The Problem with Boards

There is a huge conversation we’re not fully having in the association community, and that is about the incredible, ongoing, and massive destruction of value perpetrated by Boards of Directors for many, many associations (and other nonprofits too).

That is not an attempt to be dramatic. I really mean it. There are numerous boards of directors that consistently destroy more organizational value than they create. I’m thinking of Board Chairs that wait for “their” year to push some initiative that is a clear strategic blunder. I’m thinking of Boards that hit a rough financial patch and then slash staff expenses, directly disabling the effort that goes into increasing revenue and providing member value. I’m thinking of Boards that fail to support anything particularly new over a period of years (decades even!) because they are afraid to have anything fail “on their watch.” This is leadership/management 101, folks. We need organizations to be strategic. We need them to create value. We need them to innovate. If staff tried to pull off these value-destroying behaviors that go against those maxims, they’d be fired in a heartbeat. So what do we do to the Boards?

We pay for them to go to symposia. We orient them on fiduciary duties. We facilitate conversations where we politely make a timid request that they consider making some slight changes in their approach.

AND NOTHING CHANGES! Sure, there are Boards out there that “get it.” I’m not suggesting that every Board is destroying value. But too many of them are, and it’s not just a case of bad individual board members that need education on how to be good board members. If that were the case, then the symposia, orientations, and conversations would solve the problem, but they don’t. The flaw is systemic, and we’re not addressing it.

At the center of this systemic flaw is a very simple idea: that Boards “own” the association. Technically, I think we’re arguing that the members are the true owners, and they delegate their authority to the Board to run things. The Board then hires a CEO who hires staff to make stuff happen. All that is true, particularly legally. The law requires a clear designation of ownership, and with ownership goes ultimate authority. I get it.

But as long as they “own” it, then we have no recourse to stop them when they destroy value, as evidenced by our timid requests that they change. I am arguing that it doesn’t have to be this way. I’m not suggesting we change the legal structure. The members and Board will retain their authority, whether I like it or not. I’m suggesting we change our thinking. We need to rethink the idea of ownership here, even if we don’t change the legal side.

I want to rethink “ownership” in terms of who owns the creation of value. The fundamental job of any association (any organization actually) is to create value. If you’re not net positive when it comes to value, then you should close up shop. Period. There is only so much human energy that we can use to make this world a better place, so let’s make sure we put it to good use: creating value.

So if creating value is at the center, then among members, Board, and staff, who owns that? Well, we all do to some extent (we comprise a system, after all), but when it comes to creating value, the staff becomes more central simply because it is their actual job to create value on a full-time basis. Despite our legal structure that puts ownership with the members and the Board, we have created systems that put the overwhelming share of responsibility for value creation onto the full-time staff. We demand that they focus on that. They don’t do it alone, of course (volunteers!), but the staff are the center of gravity–not because they are smarter, better, or legally entitled to be, but simply because that is the system that we have jointly created.

If that’s the system we’ve created, then the Board’s responsibility and power in that system has become out of whack, and should be renegotiated. Period. I don’t mean changing the bylaws, I mean changing the culture. The Board and staff should come together to create a new charter, a new relationship, centered around value creation and based in a much more refined and sophisticated definition of the Board’s role, beyond the ineffective platitudes of “runs the organization,” “sets strategic direction,” and “hires the CEO.” We need specific, value-creating responsibilities to which we can hold Boards accountable.

This will become an issue of competitive advantage in the coming years. Associations that don’t fix this cultural and system problem will be at a disadvantage. So I recommend starting now.