join

Joining a Board of Directors: What are you getting yourself into?



Sharing buttons:

>> MATT FULLBROOK: Thanks for having me.

>> MARINA DAWSON: Awesome.

>> MATT: Are we ready to go?

>> MARINA: Yeah, I think we can go ahead and dive right in.

>> MATT: Alright, great.

Well, first of all, thanks everybody for joining us.

It's you know, this is, I know, a comment if talking about governance and talking about

boards, this is one of those things where there's this great combination of the technical

and the superhuman soft stuff.

So, you know, I'll just acknowledge up front the topic is so large that we're only going

to scratch the surface today.

And I'm going to talk mostly about some of the bigger picture stuff about boards and

about being a board member and I encourage you if there's some of the nuts and bolts

stuff that you'd like to dive into, send in a question at any time and we'll get to as

many of them as we can.

I'll try to address some of the questions throughout and I encourage you just to engage

and if we don't get to your questions now, I'll follow up with as many of you as I can

because I know this is a topic where there's some implications that are generic, and we'll

try to cover some of those ones that are universal, but there's also some stuff that's really

particular to your organization and your board and your experience as a board member or your

experience as an aspiring board member, and I'll try to get to some of those on a personal

level after the webinar.

So why don't we just dive in.

I'll talk a little bit about myself so that you know my background, I'll justo make sure

that this works.

Here we go.

So I sort of, I'm here wearing two hats.

I've got, I've worked at the Rotman School of Management for the last 18 years.

I ran a center called the Clarkson Center for Board Effectiveness up until about a month

ago when we launched a new center called the David and Sharon Johnston Center for Corporate

Governance Innovation.

Now, the the Johnston Center, what we do is we are on the one hand, we're like a vacuum

that just sucks up a bunch of data about boards and on the other hand, what we do is we try

to generate practical insights for boards of directors in all sectors, and and we've

got a special mandate to look at governance in what I call underserved models.

So we've spent a lot of time in the past looking at big, widely held public issuers because

the data is, really there's tons of it and it's easy to study.

We're going to spend a lot more of our time over the next five to ten years looking more

at family enterprise and cooperatives and not-for-profit organizations and crown agencies

and so on because these are the models and the types of organizations that aren't getting

as much attention and where we'd like to spend some of our energy.

On the other hand, I wear a hat as an advisor.

You see that logo for Fullbrook Board Effectiveness and what I do in that role is I get inside

boardrooms and work with boards and senior managers to try to understand what are the

unique solutions that this organization needs in order to optimize the effectiveness of

the board.

So I've got these two hats, one on the research side and one on the advisory side that sort

of feed into each other.

The data from the research gives me some really interesting research-based insights that I

can bring into boardrooms and the advisory side gives me an opportunity to kind of make

that real by understanding how real boards work on the day-to-day basis.

So I want to just really briefly for our agenda today, I want to talk a little bit about what

is a board for in the first place because it's not always that obvious.

And in fact, the answer is a little bit different from organization to organization.

We'll spend some time talking about what makes the job of a board or a board member difficult

because it's not an easy role and it requires a huge amount of effort and time and it requires

a lot of willingness to take on accountability and liability.

And finally, we'll talk a little bit more specifically about what you can expect when

you join a board and I imagine that some of you are already on boards and some aren't

but we'll talk a little bit at a high level about what to expect when joining a board

and I encourage you to send over some questions throughout that and I'll maybe prompt you

at a few points throughout the webinar to send in some questions on specific topics

and we'll take those up in a bit.

We'll take them up throughout and then at the end we'll have some specialized time to

answer questions.

So what I often, when I'm in a boardroom the first question I'll ask, and I know it sounds

a little bit condescending, but I'll ask a board, What's the point of a board of directors?

Because it's not always that obvious.

You know, what happens usually when I'm in that, when I'm in front of directors is they'll

be either one of two scenarios.

One.

Everyone will say, someone will put up their hand and say the point of the board is let's

say strategic oversight and then someone else will say, yes, its that and this other thing

and the next person will say and this other thing and then eventually we have this giant

pile of things and everyone agrees that we do all of that.

Well that makes it really difficult if you've got a hundred different jobs.

How do you know what to prioritize and how do you know where to spend your effort?

And the other thing that sometimes happens is someone will put up their hand and say

the point of the job is to you know, hire and fire the executive director and then someone

else will disagree and the next person will disagree and so it's either we've got a amorphous,

giant pile of responsibilities or we've got disagreement.

And I imagine if you ask this question in your board rooms, you probably have a bigger

discussion than you imagine.

It's hard to get a lot of agreement on this question and it's worth working through because

what you want at the end is some kind of, if not consensus, at least a philosophy about

what's the purpose of this board?

What are we working towards?

How do we support our staff?

How do we support the people that this organization benefits and where does our role end is a

very important question as well.

We did a survey about, this is a while ago, Now this is six or seven years ago and we

surveyed 250 boards across all sectors, so this wasn't specific to the charity sector,

but there was a lot of not-for-profit organizations involved and there were only three things

that every board agreed on that belong to them and nothing, and nobody else.

That was they're responsibility for the approval of strategy.

And we've got to pay attention that the verb was improving there, it wasn't developing

or designing or overseeing.

So the only, this approving strategy was the only part of strategy that every board agreed

on.

They also agreed that they're responsible for hiring and firing the CEO or executive

director and they also agree that they're responsible for setting the compensation of

the CEO and executive director.

