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Traits of High-performing Boards … and Steps Toward Becoming One

August 21, 2019  | by Thomas L. Hyatt, Esq.

Governance and Policy

Tom Hyatt is a partner in the Washington. D.C. law firm of Dentons US LLP and an authority on nonprofit governance. This blog is excerpted from a presentation he made recently at the Commonfund Investment Stewardship Academy at the Yale School of Management.

Boards that are exemplary for their development of and adherence to best governance practices have certain identifiable traits. But this is no accident—they have taken steps to elevate their practices and maintain them at the highest level.

Let’s take a look at the traits of high-performing boards and some steps that may improve your own board’s performance.

Traits of high-performing boards

  • The first trait is one of the most important: full board involvement and a sense of engagement and participation. If you read a front-page article about a nonprofit that’s had serious issues, there’s almost always an inside the boardroom story. Often it involves an autocratic or insular board chair, or there was an executive committee that did everything and essentially rendered the rest of the board little more than window dressing. Whichever way it plays out, the full board was left out and just wasn’t engaged.
  • Next, a respect for process and a focus on results that further the institution’s mission. Respect for process means ensuring that you’ve got strategic plans in place, that you’ve got good bylaws and policies, good committee work and a good governance structure enabling you to get things done.
  • Think of boards as innovators. The heart and soul of innovation is being willing to fail. When boards embrace this they learn to say, “We’re prepared to take these chances—to go in some new directions—knowing failure is a possibility, and wherever possible let’s fail fast, learn our lesson and move on to try the next thing.”
  • Strategic focus versus management overreach. Strategy is first and foremost a responsibility of the board. If you’re on a board and the topic for an hour is whether the organization should use FedEx or UPS, you have delved way into micromanagement and way out of strategy.
  • Having an effective partnership with the executive director. One of the core responsibilities of a board is to determine the mission and the vision of the organization, but the executive director or CEO should be your partner in this exercise. How do you know if you’re micromanaging and assuming what are legitimately staff duties? There is always an easy answer to this question: Just ask the CEO because she or he will tell you.

Steps toward higher performance

  • Term limits: I believe in the value of term limits and consensus governance best practices support them. The rationale: it ensures that fresh thinking and diversity of experience are regularly coming into the board. Without term limits, you develop a governance inertia and you may lose that. What’s an ideal term? There is no right answer—it is often three years per term for up to three consecutive three-year terms, but rarely should the total be more than nine or 10 total years.
  • Age limits: These are still in use in some organizations, but they are rapidly disappearing. And rightfully so. It’s all too easy to imagine due to preconceived notions and unconscious biases that someone is too old for the job when in fact they’re just right for the job. Organizations that have effective term limits rarely encounter a problem with age limits.
  • Advisory members: Having an advisory council is a great way to keep former trustees and interested supporters involved without actually being on the board. They don't have voting rights but they still have their say. It can be a win-win.
  • Competencies: Having the right competencies and the right mix of skills and experiences represented on the board is essential. Avoid falling back on the old approach of looking for directors based only on whom they represent.
  • Onboarding and mentoring: For many, the first year on a board involves little more than listening, figuring out one’s role and learning the organization. Orientation for new members helps to shorten the learning curve and get board members contributing faster. As for implementation, both the board chair and staff members can lead the effort, sometimes aided by outside experts. Mentoring: Assigning an experienced director to a new director—functioning as a “board buddy”—for the first year can be very effective.
  • Diversity and inclusion board initiatives: An incredibly impactful and useful practice. Certainly, it’s important to think in terms of gender, race, sexual orientation and religion . But think also about other types of diversity; of experience, of wealth, of point of view. If you have a very liberal board, for example, include a conservative member as well (though you may want to bring popcorn).
  • Self-assessment: An important tool that a lot of boards are using now. It has both a macro and micro component. Macro is the board looking at itself as a whole and asking, “How are we doing?” The micro level is, “How am I doing as a director?”

Click here to contact Tom Hyatt.

More resources for board members:

Governance and policy topics from Commonfund
Association of Governing Boards of Universities and Colleges
BoardSource

Authors

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Tom Hyatt is a partner in the Washington. D.C. law firm of Dentons US LLP and an authority on nonprofit governance.
Thomas K. Hyatt
Partner, Dentons US LLP
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Disclaimer

Information, opinions, or commentary concerning the financial markets, economic conditions, or other topical subject matter are prepared, written, or created prior to printing and do not reflect current, up-to-date, market or economic conditions. Commonfund disclaims any responsibility to update such information, opinions, or commentary. To the extent views presented forecast market activity, they may be based on many factors in addition to those explicitly stated in this material. Forecasts of experts inevitably differ. Views attributed to third parties are presented to demonstrate the existence of points of view, not as a basis for recommendations or as investment advice. Managers who may or may not subscribe to the views expressed in this material make investment decisions for funds maintained by Commonfund or its affiliates. The views presented in this material may not be relied upon as an indication of trading intent on behalf of any Commonfund fund, or of any Commonfund manager. Market and investment views of third parties presented in this material do not necessarily reflect the views of Commonfund and Commonfund disclaims any responsibility to present its views on the subjects covered in statements by third parties. Statements concerning Commonfund’s views of possible future outcomes in any investment asset class or market, or of possible future economic developments, are not intended, and should not be construed, as forecasts or predictions of the future investment performance of any Commonfund fund. Such statements are also not intended as recommendations by any Commonfund entity or employee to the recipient of the presentation. It is Commonfund’s policy that investment recommendations to its clients must be based on the investment objectives and risk tolerances of each individual client. All market outlook and similar statements are based upon information reasonably available as of the date of this presentation (unless an earlier date is stated with regard to particular information), and reasonably believed to be accurate by Commonfund. Commonfund disclaims any responsibility to provide the recipient of this presentation with updated or corrected information. Past performance is not indicative of future results. For more information please refer to Important Disclosures.