Nearly every impactful organisation, whether a small non-profit or a large corporation, has a board of directors. The role of the board is often shrouded in mystery for those not familiar with boardroom dynamics. This article aims to clarify the functions and responsibilities of a board of directors and to outline the best practices for effective board participation.
A board of directors is responsible for ensuring that the organisation is operating effectively and ethically. This encompasses overseeing leadership, ensuring there are adequate resources, maintaining a credible plan for the future, understanding potential risks, and upholding a vision for the organisation's overall goals. Board members have a fiduciary duty to the organisation, which involves an ethical obligation to act in the best interests of the organisation as a whole, not merely focusing on financial outcomes.
Boards operate through regular meetings, typically held quarterly, and may convene for urgent or emergency decisions as needed. The time commitment and level of involvement can vary significantly. For new organisations or those undergoing significant changes, such as a leadership transition or acquisition, the board's role can be highly demanding. Conversely, in some non-profits, board roles may be more ceremonial, serving primarily to raise the organisation's profile or assist with fundraising.
A typical board meeting follows a structured format, which includes:
.1: Prior to the meeting, the leadership team sends a detailed briefing outlining the current state of the organisation, recent developments, financials, and the agenda for the upcoming meeting. This often includes a deep dive into specific topics of interest to the board.
.2: The meeting begins with a review of the organisation's fundamentals led by the executive leadership. Ideally, there should be no surprises at this stage, as board members should be well-prepared.
.3: Executive team members present updates on their respective areas, such as sales, fundraising, strategic initiatives, and progress towards the organisation's goals.
.4: The board engages in discussions on strategic issues, such as the competitive landscape, economic or political impacts, and long-term planning. The aim is to support the executive team's decision-making process.
.5: Discussions focus on how leadership is supporting the team, including updates on hiring, organisational culture, governance improvements, and board development.
.6: The board makes structural decisions, such as approving major economic commitments, strategic shifts, key hires, or updates to bylaws.
.7: The board holds a session without the CEO or Executive Director to discuss the organisation's leadership and strategy, providing feedback or considering leadership changes if necessary.
Board meetings can range from a few hours for smaller organisations to multi-day sessions for larger entities, often including team-building activities to strengthen the board's cohesion and understanding of the organisation.
Board members are usually deeply engaged, contributing their expertise in specific areas such as marketing, finance, or HR. While some members may dominate discussions in their area of expertise, effective boards have little tolerance for unpreparedness. Non-profit boards may have members who are passionate about the mission but less experienced in operational details or those who have contributed financially and are given more leeway.
Boards can vary from being minimally involved to being deeply intrusive, potentially undermining the organisation's leadership. Ideally, boards act as a resource, amplifying the capabilities of the core team and stepping in when necessary. Dysfunctional boards either interfere excessively or fail to engage meaningfully. A well-functioning board is a mix of skills, experiences, and perspectives, providing valuable support to the organisation's leadership.
Individual board members can range from figureheads to shadow CEOs who exert significant influence. The best boards strike a balance, with members who contribute their expertise without overstepping. Board members representing investors often have clear agendas focused on returns, but a balanced board also considers the needs of employees, customers, and the community.
Board membership is often seen as exclusive, with opportunities frequently arising from long-standing relationships. Diversity on boards remains a challenge, with many boards lacking inclusivity. Efforts to diversify are ongoing, but resistance persists, often under the guise of maintaining standards. Advocacy for inclusion is essential, but board members promoting diversity can face challenges in being taken seriously.
Effective board members stay informed about the organisation, monitoring media mentions, and staying engaged with social media feedback. Regular check-ins with leadership, thorough preparation for meetings, and ongoing communication are crucial. Board members often serve as sounding boards, provide feedback, and offer support during transitions or crises.
The most vital work of a board often revolves around people, ensuring strong governance, financial oversight, and effective communication. Boards also play a crucial role during crises, providing support and guidance to navigate challenges.
Boards must focus on measuring the right metrics, aligning incentives, and maintaining clear principles. Effective boards are curious, engaged, and aligned with the organisation's goals. They avoid silos, cross-purposes, and self-interest. While boards are not usually the source of organisational problems, they play a critical role in addressing issues and supporting leadership.
Ultimately, boards should provide a stabilising influence, offering oversight and support to help organisations reach their potential. While structural challenges and human flaws exist, a well-functioning board can significantly contribute to an organisation's success.
At Yopla, our founding board is comprised of three members. This structure ensures that decisions are made by majority vote, allowing the business to move forward efficiently on key decisions. We're committed to this "odd number" strategy, ensuring that as we increase leadership our board reflects our commitment to diversity of thought and inclusive governance.
In our board meetings, we follow a structured approach to maintain focus on key policy decisions:
- : Define the aim of the decision or policy.
- : Clarify the rationale behind aiming for this goal.
- : Draft the initial rules of engagement.
- : A big white space for our team to feedback, ready for policy revision.
This method ensures that our discussions are goal-oriented and that policies are developed with comprehensive feedback, fostering a collaborative and inclusive decision-making process, one that recognises that the board does not have a monopoly on good ideas. Our approach exemplifies how a small, diverse, and focused board can effectively govern and guide an organisation towards its strategic goals.
A board of directors is a critical structure within any impactful organisation. It balances executive power, provides oversight, and supports long-term goals. Despite the challenges, boards are leaderships objective powerhouse, guiding organisations towards success.
Understanding the role, responsibilities, and best practices of a board hopefully demystifies this important institution and highlight its potential to drive positive change.