Now, we all know that those aren't the only things that boards do but the fact that these,

that there's only three things that all boards can agree on tells us something.

And one of the things this tells us is that every board has a different type of role.

You get into a boardroom, it's not always going to be predictable exactly what that

board will spend time on and exactly how they'll do it and you can count on these three things

being on the agenda, but just about everything else, it's dependent a little bit on the organization

and the people in the room.

If we ask the question, what else is there?

What else could there be?

I made a list here, but it's not exhaustive.

Most boards will approve a budget.

Some of them will be involved in setting the budget.

Most boards do something to oversee the performance of management and managing the performance

of the organization.

Most boards will be responsible for the oversight of finances and audit.

Most boards will be responsible or at least involved in the development and oversight

of the mission and vision and planning according to the mission and vision.

Some boards involve themselves and community engagement, some involve themselves in recruitment

of board members, fundraising, and etc. etc.

Now I want to stop on that fundraising piece for a second because this is a little bit

of a provocative topic for boards in the not-for-profit sector and you know, a lot of the time boards

will either be a hundred percent adamant that part of the board's role is, we must do fundraising,

and some of them will say no.

No, it's absolutely not the board's role.

Now.

The reality is the board isn't inherently responsible for fundraising, therefore going

out to their own networks and raising money.

It's not part of what their legal duties are.

The board, however does, as we'll see you in a little bit more in a second the board

does have the authority to determine what its purpose is and one of those purposes can

be fundraising and in some cases it's not.

So I know that it's probably provocative topic.

If someone has any specific questions about fundraising, please feel free to write them

in now and we'll see if we can address them a little bit later on.

I used to get asked very frequently to give a recommendation of what a good governance

model looks like and and I don't really have an answer.

I didn't then and I still don't because governance models can be as unique as organizations.

But what I did do is I wrote or drew this illustration here that you can see, looks

like a bull's eye that sort of illustrates a generic or typical governance model for

any type of organization and what you see here, that outside ring that says external

stakeholders, for to make a very simple explanation.

Let's say if this was a corporation that would be shareholders.

For not-for-profit organization, sometimes that external stakeholder group is a little

bit less easy to define.

It could be a community.

It could be some group of stakeholders that to which the organization is responsible or

we could define it more generally as the corporation or the organization itself.

Then inside that we've got the board of directors and then in the center, we've got management

team or senior staff.

Now, what's important here is we see though, the delegation of authority goes from outside

to inside.

That means those external stakeholders delegate authority to the board which delegates authority

to management and what's important here and that sometimes boards forget, is that the

management team, and this is what is illustrating here, the management team doesn't have any

authority other than what's been delegated by the board of directors.

Now for some charities, some non profit, not-for-profit organizations, this is obvious.

We know there are, there are a lot of cash starved charities where they don't have money

to have staff.

And in fact, the board is responsible for running the organization and if they were

to hire staff than the board would delegate some authority to them.

For larger organizations, it's a little bit easier to forget that in fact management only

has the authority that the board gave them.

And so, you know what happens sometimes, I'm sure some of you that are that are watching

this webinar right now have experienced a situation where the board sometimes feels

like the authority runs the other way.

Or that the executive director believes they're, for lack of a better word, the boss of the

board.

Well that just factually not true.

The board has delegated authority to management and the board is, in other words, the boss

of the executive director and the accountability flows in the other direction, meaning management

is accountable to the board and the board ultimately is accountable to that external

stakeholder group.

This is just a useful illustration for us to remember, you know, where does the flow

of authority go and where does the inflow of accountability go?

I've noticed over the years that, and this has changed a little bit over time since I

started working with boards almost twenty years ago, that there's sort of a spectrum

of the level of depth that boards engage at.

So I've defined this spectrum as the hands-off board and the oversight or governance board.

And then the managing board.

What we've got here, the hands off board, and some, I'm sure a lot of us have seen this,

is that's the type of board where they go in and they're just a rubber stamp, right?

They exist only to fulfill statutory requirements.

Meaning they have to be there.

The staff brings in their own recommendations and the board doesn't discuss them much and

they just rubber stamp.

It may be they're fundraising but they certainly don't engage in a very deep level of decision

making.

Now we've got a question on this fundraising point.

I want to address it now because I think it's, I think that it is an important type of topic.

So the question was, how can we get the board to engage more in fundraising and create a

culture of philanthropy and should board member donations be mandated.

This is a really a, it's a more difficult question than it sounds.

The role, as I said before, the role of a board technically speaking doesn't, it's not

mandatory for the board to be involved in fundraising and in fact, as far as I know,

you can't work that into formal by laws to require boards to bring donations in.

If there are lawyers on the on the webinar you can correct me.

But so, this really is, and I think the question was was articulated well, it really is about

creating a culture of philanthropy.

Now the, I remember I speak I spoke with a very prominent board chair who was involved

with an arts organization that was desperately cash starved and he said look, you know, what

we did was we were prompted by the fact that we were in crisis to start thinking about

ways that the board could be involved in fundraising and we all just sort of felt like it was our

duty, because we have a duty to the organization, to open our own pockets and open up our own

networks and get them involved in fundraising.

Now, I, that obviously is not a situation most of us want to be in and I think the question

is more how do we engage our board in a culture of philanthropy when we're not in crisis,

and I think that the, a lot of the time this starts with the board chair or some other

person in a position of influence being that sort of example.

