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NGO LEADERSHIP The governance-management partnership

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NGO LEADERSHIP The governance-management partnership

NGO LEADERSHIP: The governance-management partnership

Ced Simpson

    There’s been increasing focus on leadership of non-profit organisations in recent years, with moves to professionalise both governance and management. Yet there is uncertainty about the extent to which

    corporate and public sector models are useful, and anxiety about governance and management

    performance and relationships persist. Drawing on almost 30 years experience in nonprofit

    governance and management roles, including organisational troubleshooting, and literature on

    nonprofit leadership, Ced Simpson explores the nonprofit governance and management functions and

    how the leadership partnership can work effectively.

    Ced Simpson was involved in the development of school governance in Tasmania and was a board

    member and Chair of Amnesty International Australia in the 1980s, was responsible for supporting

    global organisational development 1988-93, and a senior manager/CEO for Amnesty International in

    Australia and New Zealand 1993-2007. He is currently co-Chair of the Aotearoa Global and

    Development Education Network, and as Director of the Human Rights in Education Trust works with

    both school boards and principals.

    These notes are based on workshops delivered for the Council for International Development in

    September 2009.

    The notes cover the following ground:

    ? Key strategic tasks to be undertaken by the NGO leadership

    ? Respective contributions of the governance and management bodies

    ? The governance-management relationship.

Acknowledgements

    I am particularly indebted to the following people and organisations for helping me to better understand

    and practise organisational leadership:

    Amnesty International (colleagues from the International Secretariat and Australian, New Zealand and

    other national sections). The global movement that includes everything from active local volunteer

    groups to distributed international networks of individuals to UN-type bureaucracy.

    Association of Chief Executives of Voluntary Organisations (www.acevo.org.uk). The UK NGO that, working with

    the Charity Commission and others, has developed effective best practice tools for NGO leadership.

    Coverdale Organisation (www.coverdale.co.uk). The management consultancy with extensive experience of working with organisations from big to small, developing along the way some valuable,

    scaleable tools to assist teamwork and project management.

    Peter Drucker (www.businessweek.com/magazine/content/05_48/b3961001.htm;

    www.druckerinstitute.com). The man ‘who invented management’, who was passionate about the

    social purpose of business, and who in his later years spent much of his time working with nonprofits,

    saying ‘The function of management in a church is to make the church more churchlike, not more businesslike. It's

    to allow you to do what your mission is’

    John Carver (www.carvergovernance.com). The man who invented governance that complements and adds value to management.

    Robert Kaplan & David Norton. The Harvard Business School duo who understood the shortcomings of

    traditional financial measures or organisational performance and developed a practical system for

    effective strategy management.

Terminology & key concepts

    To simplify things in these notes, the following terminology and concepts are used throughout:

    Board. The governing body of the NGO

    Chief Executive. The NGO’s most senior staff member Governance. ‘The systems and processes concerned with ensuring the overall direction, effectiveness,

    supervision and accountability of an organisation.’ (Cornforth 2003)

    Leadership. Organising collective action to meet organisational purpose.

    Management. Achieving goals by planning, organizing, directing, and controlling organisational resources and

    activities; the people responsible for management. Strategy (organisational strategy) ‘A set of principles and assumptions about why your organisation exists, what it hopes to achieve in the next few years, how it wants to achieve it, and how it will interact

    with its environment and deal with change.’ (NCVO)

Organisational leadership

    Organisational leadership is about organising collective action to meet organisational purpose.

    In recent years increasing attention has been given to the exercise of leadership at every level in an

    organisation. The idea of such distributed leadership is particularly relevant in nongovernmental

    organisations, or nonprofit organisations, where people often work because they are attracted by the

    purpose, or mission, of the organisation.

    The Leadership Center at MIT Sloan School of Management has developed a ‘a pragmatic, research-based

    model of how successful leaders at every level actually work’. Their 4 Capabilities Leadership Framework

    (FCF) defines four critical components of leadership:

    Sensemaking: making sense of the world around us, coming to understand the context in which

    we are operating.

    Relating: developing key relationships within and across organizations.

    Visioning: creating a compelling picture of the future.

    Inventing: designing new ways of working together to realize the vision.

In any organisation those holding formal leadership roles at governance and management level have

    particular responsibility and opportunity to fulfil these functions. In NGOs they are responsible for

    deciding and guiding the organisation’s strategy at the following levels:

Organisational effectiveness comes from alignment of collective effort in relation to the organisation’s

    vision, mission and values.

