Building a Contemporary Board for a Modern Association

July 16, 2017

Omer Soker outlines the premise that you cannot be a modern association without a contemporary board.

The capability of Australian association boards mirrors the findings of a 2016 McKinsey & Company global survey¹ which categorised boards into three general groupings:

The Ineffective Board
The Complacent Board
The Striving Board

Australian associations are split between complacent boards and striving boards, with ineffective boards being a minority. McKinsey’s Striving Boards create a strong culture of respect and trust that makes them effective on strategy and performance management. Complacent Boards struggle to embrace feedback or focus on organisational health and talent. Paradoxically, when surveyed by McKinsey, Complacent Boards perceived their overall impact more highly than Striving Boards, even though they only executed three out of the 37 given tasks efficiently.

The Johari Window is the crux of the challenge for complacent boards. They don’t know what they don’t know. Poor governance is the greatest self-imposed block to the future of associations. Worryingly, 26% of associations reported that Governance Structure was among their biggest challenges today, with 20% including Bureaucratic Processes on the same list². The similarity in percentages is no coincidence. Frequently, associations with poor governance often share a higher burden of bureaucracy.

“Poor governance on boards creates inefficiency”.

It is simply not possible to be a modern association without a contemporary board. The agenda for progress, innovation and influence must start at board level, or it will be resisted. Once the mission and vision are in place, the next step is to work out how to get there. Governance provides a framework to achieve these objectives. Engineers Australia and the Australian Human Resources Institute are two transformational case studies of how associations have used governance reform to drive strategic modernisation, member engagement and future focus.

Governance is too often seen as the enemy, typically associated with regulation and bureaucracy, rather than as an ally of progress and innovation. Good governance is the keystone of organisational success, providing a balance between compliance and performance. Far from adding to an association’s administrative burden, good governance can actually improve it. Robust, efficient structures, systems and processes can reduce inefficiency and keep an association in line with its mission and vision. The right skills matrix on the board enables it to formulate better strategies to achieve its objectives.

The complaints CEOs make about complacent association boards are often expressed around the water cooler at industry conferences. Here are their top five:

Strategy - Not Operations

Untrained, some board directors may not know the difference between strategy and operations, especially if they have not worked in large strategic organisations. Small business operators may switch between strategy and operations at will, but board directors have a responsibility not to. The board’s role is clear, and it does not extend to operations.

Strategy is setting the direction of the association, devising objectives and identifying a range of strategies to pursue. Operations refer to the management and administration of business practices within the association, and are beyond the board’s remit.

Monitor – Not Meddle

Passionate association boards can think their roles are to help staff, lend their expertise, or get involved in management. Nothing could be further than the truth. The board is there to lead, but not manage the association. Its remit is to monitor the CEO and the association’s progress, but not to meddle in its management.

So what constitutes meddling? Water cooler CEOs say that it is primarily the board’s access to influence or direct staff, or interfere with the actual process of management. Meddling is when directors make operational suggestions and then act on them.

Professional – Not Social Focus

The board is there to do an important job, and requires a consistently professional focus. It is not a social club. Camaraderie is essential, but it is not the objective.

One of the most common gripes is directors who don’t read their board papers, come unprepared for meetings or fiddle with their phones during board discussions. Directors need to come prepared, be attentive, make a direct contribution and ask insightful and challenging questions to raise effective discourse.

Difficult Decisions – Not Easy Avoidance

Water cooler CEOs bemoan complacent boards, that are uneasy about confronting problems in the hope they will go away, and are reluctant to make difficult decisions. Governing is hard and includes difficult choices on difficult issues. If an association is to move forward, it cannot avoid confronting tough or unpopular decisions. There will always be resistance to change. Boards that try and avoid issues of conflict in an attempt to please everyone will inevitably fail. Doing what’s right is never easy, and boards must hold their nerve.

Open Debate – Not Hidden Agendas

Open debate is how organisations think. It is as true for associations as it is for corporates or government in enabling better decision making. Discussing options proactively from different or conflicting viewpoints helps identify and weed out potential weaknesses. Logical, passionate arguments help determine the best outcomes for the greater good.

The opposite of open debate is passive silence. It increases the risk of personal preferences creeping in to board discussions from dominant personalities. Unchallenged by a robust board process for debate, it becomes easier for bias and hidden agendas to take hold. In these instances, it is the Chair’s role to uphold good governance.

In writing The Future of Associations, my greatest wish is for the book to bring boards, CEOs and employees together – to work collaboratively in the best interests of their associations. This may take some reflection, so here are eight priorities that apply equally to CEOs and employees as they do to boards.