Should Your Board Be Fired?
At the recent CLA Dallas 2014 Conference, I conducted a seminar with the intentionally provocative title, “Remind me… Why do we have a board?” In the seminar, I asked all the participants to quietly reflect on the following question before they answered:
“If you weren't legally required to have a board, would you have one?”
After a brief time for reflection, I asked for a show of hands. Only half of the organizations present said they would. While you may personally find that shocking, the response was identical to the answer I received from another CLA audience at a similar seminar years ago.
While I recognize that organizations do not legally have the luxury of simply firing their boards, the answer I've received each time I ask this question raises some interesting implications.
One potential implication is that for those organizations saying they would not have a board, perhaps only the dynamics of power and legally constituted authority within the organization preclude the board being “dismissed.” That is, if the board were subordinate to the CEO rather than being the CEO’s boss, like nonperforming staff they would likely be fired.
What’s the problem here? Well, while generalizations are always a bit risky, here’s one “big idea” I shared in my seminar:
These organizations would choose not to have boards because their boards aren't perceived to create value. In short, they’re perceived to be more of a hassle than they’re worth.
Clearly, a “root cause analysis” would yield different outcomes for different boards, but I’m personally persuaded after decades of observing and working with boards that many just don’t get it. They’re operating from fatally flawed paradigms, and the predictable result, in the immortal words of the great advertising genius, David Ogilvie, is that they’re “skidding around helplessly on the greasy surface of irrelevant brilliance.”
Part of the problem for many organizations is that they have uncritically “chugged the Carver Kool-Aid” – they have embraced a paradigm because it was fashionable, not because it made strategic sense. As I noted in my seminar, a choice of only one paradigm or model isn't a choice: it’s a prison.
Believing, as did Kurt Lewin, that “Nothing is more practical than sound theory,” in my seminar I briefly shared five different theories that inform my thinking about board design:
- Value theory – My admittedly contraction notion is that boards do not exist primarily to govern. They should exist to create value for the organization, often in ways that only boards can. If governance (however that is understood) is part of that value creation, then so be it. But if the board lacks laser clarity on exactly how it creates value, perhaps it’s just “all dressed up with no place to go.” (Or perhaps dressed up for the board meeting and wondering once again whether there will be a quorum.)
- Organizational design theory – Just as in architecture “form follows function,” so in this theory should strategy dictate structure. In far too many organizations, the proverbial cart is before the horse and it’s structure that is dictating strategy. It’s the board that is holding the organization hostage.
- Alignment theory – One aspect of alignment theory is that in addition to the structure, composition, and function of the board being aligned with the organization’s vision and strategy, so should it be aligned with the organization’s value proposition. This distinctive value proposition should be the cornerstone of the organization’s strategy.
- Contingency theory – This theory says, in essence, “If A, then B. If X, then Y.” In other words, the structure, composition, and function of a board should “fit” with the organization’s distinctive needs at a particular point in its life cycle, and not be some preconceived “One size fits all” approach that presumes to have the solution before the problem is understood.
- Strengths theory – Strengths theory applied to boards says in essence that the potential value a board (and individual board members) can create is a function of its strengths, and these strengths need to “fit” (be aligned with) what the organization actually needs.
In summary, my personal conviction is not that roughly half of the boards of Christian organizations need to be fired. It’s obsolete, anachronistic, and counter-strategic thinking that needs to be fired so that boards can be rebuilt and fired up.
Until more CEOs and board members get “the value creation thing,” apparently as many as half of Christian CEOs could be praying that their boards would just go away.
Written by Dr. Larry Johnston
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