Boards for micros - the playbook is different
There’s no rule book for directors sitting on boards for micro-organisations, only some aspirational principles to achieving the right balance between striving for textbook governance standards and simply enabling the organisation.
The vast majority of the directors appointed to micro-organisations are unpaid volunteers, with many having few governance skills or training. Often, these directors are appointed based on their proven passion for the cause, on access to potential donors, and/or to bring skills to support the operations rather than oversight of the organisation.
They are regularly challenged by striking the governance-operations balance, constantly in danger of tumbling off the ridge that plots a ragged line somewhere between board and management.
The layers with the governance structure in micro-organisation are barely perceptible and often intersect. A CEO with no other executive employees must rely on the organisation’s Treasurer to backfill occasionally as a CFO, the Secretary to cover various compliance obligations and filings.
One of the worst outcomes from this is that it can distort the focus and agenda of the board by introducing more granular operational issues and concerns to board meetings. It becomes harder for board office bearers to switch between their quasi-management support and their oversight of business strategy and organisational performance as directors.
In fact, their operational involvement by definition embeds them into the organisational performance that they are critiquing. To varying degrees, these directors are faced with regular self-assessment.
This is an entirely different playbook to that which governance bodies like the Australian Institute of Company Directors (AICD) provide as the ideal board playbook, where there is a quite strict division of roles, powers and responsibilities between board and executive.
The Institute of Community Directors Australia (ICDA) is focused on assisting not-for-profit boards to deal with this imperfect challenges. In one help sheet, it describes a number of models typical of micro- to medium-sized organisations and their potential governance pitfalls.
Perhaps the ICDA model to which this article alludes is what it calls the Management Team/Partnership model, in which organisations do have professional management, but in which board members play quite active operational roles.
It rightly points out that this model features “board meetings deal both with policy and with aspects of administration, but this can lead to the board frittering its time away on day-to-day matters that are properly the responsibility of the staff.”
The outcome of this is obvious. This frittered time, means the boards in micro-organisations become distracted from focus on strategy, on brand building, on risk management and, inevitably, on governance structure and effectiveness itself.
To mitigate this, if you are sitting on the board of a micro-organisation, if not already in place or in practice, it is worth initiating:
The development of a Board Charter, which enforces board thinking about its proper role and responsibilities and overarching priorities;
A clear articulation of the organisation’s purpose. As many not-for-profits are created to fulfil a specific purpose, this is usually fairly clear but, as organisations grow and mature, it is easy for line of sight to the purpose to be lost or diluted as other seemingly adjacent or parallel opportunities arise;
An annual strategy day and regular strategy discussion as a permanent fixture in the board agenda;
The development of a well constructed and articulated Delegations Policy, which helps establish greater empowerment of management and a better understanding of how granular information needs to be in board reports;
The establishment and proper delegation of responsibilities to appropriate board committees. Some of these, like Finance and Risk, are obvious implementations, but others should be considered that align to the board’s strategic focus rather than simply mirror operational divisions or activities.
Ensuring these things are regularly on the board agenda for review and discussion helps to ensure that the eyes of the board are elevated to oversight of the organisation’s alignment to its purpose, strategy and its regulatory and social obligations, even allowing for the fact that director involvement in operations is essential to complementing and supplementing its human resources.
There is one other possible tool that some micro-organisation boards may consider - less frequent board meetings. Many meet monthly, which means the temptation to micromanage the organisation and reduce delegation to the people paid to do the work.
Less frequent meetings can ensure the board has less temptation or opportunity to dive deep into operations and help foster greater delegation for more operational oversight to board committees, which can be comprised of a mix of directors, executive management and outside specialists.
Board committees are also good vehicles for inviting participation in the organisation and its cause from the broader community, with potential for expanded networks, increased support and funding.