Once I started training and placing business executives on nonprofit boards sixteen years ago, they began asking me to help their boards to become more effective; moreover, simply “training” them was not sufficient. Neither was board “self-assessment.” So, I developed a board assessment and development model and mentored others how to do conduct the process as well. Elements of my approach are described in Leveraging Good Will, and in various blog posts.
Through the facilitated process, the board develops a plan and begins, if needed, to refine its board model and committee structure, transition and strengthen the board composition, focus the board agenda (and understand exactly what information the board needs that is relevant and useful), and prepare for leadership succession, in order to better fulfill its oversight responsibilities and achieve the enterprise’s greater potential.
What drove the demand from so many board members and boards for an effective change process for boards? Financial pressures! By the mid-1990’s, nonprofits were having to adjust to drastic changes in funding patterns from all sources–government, foundations, corporations, and individuals. Additionally, demands for services from the community were increasing, and expectations for accountability and measurement were heightening. Boards were waking up and realizing that they needed to understand what it meant to govern and how to govern well. It was no longer business as usual for nonprofit boards.
Not surprisingly, consultants from major global consulting firms and CEOs of major corporations whom I placed on nonprofit boards, as well as those who served on boards where I consulted, often commented to me that for-profit boards could use board development services of a similar nature to help address similar matters of board composition, leadership succession, the focus of meeting agendas, the information the board needs (either through first-hand observation or prepared materials), and so on.
McKinsey’s new article on Using the Crisis to Create Better Boards describes the new awakening among for-profit boards to improve governing practices in much the same way. I have always believed that market forces drive change; just as with nonprofits, financial distress is shaking up for-profit boards and will lead to better governance.