2. Life cycles - evolving organisations
Organisations evolve and develop. It is useful to think about governance in terms of an organisation’s life cycle.
Organisations can evolve from a few interested and committed people working for a shared cause to a separate legal entity employing thousands of staff.
Here are some typical points in the life cycle and some of the typical challenges for boards and their pre-cursors - working parties and committees.
1. A few interested, committed and motivated people take action
Many organisations began their lives when a few interested, committed and motivated people come together to take action. At this point there is no legal entity. There is no board. The challenge is to give practical expression to the commitment and motivation.
2. A few interested, committed and motivated people working for a cause - a working party
A working party or committee is established and it takes responsibility for the actions of the group. There is still no legal entity. There is still no board. However to be effective the group needs to carry out many of the functions of a board by answering key questions such as: What is our vision? What are we trying to archive? How will we archive it?
The challenge is to take effective action and grow.
3. An unincorporated network/association
The working party may grow into a network or informal association. The informal association may reach a point where the members see it has a clear future, is likely to have to deal with money, possibly employ staff, or take risks for which individuals may be held accountable.
The challenge is to formalise the status of the organisation as a separate legal entity.
4. An incorporated body with no staff
The network or informal association incorporates and becomes a legal entity in its own right. As such it requires a governing body. The governing body is likely to be the members of the previous working party.
The newly formed legal entity (Association, Cooperative or Company) has no staff and so the governing body is hands on - doing all the day to day work of the organisation as well as governing the organisation.
The challenge is to get the work done.
5. An incorporated body with one staff member
When the organisation has sufficient resources to employ staff (through funding or fund raising) there will be the inevitable questions: What are the roles of the staff member? What are the roles of the board/committee?
The challenge is to clarify the roles. The board/committee is likely to keep some hands on roles because the staff member is like an extra pair of hands rather than an Executive Officer.
6. An incorporated body with several staff and an EO
As the organisation grows the staff member is likely to change from being an extra pair of hands to being an executive officer.
The challenge is for the board to let go of the hands on role that it began with when the organisation was being formed and focus on the governance role. This will require the roles of the staff and the board to be re-defined.
7. An incorporated body with several staff (and some new and some old board members)
As the organisation grows there is likely to be turnover of board members. Some of the board members are likely to be original members. Others will be new.
The challenge is for the organisation to maintain its mission and incorporate new board members without trauma and dysfunctional conflict on the board and/or within the organisation.
8. An incorporated body with 100 or more staff
When the organisation has grown considerably the board will focus on governance. All the hands on roles will be let go.
Where the Executive Officer is a very effective manager, these is the possibility the board will be a rubber stamp.
The challenge is for the board to govern (not to be a rubber stamp). The board will need to be explicit about the model of governance it is using, very clear about its role and the role of the CEO.