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  Management
  Alternatives Pty Ltd
  ABN 23 050 334 435

 

 

 



Contents | 1. Introduction | 2. Life cycles | 3. Models | 4. The Board
5. Board review questionnaires | 6. Resources


3. Models of governance

There are many models of corporate governance. There is no one- size-fits-all. Some of the ways people have described boards and their roles are below.

Each board requires a shared view of its roles and responsibilities and the way it will work.

Key questions are:
What is our preferred model of governance?
How do we want our board to work?
How will we know we are doing a good job?

Some boards adopt a particular model. Some adopt a particular model and then make variations to it. Other boards are more eclectic.

The following quotations highlight key ideas in different models.

Tripartite System - A conventional model of governance

"In many nonprofits, the responsibilities for running the organisation evolve into a three-part, interactive system - a tripartite system - comprised of a board of directors, an executive, and staff. If this system is to function effectively, its parts need to share a sense of mission. A board’s central function is to keep the organisation’s mission in focus, and its primary responsibility is to ensure that the other parts of the system are working toward accomplishing that mission." (p4)

From Diane J. Duca Nonprofit Boards Roles Responsibilities and Performance quoting Cornforth and Edwards in Good Governance: Developing Effective Board-Management Relations in Public and Voluntary Organisations.

Ways of seeing boards

There are different ways of seeing boards. Three are outlined in David Fishel The book of the Board Effective Governance for Non-profit Organisations.

The agency or stewardship model

“The agency view presumes that managers tend to act in their own self-interest rather than in the interest of the ‘owners’ of an enterprise. In this world, the board members see their main function as being to control the behaviour of mangers. They primarily have a stewardship role - making sure that the resources of the organisation are safeguarded." (p11)

The political model

"The political or democratic perspective of the board assumes that board members are their to represent to interests of one or more stakeholders in the organisation and to express or resolve differences between those interest groups." (p12)

The managerial model

"In the managerial view, the board is regarded as the apex of a management hierarchy. Ideas and practice from management are considered appropriate to governance also - so board members should be chosen on the basis of their expertise and contacts, in order to add value to the organisation’s decision making processes." (p12)

Dimensions of the board’s role - Robinson

"A board operates in three dimensions in the life of a nonprofit organisation. It is a legal body and has responsibilities that relate to its legal duties. It is also a functional body; there is work to be done and the board is often in the best position to do it. Finally the board is a symbolic body; a role that is critical to the board’s effectiveness but is often unappreciated...(pp29-30)

"The Legal Dimension - There is no escaping the fact that the board is the legally responsible body within a nonprofit organisation. (p30)

"The functional dimension - In addition to being a legal body, the board is also an important resource for getting the job done. In a startup organisation the board may find itself the chief cook and bottle washer....In a mature organisation with a large and professional staff the board will spend its time differently. (p35)

"The Symbolic dimension - The board is a leadership body.....Who serves on a board conveys an important message to clients, constituents, members, donors, and the community at large." (p37)

Maureen K Robinson. Nonprofit Boards that work. The end of one-size-fits-all Governance.

The cyclical board model

"Boards of directors tend to behave in a certain way depending on their stage of development, as well as the state of the organization. Sometimes they behave like managers and at other times they act more like leaders. Unlike the governance-theory model and the tripartite system model, which offer principles of board governance, the cyclical board model describes categories of board behaviour. "(p7)

Some examples for different stages are:

"Founding stage - There is no distinction between policy and management; the board acts as staff and runs the organisation... (p8)

"Corporate Stage - the board behaves like a corporate board; policy making and planning emphasised; recruit prestigious members" (p-9)

From Diane J. Duca Nonprofit Boards Roles Responsibilities and Performance quoting Miriam M Wood Is Governing Board Behaviour Cyclical “Nonprofit Management and Leadership 3, 2 1992

Governance - theory model - Carver

A good model of governance will enable the board to:

  • Cradle the vision
  • Explicitly address fundamental values
  • Force an external focus
  • Enable an outcome-driven organising system
  • Separate large issues from small ones
  • Force forward thinking
  • Enable proactivity
  • Facilitate diversity and unity in board composition and opinion
  • Describe relationships to relevant constituencies
  • Define a common basis for discipline within the board (ie sticking to the job)
  • Delineate the boards role in common topics (ensuring the board’s specific contribution to any topic is clear).
  • Determine what information is needed
  • Balance over-control and under-control (ie neither be rubber-stamper or meddler)
  • Use board time efficiently.

In the Carver Model the board is responsible for:

1. Linkage to ownership: The board acts in trusteeship for "ownership" ie, members.

2. Explicit governing policies: The values and perspectives of the whole organization are encompassed by the board's explicit enunciation and proper categorization of broad policies.

3. Assurance of executive performance: Although the board is not responsible for the staff's performance, it must ensure that staff members meet the criteria it has set. In this way, its accountability for that performance is fulfilled.

The categories of policy the board will have are:

1. Ends: The organizational "swap" with the world. What human needs are to be met, for whom (outside the operating organisation), and at what cost or relative worth.

2. Executive limitations: Those principles of prudence and ethics that limit the choice of staff means (practices, activities, circumstances, methods).

3. Board-Executive relationship: The manner in which power is passed to the executive machinery and in which the use of that power is assessed.

4. Board process: The manner in which the board represents the "ownership" and provides strategic leadership to the organization.

Based on John Carver Boards the Make a Difference. A new Design for leadership in Nonprofit and Public Organisations.