Time to rip up the governance rulebook

Time to rip up the governance rulebook

Time to rip up the governance rulebook

BOB

We’re all guilty.  Funders, commissioners, umbrella bodies, influencers continue to perpetuate boards who are shackling rather than liberating our social missions. Bob Thust calls on us to step back and apply some sanity.

The proposal was signed off, but it was a hollow victory.  This was the third time I’d had to bring this back to the board, and it was basically the same as it had started out.  If anything, it was worse.  Less ambitious and less meaningful. Less connected to what our key stakeholders had said they wanted. I could have used the days we spent discussing it making progress instead.   

I’ve been here all too often, as I’m sure most of you reading have.  But governance doesn’t need to be frustrating, constraining and unhealthy.  It can be exciting, liberating, and progressive.  And it needs to be.   

 There is an increasing acknowledgment that tackling important social issues is (and always has been) complex.  An endeavour that can’t easily be distilled into a linear and contained process of cause and effect.  To have any impact requires us to be bold, to change strategy in response to what we learn, to act fast because the problems we face are urgent.  It requires that we represent, champion and promote the voices that so often go unheard.  It requires us to look beyond our own organisations and their continued existence and stay true to our missions, whilst recognising our inability to achieve any of them alone. 

 Yet, for organisations with a social purpose the predominant model of governance is command and control that relies primarily on systems of risk management to ensure survival and achieve predictable outputs, rather than stay true to a collective purpose.  A model that too often creates bottlenecks and inefficiencies, and places ill-equipped, distant boards that suffer from a huge lack of diversity in an ultimate position of power.   

Given the challenges we face we can’t let this status quo continue. 

Our problems start with a widely held assumption that legal structures which include non-executive boards equate to stronger governance than those which don’t.  I can’t see any good evidence for this.  Indeed I tend to see more evidence to the contrary. 

Trust in civil society institutions continues to fall, the recent civil society futures interim report highlighted an increasing frustration from those in the social sector (and the people they support) feeling they lack control and are not listened to, and we regularly complain of a tendency towards risk aversion rather than bold collaboration.  Recent Charity Commission research found only 40% of all trustees felt their board contained sufficient governance skills to effectively meet the needs of their organisation.  Despite it not being clear what these ‘governance skills’ are, from boards themselves this demonstrates an encouraging self-awareness yet a worrying lack of capacity. 

 Many of the most inspiring examples of social change continue to come from places that don’t have traditional boards at all.  Buurtzorg builds on a foundation of small, self-managed teams linked to neighbourhoods that provide a range of services for older people.  Chayn is not a traditional organisation at all but a distributed, volunteer run network supporting women suffering from domestic violence around the world.   

The predominant approach to governance we have now is seems to be resulting in exactly the opposite of what we need.  And we’re making it worse…  

As a sector we exacerbate the problem,.  We focus too much of our time, research, support, funding, recruitment and expectations on governance at board level.  Successive corporate and charity governance codes have emphasised the critical role of organisational culture, and yet we too often respond to challenges by first tightening controls or getting more professional expertise on the board, rather than helping organisations build stronger relationships of trust internally and with their partners and wider stakeholders.   

We too easily make the assumption that because it’s usually a board that carries the ultimate legal responsibility for the stewardship of an organisation, this also means boards necessarily carry the ultimate accountability for everything that the organisation does, including giving them the key role in setting strategy, in taking all the important decisions, and scrutinising the plans of the staff team.   

All of this means that we are placing non-executive boards on a pedestal: setting unrealistic demands and thereby setting them up to fail, scaring them into a narrow focus on operations and risk management, or else inflating their egos to the point where many overstep their experience or lack the humility to see themselves as just part of a much bigger eco-system, rather than those looking down on it.  If you add to that a reliance on unpaid non-exec boards that seriously limits the scope for genuine diversity you have a potent and problematic mix. 

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So what do we do about it? 

Whilst this could be the starting point for a radical proposal for getting rid of boards altogether and ditching the usual systems and controls for risk management, that’s not quite what I’m arguing.  There is real experience and value to be had from non-executives. There are many social purpose organisations I know that actually might benefit from creating a non-executive board.  There is no point either in denying the high stakes involved in getting governance, accountability and legal compliance right and the need for controls in key areas.   

But it’s time we understood that board roles aren’t any more important for good governance than the staff team, partners or the communities these organisations exist to support.  It’s time we stopped scaring those leading social purpose organisations and helped them realise that the role of a board is not as constrained or as elevated in importance by its legal responsibilities as many assume, whatever your organisational structure.  Instead of warm words on the importance of user voice, lived experience and organisational culture, let’s actively encourage and provide the space to those leaders to look beyond the traditional and consider the multiple formal and informal ways they might develop mutually accountable relationships with stakeholders, rather than force them to rely too heavily on internally facing process and hierarchy.   

I admire many of the organisations and boards I’ve been working with recently, such as Lankelly Chase Foundation who have been carefully reviewing their own governance as part of their ongoing inquiry into working with complexity, or the  Association of Camerados CIC (AoC) who feel that legally responsible non-execs often have too much skin in the game to put mission before self-preservation (witness recent accusations of a culture of cover-up in the humanitarian sector, for example).  Instead they’re scoping an idea to set up an independent panel appointed by those involved in the Camerados movement and with a remit to hold AoC accountable by publicly publishing the result of an annual ‘mission audit’, whilst retaining the ability to be nimble and rapidly responsive.   

I’m not presenting these or any of the previous examples as solutions.  None of these organisations have ‘cracked it’. They wouldn’t say they have, and in any case what works for one situation will probably not suit another. 

But I do think it’s important that more people leading social purpose organisations are willing to meaningfully question the role, influence and power of all stakeholders, try different approaches, adapt and learn.  That they are willing to question whether preconceived management structures and governance models work for them.  Or even question whether a governance ‘model’ is the answer, as opposed to starting by building and nurturing a set of shared behaviours.  

So for funders, commissioners, umbrella bodies and those with influence across the social sector please let’s stop reinforcing the role of the board as the primary or even sole driver of leadership and governance.  Let’s stop equating the term governance with just a narrow focus on vaguely conceived notions of stewardship or ill-fitting risk management.   

Funders, stop forcing those you support into pre-determined approaches as a condition of funding, but instead fund them to explore what might be meaningful for them.  The Listening Fund from Blagrave Trust, which is giving youth focused social purpose organisations the space to figure out for themselves how best to ensure the voice of young people is heard and acted upon, is just one example of how we might start to re-balance this. 

More importantly, if you’re out there feeling frustrated or unnecessarily constrained by your board and governance arrangements, I’d urge you to take a step back and allow yourself the freedom to consider with others what might work best for you rather than consider yourself stuck with what you have.  Hold onto the fact that governance needn’t be a millstone around your neck, but a positive force for change.  Talk to others that have trodden different paths before.  Get yourself to some events like Losing Control (newsflash, we’ll be repeating this alongside the Social Change Agency in the near future).  And if you want to just have a chat, get in touch – we’ve as much to learn as we have to give.  

Ultimately, we can’t continue to predominately promote or accept a one size fits all, command and control model and hope that adding a few more diverse board roles will have any fundamental impact any time soon.  As Einstein said, the definition of insanity is doing the same thing repeatedly and expecting a different result.  It’s gone too far for tinkering around the edges, we need to rip up the governance rulebook and start again.

Bob Thust is co-founder of Practical Governance, trustee of Local Trust and treasurer at the Bevy community-led pub in East Brighton.

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