Boards govern, right? And executives, execute.
Nothing could be farther from the truth in today’s Not-for-Profit and Small Business world – and even some rather large businesses, for that matter…
Many Not-for-Profit board members are there because they were the longest serving volunteer and happened to be in the room at the wrong time. The vast majority of small businesses don’t even have a board!
So boards end up managing, dabbling in things they know best but should no longer be concerned with on a day-to-day basis. Because the transition from executive to governor is not an easy one – and it carries different liabilities and responsibilities.
That’s why a non-executive, or independent, board member is crucial to the success of the board. He, or she, brings experience from outside the organisation, a fresh pair of eyes and a critical mindset. Notwithstanding this, the independent board member has just one problem. Conflict of interest. Not his, his colleagues.
If his colleagues are drawn from within the organisation, they can often be absorbed in internal politics without knowing it. This happened to me on the board of a Not-for-Profit I recently resigned from. The financials kept changing and it was not until after some months that I realised there was a power play between the financial controller and the CEO. The board was being held ransom to this unprofessional behaviour but could do nothing about it because firing the financial controller was the CEO’s job.
This is why boards need consultants.
As an independent board member, despite your best intentions, you are jointly liable for the decisions of the board. This can generate a mood of compliance for those who are conscious of the liabilities they hold and leads to a level of self-censorship in board meetings – your best ideas may not be acceptable to the rest of the board. The absence of transparent information and robust debate tends to a conservative approach. Compliance is not a strategy.
Seven reasons why a board needs a consultant
- An independent board member needs a supportive board to have his ideas heard. A consultant doesn’t. He is there to deliver according to the pre-determined agreement.
- A consultant can make suggestions independently, he has no liability for the execution of his suggestions and therefore has no tendency to self-censor. He will call things as he sees them then help the board to enact the changes should the board wish.
- A consultant has seen other organisations, many board members have not. I served on one board with people who had only ever worked in that organisation or had had a career in only one other organisation.
- Sometimes the CEO needs coaching. The chair can engage a consultant to perform this task that no-one can reasonably expect another board member to do, even if they have the expertise.
- A consultant is independent of the board, having only one client, the chair, and can bring his expertise to bear in ways other board members cannot. Even if that expertise may be similar to that of other board members.
- A board governs, a consultant consults. A consultant is not going to do your governance for you, why are you doing your own consulting?