I've seen this a lot not just with when we talk about philanthropy at the board level,

but when we talk about a lot of other governance related topics, is that it's often led by

the chair and the executive director sort of coming up with a way to engage and a way

to to lead by example, maybe they start sort of annual campaign, maybe they start, they

make their own contributions that sort of show that it makes a really big difference

to the organization for people in a position of leadership to be involved in that way.

Now.

I want to caution.

If you require your board or your board members to contribute significant amounts of fundraising

dollars, you exclude certain types of board members, and clearly what I'm talking about

is people who can't afford to give, from eligibility to serve on your board.

And we'll talk a little bit more bit later about the importance of board composition

and I think it's important for your boards to acknowledge the fact that it's, you have

to be really open-minded about what I'm going to call more generally diversity in the boardroom.

Do you only want wealthy people in the boardroom?

Is the only purpose of your board to raise money.

If so, it's going to be really difficult to engage your board in a broader level of decision

making if they feel like their main purpose is to bring in money.

So let the, we can talk a little bit more about that in a minute.

We had a follow-up question about a minimum dollar level for donations.

And again, we've seen it work and I know that that in the, especially institutional nonprofits

where they really are able and willing to attract very wealthy board members, a minimum

dollar level can be something that's functionally appropriate.

For the typical charity organization that maybe doesn't have access to people with the

same level of wealth, it may be more practical to attract people who have deep community

ties and can get in, can engage your community in fundraising rather than opening their own

pockets.

We'll talk a bit as I say, we'll talk a bit more about that in a minute.

I want to, yeah, we're, so I want to talk a little bit about that managing board at

the opposite end of the spectrum.

We were talking a minute ago about the hands off board, that it's only for the rubber stamp.

The managing boards are a lot less common than they used to be.

We, the managing board is a board that comes in and they're actually responsible for running

the day-to-day operations of the organization, meaning that they don't have staff.

And we, as we said before, we know it, we all know small nonprofits that don't have

a lot of money where the board is responsible for running the organization.

This is not nearly as common as it was and it's not usually a state that most organizations

want to stay in.

Those organizations are either, the, this either happens because there's no money or

because there's crisis or because of the, the executive director has left unexpectedly

or some other sort of temporary situation.

What we, what most boards really want to stay at in most cases is this governing or oversight

for it.

And the role of that board is to develop and approve strategy, to oversee the CEO or executive

director and their recruitment and evaluation, in succession, compensation, managing risks,

monitoring organizational performance.

This is that board where I, many of you have probably heard the expression "noses in, fingers

out" and what it implies is that that board, most of the time, rather than being involved

in day-to-day operations, rather than running the organization, rather than making micro

decisions, they're going to be involved at a much higher level.

And their responsibility is going to be much more strategic and much more of an oversight

role rather than an ongoing operational role.

And this is where most boards today exist and operate.

This is a really significant and important question that I ask boards both in the classroom

and in boardrooms and actually run an exercise with them, and the question is, to whom as

a board member do you owe a duty?

Now there's a lot of ways that we can think about this question.

I usually don't give them any context, and if I meet a board for a first time I'll give

them this question.

I'll ask them to go out in groups without any guidance and try to answer it, and they

come back with a huge variety of answers because some of the board members will interpret duty

as a legal duty, and we'll talk a little bit more about that in just a minute.

Some of them think about it as a moral or ethical duty, some of them think about it

as a duty to the mission of the organization.

There's a lot of ways to interpret this and it's important to acknowledge, in my opinion,

all of those types of duties because if we only interpret duty as a legal thing, we sometimes

miss some of the nuance, opportunities that our organizations have.

So for example, the, the, in Canada every board has a legal, primary legal fiduciary

duty, and I'll take a step back in case any of you are not sure what a fiduciary duty

is.

A fiduciary is someone who is in a position where they are, have been a trusted, in a

position of trust to look after the interests of someone else.

And so in this case the board in Canada, primary legal fiduciary duty is to quote unquote the

corporation or the organization.

This is true for for a large public entity as much as it is for a small community charity.

And what that means is that you are prime, as a board member your primary duty is to

look out for the interests of the corporation or of the organization.

Now, what does that mean?

That means that, that, let's think about it.

I'll try to, I'll make up a situation on the spot.

We can all think of no matter what type of organization we have, we think about the people

who benefit, let's say it's the community.

The interests of the community are not always directly aligned with the interests of your

organization.

So for example, you may have an opportunity to do something that will that will create

short-term benefit for your community at the expense of the long-term interests of the

organization.

So if you spend, you've got $10,000 right now that we can spend to benefit the community

for the next week or we can invest it in the long-term health of the organization.

It's actually very complicated for a board of directors to make a decision as to what

the right approach is because we've got a really interesting opportunity in the not-for-profit

sector.

Let's say that you've got, your, the purpose of your organization is to cure cancer and

in a way the purpose of your organization is to die.

Right?

If you if you have completed your mission, then there's no longer that, your organization

no longer has a purpose.

This is in a way a privilege that, that most for-profit organizations don't have, which

is a privilege to achieve a mission and then it's done.

And so this is where that piece, that question of to whom do we owe a duty becomes really

complicated for us, for certain not-for-profit organizations and charities, in a way that

it's not complicated for for-profit organizations.

Because you may say well we've got this $10,000 on the table and we owe a duty to the corporation

and the purpose of your corporation is to end poverty or end cancer or have some specific

end goal.

It's very difficult to think about whether we not, whether we invest it in our community

or whether we invest it in our organization.

So I wrote on this slide, why and when does this question really matter?

I encourage all of you who are on boards, when you have got a really significant decision

on the table, ask this question.

