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On Being a Fiduciary

 

A presentation on governance
by Robert Ballantyne

If you, your association, or board wish to talk about governance this outline covers topics we find useful to explore first. One of these is the concept of a fiduciary, which is at the heart of any discussion of good governance.

This material can be presented as a workshop, seminar, or talk to boards of an incorporated organization, or to boards that expect to incorporate. The focus is mainly on generic good governance with some references to Policy Governance.

What someone said to recruit new board members

The following may be good reasons to volunteer, but they are not about good governance.

• It is not much work: only 3 meetings per year
• Give it, get it, or get off
• This is a working board (we're too busy to deal with governance)
• You are only one of 40 people, and the executive committee makes most of the decisions
• We just act as a sounding board -- management are really wonderful and know what to do
• We are not a governing board, but we have line responsibilities and authority (an unusual situation, and not covered in this talk)
• You did well in committees, and now you are given the honour of being on the board

The reality of a board position in a corporate entity

The position of the board appears as a box at the top of organization charts. This conveys the impression that the board is the most senior level of management. The board has the power to act as the senior management; but this is not its real reason for being nor its most effective role.

• Why the government requires incorporated entities to have boards
• How it really works (even if you never looked at the articles of incorporation)

• Government allows the creation of an artificial entity
• The entity has a membership
• The membership approve bylaws
• The bylaws provide the mechanism to create the board
• What it means to be a fiduciary

When the board speaks, the artificial entity speaks. The board is, therefore, the mouthpiece of the corporate entity

• The board may take on any responsibility it wants... but its main responsibility is to speak for the entity. Therefore, the main product of the work of the board is words. Those words should mean something! Read your board minutes to see if your words are really meaningful.
• The common advice to boards is to govern by policy. Most do not. Instead they use their power of edict, either to rubberstamp staff plans or fire thunderbolts at the staff. Most people are not skilled in the use and language of policies.
• People don't know how to articulate desired results. Read Robert's article: Don't Tell Me What To Do.
• How to govern: understand, as fiduciaries, what the owners of the organization would have the organization accomplish, say it in words and hold the organization accountable for results. Know how to monitor.
• Are the your 'owners' the same as your membership? Maybe, maybe not.

The language of Policy

• The scope of Policy: what must be accomplished, and what constraints should apply, and how the board should govern itself.
• Examples of powerful policy.
• When we understand a problem we are tempted to specify the solution. There may be other, better, solutions. When we direct staff to carry out our solutions, they are not motivated.
• The test is: the staff have the right to say, "If you didn't say how it should be, don't ask me how it is."
• Some boards say to staff, "bring me a plan, and I will tell you what I like and don't like." What is wrong with that? It is followship, not leadership. Followship does not make for good governance.

The difficulty with the new governance

• It assumes that the board wishes to be a fiduciary, to delegate, and not be a manager
• Many board members think they know how to manage, and want to supervise management
• Many board members have their own list of 'wants' and personal visions and agendas; and believe that it is their job to introduce these into the organization
• Many boards are content to be a sounding board or a source of support for management
• Many boards feel that the management expertise rests with them, and the members not trust management to the staff
• Not-for-profits are often more difficult to govern than for-profits
• Past experience on boards is of little help with the new culture of governance
• There is a lot to be learned in order to create the first suite of policies and set up a rigorous monitoring process. It takes time and commitment. Someday it will part of the culture, like Robert's Rules of Order; but that is years away
• Governing is not intuitive. Showing up and acting out of what feels right will not do the job. First you have to learn the skills.

Saying the words that result in real new benefits for your community will make learning to govern with integrity worth the effort

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