision-making, aiming to reduce the need for constant deliberation. Policies should make an org more efficient, not less so. Overemphasis on policy enforcement undermines this purpose, resulting in endless tinkering on the policies, which makes the policy-making redundant at best and irrelevant at worst

Key Questions:

"If our policies dictate the course of action, do we need to revisit this discussion? Perhaps we should stick to our established policies without unnecessary discussion."

"Should we delegate policy enforcement to the director? Do we require clarity on existing policies or are we seeking an exception while maintaining the policy?"

Income vs. Expenditure

One of the first new concepts a rookie board member might hear and not understand is the term "fiduciary responsibility." The term fiduciary is a fancy Latin-derived term meaning "faith" or "trust" which means the board is obligated to act in the best interests of the organization. For comparison, your investment advisor would need to have a fiduciary responsibility to manage and invest your money in a way that is good for you, not just good for her. The same goes for boards. You are serving for the organization, not for yourself. (Lord knows you didn't come for the free pens and snack breaks, or maybe you did—not judging!) While taking your fiduciary responsibility seriously is good, excessive focus on expenditure management alone is a mis-directed focus. Healthy boards scrutinize income more than expenditure, ensuring long-term financial viability. If you're debating about how much was spent on copy paper or Zoom accounts in the last quarter, you might be missing the real problem: income. It is better for the accountant, manager, or CFO to provide expenditure accountability in the organization and instead have the board focus on the profit side of the sheet, not the loss side.

Key Questions:

"Amid concerns about budget shortfalls, should we explore strategies to improve income generation? Let's address the root cause rather than obsessing about spending."

"Beyond budget cuts, should we address our consecutive declines in projected income? How can we reverse this trend?"

Crisis Discernment vs. Crisis Management

Every board experiences a crisis sooner or later: Your public figure CEO has an inappropriate relationship with a direct report. Or an executive director is misappropriating significant funds for his benefit, and your accountant is even implying some criminal conduct. Or a pastor is accused by high-level staff of creating an unhealthy work environment because of his anger issues. Or your organization might be caught up in a local, regional, or even national news uproar that has people flooding social media in outrage. These are the moments of "crisis management" everyone dreads. However, hasty decisions in these cases often exacerbate the situation. Healthy boards distinguish between short-term crisis management and long-term crisis discernment, prioritizing thoughtful responses over knee-jerk reactions. Extra meetings may be necessary to navigate crises effectively, ensuring the organization's sustained success (even though boards hate extra meetings). You need a crisis discernment season to really tease out what the facts are, what the policy-driven response should be, and if anything more needs to be done in extreme circumstances. Remember: you're not here to make sure the organization makes it through the next 3 days, you're here to make sure the organization is successful for the next 30 years.

Key Questions:

"Once we finalize the statement, should we outline our approach to truth-seeking and potential blind spots? Let's avoid rushed decisions and prioritize thoughtful responses."

"Are we rushing to react rather than responding judiciously? Could our haste lead to regrets down the line?"

These seven contrasts shape a board's long-term health. Even dysfunctional boards can wield significant influence by consistently opting for healthier alternatives in each scenario.

So, what's your take on what healthy boards look like? Have you seen any of these contrasts at play in healthy or even dysfunctional boards in the past? How have you sought to be the kind of board member that contributes to overall health?