And I mean really deliberately ask the question.

Before you start talking about how you're going to make the decision and the nuts and

bolts of what's behind it, sit back and ask the question.

Okay, before we explore this decision to whom do we owe a duty.

Not everybody on in the boardroom is going to agree.

What you should try to do is rank it.

You know, what we owe a duty.

Well, let's make a list of people who stand to benefit or lose from this decision.

Let's make a list of them and let's rank them.

I know it's not perfect but it helps to articulate in the boardroom, then and there, you know

what, this is the stakeholder to whom we owe the greatest duty right now and who stands

to benefit the most or lose the most from this decision.

So as we talk through it, we get a little bit of guidance as to where we want to prioritize

our attention.

Now, I think it's probably worth taking a second, I mentioned this fiduciary duty before.

Let's take two seconds to to talk a little bit more.

I'm not I'm not a lawyer.

So I'll preface with that but let's talk about what that means.

One of the pieces that's not always clearly articulated to board members before they join

boards, and this is particularly true in the not-for-profit sector, is that there's a lot

at stake.

Not just that it's a difficult job, but that you are personally liable as a board member

for the decisions that you make.

So if things go wrong and the organization gets sued, you theoretically have your personal

assets on the line, and I'm not saying that to scare you.

In fact, you know, there are types of insurance that will cover you and it's extremely rare

in Canada for the, for lawsuits to actually affect the the bank accounts of directors,

but I think it's important to illustrate the fact that being a board member is not just

a figurehead role.

In fact, you ultimately have the authority and accountability for the decisions that

are made at an organizational level.

And the law outline some of the ways where you need to discharge that duty.

One of them is called the duty of care, which can be broken down in a few different ways.

You've got to, you've got to act honestly, you've got to be diligent and make sure that

you're doing the, your job to the best of your abilities, you are responsible to actually

act because inaction in important cases is, potentially be liable for not acting, and

you've got to duty to be obedient to the organization and read the appropriate information and pay

attention to your governing documents and so on and so on.

The other side of your legal duty is the duty of loyalty, which is really just a duty to

act in the interests of the organization rather than in your own self-interest.

And this is it doesn't mean that you can't have conflict of interest in the boardroom.

So for example, if you're in a, if you're on the board of a not-for-profit organization

that benefits a community that you live in, that doesn't preclude you from being on the

board.

You're still allowed to be involved in conversations that, that may potentially benefit you and

your community.

You just need to make sure that you articulate those potential conflicts and recuse yourself

from decision making where you feel like those conflicts might make a material impact on

the way that you involve yourself in the decision.

But these are really important things to remember because it's as I said, that being on a board

is not just something you put on your resume and it's not just a figurehead position.

It's much more than that.

You have ultimate authority and accountability for the decisions made by the organization.

I often ask this question, when I'm in boardrooms.

I ask the question, where does your board typically operate today?

And I ask people to write down a number and the number would be on a scale of 1 to 10

from deeply operational to highly strategic.

Any of you who are on a board now, why don't you just think, take 5 seconds and think about

where you fall on that scale and write it down.

We won't take it up for every single person who's on the call, but I think it's worth

thinking about it.

And we'll ask another question in a second once you thought about it.

This could be, the next question is, where should your board typically operate and it's

on the same scale, between fully operational to highly strategic.

And once you take a second to think about that, it's not going to surprise you that

most directors and most boards will have on that first number, this iswhere should, where

does your board typically operate today?

We will be closer to the deeply operational level.

And where SHOULD your board operate is usually closer to the side the highly strategic level.

And why is that?

It actually it comes from a lot of different, a lot of different drivers.

One of them is that we, just as human beings are very, very curious about the details,

you know, if our executive director comes into the boardroom and gives us an update

on something that's happened over the past month, it's often going to be our natural

inclination to just ask about, you know, tell me more about this number in the financial

statements or tell me more about, about this complaint, this really specific complaint

that we got from one person in our community.

Or you know diving into things that are emotionally tangible.

And it's also partly driven by the fact that the presentations that we get from our staff

are often really deeply focused on the past, that give us updates on what's happened and

they often don't ask us a lot of questions about where things are going or should go

and that invites us to spend a little bit more time, as we say, in the weeds, asking

about the nuts and bolts of operations.

So the board and management sort of both play a role in keeping the board a little bit more

to the left hand side of this scale.

Where boards often want to be is in that highly strategic side.

So asking probing questions, looking toward the future, trying to make plans and then

and making sure that the organization is positioned for the best opportunity to be successful.

And that's very difficult because, well for a lot of reasons, which we'll explore more

in a second, but the biggest thing is that boards are just not there enough.

And I'm not saying that they should be but the reality of a board is you spend, you've

got sometimes quarterly meeting, sometimes monthly meetings and you're there for a few

hours and that's all you get.

And so we've got this deep, deep drive to become more involved and ask really specific

questions.

I just got a question here about, bringing us back to the duty piece.

One of them was about asking if the board should always have insurance.

So the short answer is yes, and the longer answer is, there's type of insurance called

directors and officers liability insurance.

It is not particularly cheap.

Although it can be, there are in, there are often special rates for for not-for-profit

organizations, but I would say that if I was being asked to join a board of directors,

I would be very wary of joining if there was not directors and officers liability insurance.

It's a low probability that the organization would get sued in a way that would affect

the board and even if they did it's a low probability that the board's personal assets

would be at stake.

