Monday, 19 April 2010

Board Behaviour

The similarities in governance structures between the sector in the US and the UK are striking.

On Friday afternoon I had a great meeting with Bill Ryan, research fellow at the Kennedy School of Government at Harvard. He is a leading thinker on board effectiveness and runs an online programme for chief executives supporting them to develop the performance of their boards. We discussed how this programme could be made available to chief executives in the UK.

Bill described how the narrative around nonprofit governance over the last decade in the US has focused increasingly on the control and audit aspects of boards, with the sector seeming to want to fit into an agenda of post-Enron corporate governance structural reform. Nonprofits adopted the onerous Sarbanes-Oxley regulation even though it did not automatically apply to them. Committees, audit trails and regulation proliferated, and yet governance did not necessarily improve.

Bill cited the example of the Smithsonian in Washington, an organisation which could not have had better governing structures on paper if it tried. It’s chair is the chief justice of the US supreme court. However scandal broke in 2007 where amongst other things the Chief Executive’s remuneration got out of hand (even by ACEVO standards!). The issue according to Bill was that the board had neglected the behavioural aspects of governance, the way in which people on the board actually related to each other and made decisions, and focused instead on structures.

This is pretty common. It is after all a good deal easier to talk about structures than it is to talk about behaviours. And it’s an important lesson as we work on revising the code of good governance in the UK. The right structures, with all the text-book checks and balances, are necessary for good governance but not sufficient. People need to behave in the right way, relationships must be cultivated and nurtured. Egos must be kept in check. This is of course equally true on both sides of the Atlantic and is why it is so important that tools like ACEVO’s governance review service look at both structures and behaviours.

The comparison between the UK and US structures therefore is very helpful. More diverse are the systems of governance across Europe. With partners across the continent Euclid Network is leading on the creation of a set of Europe-wide governance principles. In Paris last December representatives from across the UK and France began work in defining principles common to the two countries, and in spite of varying structures being described, those common principles of accountability, of collective responsibility, and of board leadership shone through. In the summer this will be expanded to Scandinavia with an event in Oslo.

ACEVO passionately believes in the importance of providing an international perspective to third sector leadership, and it is clear that in observing how topics such as governance develop around the world we can all learn from each other. Long may that continue.

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