    Vision

A defining characteristic of NGOs or nonprofits is that they are vision/mission/values-driven. Fulfilling a

    mission relating to a particular vision of the community/society/world rather than profit is their

    bottom line, and people are generally motivated to work for/in/with the organisation because they

    share its vision of the future.

    A vision helps unite people towards a purpose. Creating and living a vision is the role of leaders in

    organisations. They have to espouse it and help others to believe it. Visions are aesthetic and moral, they

    come from within as well as outside.’ (Brefi Group, 2010) Mission

    "A clear, agreed-upon mission statement is one of the four primary characteristics of

    successful non-profit organizations” Niven (2003, p102) The organisation’s mission is the reason for its existence. It is the organisation’s contribution to realising

    the vision.

    According to Peter Drucker (1990) a mission must:

    ? relate to an organization's strength: 'Do better what you already do well - if it's the right thing to

    do'

    ? relate to external opportunities, needs: 'Where can we, with the limited resources we have -

    and I don't just mean people and money, but also competence - really make a difference, really

    set a new standard?'

    ? be something we can believe in

    Deciding on the organisation’s mission involves questions such as:

    'What are the opportunities, the needs?'

    'Do they fit us?'

    'Are we likely to do a decent job?'

    'Are we competent?'

    'Do they match our strengths?'

    'Do we really believe in this?'

To fulfil its role in communicating purpose to critical stakeholders, a mission statement needs to be

    reasonably succinct and compelling.

    For example, faced with a global written-by-committee Amnesty International ‘mission statement’

    To undertake research and action focused on preventing and ending grave abuses of the human rights enshrined in the Universal Declaration of Human Rights and other international human rights instruments

    the New Zealand section articulated its mission as

    To make the best contribution New Zealanders can to ending some of the worst violations of

    human rights worldwide.

Values

Connected intimately to the vision of the community/society/world to which they are trying to

    contribute are the values that guide the organisation in the fulfilment of its mission.

    Steve Jobs, CEO of Apple Computer, Inc., once remarked, ‘The only thing that works is management by values. Find

    people who are competent and really bright, but more importantly, people who care exactly about the same thing

    you care about.’ (Koteinikov, 2008)

    Values are the beliefs of an organisation, the expression of what it stands for and how it will conduct itself.

    Values are the core of an organisation's being. They underpin policies, objectives, procedures and

    strategies because they provide an anchor and a reference point for all things that happen. (Brefi Group,

    2010)

    A growing number of NGOs are recognising the usefulness of referencing human rights in their values statements.

    The community/society/world they envisage is generally one based on human dignity and freedom, and the cross-

    culturally negotiated, internationally agreed human rights framework contributes standards based on widely

    shared values that can readily be applied to the mission and life of the organisation.

    Strategy

    The organisation’s strategy is

    The broad coherent priorities you plan to pursue in order to achieve your mission consistent

    with your unique situation and responding effectively to your challenges and opportunities.

    (Niven, 2003)

    Development of strategy often involves difficult choices for NGOs inspired by a vision for the world.

    "Some nonprofits develop a big pile of well-intentioned programs, ideas and directions that try

    to respond to every need and opportunity that comes along and might vaguely fit under their

    mission. There is always a reason to do something that no one else is willing to do if it relates to

    the mission. The harder thing, as is often pointed out in strategy discussions, is to have enough

    of a strategy to know when to say no, when to drop things, pass up opportunities. Understand

    that, yes, a need might be real, but you might not be the best response to it." (Bill Ryan, in Niven

    p128)

    Paul Niven suggests the following steps to develop organisational strategy:

    Step 1: Review

    View your organization from an historical perspective. Chronicle the history of your public or

    nonprofit agency from its earliest developments to the present-day realities you face. Along the

    way you can document programs and services you've offered, milestones reached, any shifting

    priorities, and external events such as demographic or legislative changes. (p134)

    1 Consider using the Appreciative Inquiry approach to balance the deck. (p135) ... []

    Step 2: Conduct stakeholder analysis

    Who are the organisation’s key stakeholders? What do they value in the organisation’s work? How do

    they rate the organisation’s performance? Which stakeholder expectations must be met?