But despite the fact that the probabilities are low, it's still possible and I think that

it's a very wise investment for a typical organization to make sure that there's directors

and officers liability insurance, so first of all, you can make sure that your board

is covered in case of these days unlikely scenarios, but second of all it helps you

to attract better board members, especially ones who would ask that question and and would

be unlikely to join the board if they weren't covered.

We had another question about the the duty piece asking, what if we see the board making

unethical decisions and that, it's a such a big question that it's hard to give a generic

answer but I'll do my best.

If the decisions are unethical in the, in a sense that where it's criminal or illegal

or close to it, then, you know, I certainly would, I would make sure that it gets investigated

with all due diligence with respect to the law.

If we're talking about something a little bit more nuanced than that.

[pauses]

It's a difficult question because you know the decision itself, it comes from the board,

should be a decision that's made by a collective of people.

Right?

So the you've got somewhere between five and 15 people in this room who have collectively

made a decision that you deem to be unethical.

That suggests a really, potentially significant misalignment between the board and the interest

of the organization There, I would encourage if you're, if you're

asking this question from the position of a staff member, I would encourage you to connect

directly with the chair of the board and have a conversation about it.

The interface between the executive director and the board chair is an extremely important

one and one that needs to have a significant amount of trust between them.

And I think that you should, as staff you should not be afraid to, I was going to say

confront, but maybe that's too too dramatic a word, but you should not be afraid to approach

your board chair and have a conversation and say, look here specifically are my concerns.

This is why I think it's unethical.

And see what comes out of that conversation.

If they're, if it's, if there's no solution there or if there's no desire to move and

you really are convinced that the board is behaving unethically, I think you have to

think really seriously about whether or not you want to continue to be involved in the

organization.

If you're, if the comment is being made from the perspective of a board member, in a way,

it's similar.

I think you need to make sure that, that, you've got a committee, often this is the

audit committee who, who as part of their responsibilities they've got the the duty

to oversee the the ethics and decision making of the organization and overall enterprise

risk for the organization.

And if there's a specific decision where you think there was something unethical that was

done you'd have the audit committee specifically investigate or, or take a deeper look into

that decision and come back to the board and report and make a recommendation as to what

should be done going forward.

And again, if you really truly believe that the board after due investigation is continuing

to be unethical then you have to consider really seriously your desire to be involved

in the organization on a longer term basis.

So I mentioned before this "noses in, fingers out" saying and this is really related to

this question, and I'm willing to bet that most of you had, as I said, on this scale

you were a little bit more towards the left on where does your board operate today and

you're a little bit more towards the right on where should your board typically operate.

And let's see, if we think about this "noses in, fingers out" question, when is it appropriate?

And the answer, is most of the time, not always, so the board should, in most cases, in a typical

case, try to spend most of their time at oversight level where they're doing, they're doing what

I call governance as opposed to, you know, making operational decisions or actually running

the organization.

There are of course situations where "noses in, fingers out" doesn't make a lot of sense.

For example, if you've unexpectedly lost your executive director, you know, whether, let's

say they won the lottery and they left today and you weren't prepared for succession.

They don't have anyone on staff who's really prepared to step in.

It is in fact, the board's obligation to make sure that the organization is sufficiently

well run on a day-to-day basis and it doesn't necessarily mean that one of the board members

has to step in and be executive director.

In fact, it may be a responsibility that the board takes on collectively, but it is the

board's responsibility to, in those moments say, you know what we need more than our noses

in, we need to get in there and make sure that our organization is going to survive.

Let's run it and let's run the organization ourselves until we feel we've got an appropriate

successor in place.

That's just one example.

It doesn't always have to be driven by crisis, but there are definitely situations where

it's appropriate for the board to be a little bit more engaged or a lot more engaged and

I sometimes push back on board members who say no, no, that's not the board's job.

Sure.

That's sometimes maybe true.

But there are situations where the board's job needs to expand dramatically and hopefully

temporarily.

So I want to just take a second, I, because I a spend a lot of my time doing research

and trying to communicate things in the, in as easily a digestible way as I can, I've

divided what I think makes boards jobs difficult into four categories.

One of them is that that we've got such a limited amount of time, I mentioned before

that we meet, you know at most 12 times a year in most cases and in a majority of cases

much less than that and our meetings are let's say a couple hours long.

How do we make sure that in that really small amount of time we are getting everything done

that we need to get done, especially considering that we have the ultimate duty for the appropriate

execution of the organization's responsibilities?

That we've got ultimate authority and ultimate accountability, and we need to discharge it

in a small number of hours per year.

One of the other challenges is making sure that we have the right people in the room.

One of the things that I've noticed is no matter how much, how much effort that boards

put into the development of effective processes, practices, policies and so on, it doesn't

really matter if you don't have the right people in the room.

And it can be a really difficult challenge, especially in a volunteer situation, to attract

and motivate the right people to be on the board and even more importantly to be engaged

once they're there.

Information asymmetry is another very, very significant piece.

So if we think about that small amount of time that boards spend, the, I think it was

Korn Ferry did a study a few years ago where they found that the average board member in

the, in a corporate setting spent 300 odd hours a year.

I know that's a lot for most nonprofits but 300 odd hours a year compared to 3500 hours

a year for a CEO.

And what that means and it's similar for an executive director who, in a lot of cases

that's their full-time job, every day all day.

Whereas the board is there for to 12 times a year for a couple hours.

How do we make sure as a board that we have as much of the important information from

the executive director and the organization as possible in order to make the decisions

that we need to make.

And the gap and the asymmetry of information is very difficult.

It's never going to be fully bridged but it's an important one for us to spend some time

on and I'll talk a little bit more about that in a second.

And then finally, the fourth area, thing that makes boards' jobs hard is this external unexpected

stuff.

So maybe it's regulatory or political.

Maybe it's something from your community.

Maybe it's a change in funding stuff that you can't necessarily control that comes at

you in an unexpected way from the outside.

So I'll talk about the the information asymmetry piece.

We sometimes refer to as the information chasm or the information gap.

And the question is how do you make sure that the board is fully informed but not overburdened,

right?

So we, as board members we haven't signed up for this to be our full-time job.

We don't have time to put in, you know 10,000 hours on this [laughs] we've got, you know,

a, maybe if we're lucky, a couple hundred hours a year, a few weeks a year, where we

can dedicate to to the board.

So how do we make sure that we've got as much information as possible without it being too

much of a burden.

And so we're I talked about that gap in the hours that that gets spent by directors and

CEOs.

This is what we call the information chasm or at least one illustration of it.

Some of the things that boards do to try to bridge that chasm, a lot of boards now hold

retreats where once a year or more they'll get together and just talk about strategic

stuff talk, about that higher level stuff that they don't have time or the opportunity

in a regular board meeting to cover.

There's a lot of opportunities now for directors to do continuing education, which can range

anything from spending time with me for an hour on a webinar, to taking a course for

a few weeks, to going to conferences, for independent auditors and Consultants to provide

them specialized information and advice.

There's a lot of different things, tools that boards have at their disposal to try to close

that gap but it's never completely bridged and that's that's not a bad thing.

I mean, they're, the, the CEO or the executive director is there to run the organization.

It's to be expected for them to have more information.

But the question underlying this is, what does your board need to know?

And when does it need to know it?

And we got a question a minute ago, what do you recommend that the executive director

includes in board reports?

And the answer that question, you know, I hate to be the researcher who just says "it

depends" but it really does.

I would say that if we, if we think about the the reports as falling into several categories,

one being the premeeting reading reading materials, one being the presentations during meetings,

and one being sort of ad hoc interaction between meetings, each of these different buckets

is going to have different types of content.

So if we think about the pre-meeting materials, the pre-read, I would usually recommend that

the executive director and staff would include as much information as possible in the pre-read

and have, and the board should have reasonably high expectations of the board members to

read and consume a lot of information before meetings and to be prepared because the presentations

during the meetings, boards and managers get much more out of them if they don't have to

rehash the content of the prereads.

So, for example, if you've got board members who tend to come in unprepared and need to

have a lot of that, the content from the pre reads covered in the board meeting, that actually

sets the board back quite a lot because you end up having to spend time in board meetings

covering material that you could have all, that you could have just read in the first

place.

So if you can, if you get to that point where you can trust your board members to come in

fully informed and only have questions that are substantive and about the future and sort

of pushing management and ways that, that are more about strategy, then the presentations

during board meetings, that second piece, can be more about thinking about the future.

So I often will recommend the executive director to include in the pre-meeting materials really

provocative questions for the board.

So rather than just giving a dump of information, include in addition a summary of what you

think it means and why you care and why the board should care and some questions about

what's keeping you up at night and what do they think is important.

And the executive director can provide sort of that open-ended provocative platform so

that when you get into the meeting, the board's already thought a little bit about what they

want to talk about with respect to strategy and the future.

And it also helps to get the board used to having open discussions and asking provocative

questions.

And that interaction between meetings, you know, I know that this can be a little bit,

some executive directors and some boards like to limit the amount of interaction between

meetings, first of all just to save time and second of all to make sure, that all of the

board members have access to the same information or as much of the same information as possible.

I still do encourage most of the time for the staff to engage with the board as much

as they feel comfortable in between meetings.

First of all to make sure that they're in the loop but second of all to use them as

a bit of a sounding board.

There's no reason why the the board's rule needs to to end the moment that the board

meeting is done.

These are very intelligent, very committed people who have the opportunity to provide

support, provide guidance, provid even mentorship.

And so I usually encourage boards and management to be a little bit open minded about how they

can interact with each other in between meetings to make sure that they've got the opportunity

to bridge the gap as much as possible.

And the information gap is so big in most cases.

I took this circuit diagram.

This is what what tends to get boards into the details, because the gap is so big that

the board wants to ask lots of nuts and bolts questions.

This is why management has that opportunity to guide the board a little bit differently

by asking high-level questions.

And so the information gap and "noses in, fingers out" are connected.

I want to take a minute before we flip over to the question and answer period to talk

about the time allocation and meetings.

I just have a few, what I think are reasonably simple, but more importantly are free recommendations

as to how boards can spend their time a little bit more efficiently in board meetings.

One is, there's, many of you will know there's a device called a consent agenda.

What a consent agenda is, it's a document, a tool, where you can compile, combine non-controversial

items like the approval of minutes, for example, into one approval item that you just, instead

of having to talk about it, have a separate motion at your board meeting for all these

routine stuff, pile it all into one tool, the consent agenda and at the beginning of

the meeting just get all of it off the table at once.

So if you're if you're not familiar with consent agendas, just take a quick Google search and

I highly recommend that even the most basic board operations I've recommended that you

use consent agendas.

If you're having trouble focusing on the strategic items scheduled them at the beginning of the

meeting because what happens to the stuff that's at the end of the meeting.

Well, of course, it's the stuff that you run out of time on and you don't end up paying

attention to it.

Put the important forward-looking stuff at the beginning and you'll spend more time.

I often recommend that boards track and record the actual time they spend on agenda items.

So what this requires is, first of all, on the agenda, or it doesn't have to be physically

written on the agenda, but whoever is in charge of the agenda should have a very specific

idea of how much time they want to spend on each item and then actually track the time

that you spent.

A lot of the time what you'll find is that you're not spending the time the way that

you hoped you would and by tracking it and monitoring it, and then having a discussion

with the board about it afterward, it gives you an opportunity to say, okay, here's what

went well at the meeting, here's where we went over time, here are the things that we

spent more or less time on than we wanted to.

How do we want to do it differently at the next meeting?

And then what's important is to change and deliberately at the next meeting adjust the

way that you're spending your time and keep on tracking it because once you've hit that

point where you're happy with the way your time is being spent it's easy to fall back

into old routines.

Keep on tracking it and talking about it.

Finally a couple of last pieces.

Allocate at least a couple of hours for board meetings.

I know this is more common now, but it used to be that a lot of organizations would only

allocate an hour and they had a lot of trouble having the time to spend on strategic items.

And we've done some research that shows that even one additional hour increases the amount

of time that you allocate to strategic items by a very significant amount.

So if you've got a one-hour board meeting definitely consider making it two, if you've

got two, consider making it three and think about how you might use that extra time to

focus the board on big picture strategic oversight.

And then finally, this is really important, give the board at least one week in advance

to read yhe pre-meeting briefing materials.

If they don't have enough time, they're unlikely to come into the room prepared and if they're

unprepared you end up spending a lot of your time reviewing material that they should have

been prepared for already.

Now I had a couple of additional slides, but I want to make sure that we give some time

for Q&A and so I'll get back to the slides if our questions focus on some of these topics.

So what I will give you time for Q&A now, but I want to point your attention.

I put my email address at the bottom here.

It's matt@boardeffectiveness.ca.

If we don't get the chance to get to your question today and you really want to chat

about it, email me directly.

I am more than happy to chat with you and talk about whatever topics you're interested

in with respect to boards and governance.

So I will leave it to Marina, I think to direct me on this Q&A.

>>MARINA: Wonderful.

Thanks, Matt, lots to think about here for sure and thank you to everyone who's submitting

your questions.

Keep them coming.

So Matt, let's dive right in.

For new directors, let's talk a little bit about, maybe folks that haven't joined the

board yet, what questions should they be asking before they go ahead and accept a director

position?

>>MATT: Yeah, so there, I would sort of divide this, and I'll try to be as short-winded as

possible here.

I would divide the answer into a couple of different things.

One being the nuts and bolts stuff.

So I would definitely ask like tell me about the the calendar, how much time do you expect

of me?

Tell me if you've got directors and officers liability insurance.

Show me the strategic plan and the business plan and the board manual and the bylaws and

all that stuff so you get the chance to have a look at it and just make sure you get a

sense of what it's all about.

I also really encourage new board members to ask about the tone in the room and ask

to be given access to the staff and the other board members to just get to know people because

in, you know, in the end of board is just a group of human beings with whom you'll either

work really well or won't.

And so I really encourage you to to take the time that you can to get to know the individual

people and ask them a lot of questions about themselves, about the organization and about

how things work.

And get a feel for whether or not you think you'll be able to contribute value to the

team and you know, if you don't get it, if I thought, I spoke with a board member the

other day when I was talking about this exact thing and they said well, I asked that and

they didn't give me access.

I would look at that as a serious red flag.

Oh the I would also ask about about what formal onboarding processes they have.

A lot of Charities don't have, but if they do make sure that you understand them and

take as much advantage of them as you can.

>> MARINA: Well, that's great that you brought that up, Matt, because I was going to ask

you if we could flip that question around and look at it from the board's point of view.

What should they be doing to onboard and orient new board members?

>> MATT: Yeah, good.

So I think that it can be really helpful to be on the one hand as formal and prepared

as possible.

So for example, make sure you've got as much documentation as possible about what the organization

is about.

How does the board function?

What are our processes and structures around governance?

What's the strategic plan, business plan?

All that stuff, have it ready in a package to sort of hand to somebody because if you

don't have that ready, it's going to be very hard for them to come in fully prepared.

But I would also, just the exact opposite, I would be ready, I would prepare a specific

approach to how you want to make sure a new board member becomes familiar with the people,

with the organization, with the community, how these things work, and be really specific

about what you expect from them in terms of how they prepare themselves and how they get

to know everybody.

Because you've got the exact potential challenge that they have, which is they may be an absolutely

wonderful fit, so you want to prepare them to contribute and be as successful as possible,

or they may be an awful fit and you want to make sure you give yourself the opportunity

to know that right away.

[laughs]

>> MARINA: That's great.

And I think on that note too, I've popped a link in the chat box, but our Boards That

Work course can be a good option sometimes for folks.

We have a Better Board Kit as well that can be done by the board as a team.

So go check that out if you're looking for more professional development opportunities,

and of course share this webinar because I've noticed we've had quite a few organizations

sharing this as an opportunity to get their board members engaged in sort of, some free

professional development, which is always a good thing in the sector.

[laughs]

>> MATT: Yeah, free is really good.

[laughs]

>> MARINA: Yes.

So now once you've joined a board, Matt, how do you break in?

So perhaps you're the newbie and there's lots of long term directors.

How do you settle into that position?

>> MATT: Yeah, I think that the most important advice, and this, I don't know that this is

special for new directors, it's just something that's important to remember in general but

can be really helpful for new directors in the beginning, is find your balance of listening,

and you should definitely be listening more than talking, but find the balance of listening

and participating and get a sense for where you've got the most opportunity to add value.

And this can be, be patient.

It takes a long time to become completely familiar with an organization and to be, to

get a feel for the people.

But find those areas where you believe that you've got the opportunity to add the most

value and communicate that.

You know, we've done quite a lot of research that seems to suggest that the most important

skill or trait of a board member in any sector is what we call independent mindedness.

So this is, this is somebody who has the guts to speak truth to power.

It's somebody who is not too dramatically swayed by groupthink, who's willing to express

unpopular opinions.

Who's able to introduce constructive conflict with an emphasis on constructive.

And so find the way that you can sort of nudge the board out of their comfort zone.

And and get them thinking about new stuff.

They will really, really, really value that and I know it can take a long time or it can

be seem really uncomfortable to be the new person and and be thinking along those lines,

but that's where you're going to be adding the most value, in not just contributing your

resume expertise, but in helping to enable the board to see challenges from as many different

angles as possible.

>> MARINA: Great.

And here's another excellent question.

What is the best way to find a board position if you're not on a board currently?

>> MATT: Well, I mean there's a lot of, there's, let me just think about what, I'm going to

make sure that I get the list right.

So Marina, I'll, I'm going to ask you a question.

Does CharityVillage do any sort of posting of board positions?

>> MARINA: Absolutely.

I'm so glad you asked that Matt.

>> MATT: Yeah good.

>> MARINA: Yeah, we do.

You can post free volunteer positions on CharityVillage and that does include board service positions,

and one really great thing that we have going is a partnership with LinkedIn to post skilled

volunteer positions on LinkedIn as well.

So oftentimes the board volunteer positions will get cross-posted there and then additionally

for those of you that are in Ontario, we have a partnership with CPA Ontario where they

also circulate board positions posted on CharityVillage to their members as well.

So that can be great if you're looking, especially for a treasurer.

Yes, so I will put some info in the chat box as well.

>> MATT: Yeah, that's perfect.

And another organization where, many of you have probably heard of The Institute of Corporate

Directors that they are, it's sort of a trade association for corporate directors in Canada,

and they have just an absolutely vast number of board postings, a lot of which are in the

not-for-profit sector.

>> MARINA: Fantastic.

So lots of good places to get started with there.

The last question I'm going to send to you Matt is about diversity.

So obviously board diversity is a really hot topic in the sector with great reason.

We need to work on this as a sector.

What can boards be doing to optimize the diversity of their members?

>> MATT: Yeah, so the, it's an amazing question and one that may be the question I get asked

the most compared to any other question around boards and governance, and it's clearly a

very complicated area.

But I think the first thing is, I get in boardrooms frequently and there's a lot of arguing about

what diversity means and, and fair enough but I think not getting hung up on what diversity

is, is the first question.

You know, if you want, if diversity to you means having more women on the board, great.

If it means ethnic or racial diversity, great.

If it means people with disabilities, great.

Or if it means professional expertise, fine, these are, I think that a lot of boards waste

time trying to argue about what it is.

The reality is there's a vast amount of research that shows that, that groups made up of demographically

diverse people make better decisions.

So let's just get to work on it.

First of all, don't get hung up on well, where we only recruit people with this particular

resume background because that's going to limit your pool of diverse candidates.

Instead, focus on what are the characteristics that actually make our board effective.

You may need a lawyer, you may need an accountant, but you don't need 10 of each.

Let's make sure that we focus on people who are independent minded, who are consensus

builders, who are willing to challenge and introduce constructive conflict, who are willing

to change their mind.

None of those things are demographically linked.

If you want a diverse board recruit on the soft skills that make people good board members

and I guarantee you you're going to have a pool of very diverse candidates and this is

something if you've got more questions email me and we can talk more specifically.

>> MARINA: That's great.

Thanks Matt, and I just want to give a quick share from a participant who suggested a great

resource, diversity.volunteerottawa.ca which matches people from underrepresented, sorry

underrepresented communities to nonprofit boards in Ottawa.

So I've --

>> MATT: I love that, great.

>> MARINA: I've popped that in the chat box as well.

So go check that out.

Well, thank you, Matt.

This has been such a great presentation.

Lots of information and we really appreciate you offering as well to continue the conversation

with folks that have more questions, with your email.

So thank you.

>> MATT: It's my pleasure.

Thank you.

>> MARINA: So I just want to remind everyone before we close today, we will follow up with

you by email this afternoon or tomorrow morning with the webinar recording, the slide deck

and we'll put as many resources as we can in the follow-up email as well.

If you do have further questions or there's a particular resource that was mentioned that

you don't see there.

feel free to drop us a line at webinars@charityvillage.com and we'd be happy to track that down for you.

We will have a short survey as well that takes less than five minutes to fill out.

We hope that you'll complete that for us if you can and you will have an opportunity there

to let us know if there's future topics you'd like to see covered and we'll also be sure

to share this feedback with Matt as well.

So if there's anything that you want to give a shout out to Matt, make sure you put it

in there.

Our next free webinar is coming up on July 11th.

We're going to be discussing the challenging issue of how to navigate workplace conflict.

So there will be a link to register in the email that you receive later today or tomorrow.

With that, I want to thank you all again for joining us today, and I hope that we'll see

you again at a future session.

Thank you.

>>MATT: Thanks.