     1 See http://appreciativeinquiry.cwru.edu/

Step 3: The SWOT analysis

Step 4: Identify strategic issues

    [F]undamental policy questions or critical challenges that affect an organization's mandates,

    mission, and values; product or service level and mix; clients, users, or payers; or cost, financing,

    organization, or management.

    Strategic issues are those that

    ? appear on the agenda of your board or elected officials and leaders.

    ? are longer term in nature.

    ? affect the entire organization.

    ? have significant financial ramifications.

    ? may require new programs or services to address.

    ? are "hot buttons" for key stakeholders.

    ? may involve additional staff. (p138)

    Step 5: Develop strategies

    Strategies may emerge from considering questions such as:

    ? What are the practical alternatives we could pursue to address this issue?

    ? What potential barriers exist in the realization of the alternatives?

    ? What action steps might we take to achieve the alternatives or overcome the barriers to their

    realization?

    ? What major actions must be taken within the next year (or two) to implement the action steps?

    ? What actions must be taken in the next six months, and who is responsible?

Developing organisational strategy requires time and involvement of the full NGO leadership

    governors and managers. Retreat workshops away from the hurly burly of day-to-day business are

    often useful.

    Although both boards and senior management must be involved in the development of strategy, the

    decisionmaking roles are distinct: it is the board’s job to decide what the overall strategy is, and the

    management’s job to decide how it is to be implemented.

    The NGO leadership partnership

    Effective NGOs are led by a powerful partnership of the board and chief executive. These notes describe

    that partnership, the contributions made by each party, and the shared leadership functions.

    Before looking at this in more detail, it is useful to examine how the board-management partnership

    generally develops.

    NGO leadership arrangements typically change over time as the NGO grows in scale.

    As stakeholders require greater accountability in return for their investment of time and money, a more

    clearly differentiated governance role develops.

    Adjustments in role and power balances can be

    difficult.

With increasing stakeholder expectations for NGO effectiveness, there has been a drive for greater professionalism

    in both leadership roles.

Leadership confusion

    A close reading of the section above on Terminology and Key Concepts readily points to a problem: there is clear overlap between definitions of ‘leadership’, ‘governance’ and ‘management’. In the late 1990s two UK organizations carried out one of the most extensive studies of governance.

    ACENVO (the UK Association of Chief Executives of National Voluntary Organisations) and the Charity

    Commission (the regulatory body for charitable NGOs in England) based their study on surveys

    completed by 100 Chairs and 260 CEOs, best/worst case studies involving 14 Chairs and 13 CEOs,

    discussion groups, and an independent review team.

    In the resulting report, Partners in Leadership, the review team cited the following quotes from NGO

    leaders:

    ‘I sometimes feel that the board members have all of the responsibility but the chief executive

    has all of the power’ (Chair)

    ‘If I am honest I can only exercise governance to the extent the chief executive allows me

    through the information he gives me’ (Chair)

    ‘A chair can quite easily get rid of an incompetent chief executive (procedures and good practice

    go out of the window!), but a director can’t get rid of an incompetent chair.’ (chief executive)

    ‘As a chief executive I give positive feedback to the staff, but there’s no one giving me positive

    feedback on my performance or the performance of the organisation’ (chief executive)

    ‘Board members don’t always appreciate the role of the director. There is sometimes a

    perception that the director is one of us, but they also get paid. The fact that I’m paid is

    considered somehow “dirty”.’ (chief executive)

    ‘The lines between policy and operations are always grey’ (chief executive)

    ‘It is the board which must sustain continuity of fundamental aims, values, visions and policies.

    Too often it is the chief executive who is custodian of the values and vision.’ (chair)

    (ACENVO, 1998) A leading New Zealand writer on governance, Doug Matheson reports that ‘dysfunctional relationships between board directors/chairman and chief executives are a major concern of chief executives today’,

    with commonly cited problems such as:

    1. Board members not familiar with the difference between governance and management, get too

    involved in what are essentially management decisions.

    2. Board meetings feel like a game of 'spot the mistake' where board members get bogged down in

    historical detail at the cost of addressing larger issues and the future.

    3. An adversarial director/chief executive relationship; board members nit-picky and distant from the

    reality of the business.

    4. Board members ‘who focus on what the organization can do for them rather than what they can do

    for the organization.’

    5. Board members’ ‘increasing concern with compliance is making them more risk-averse and causing them to focus on history at the expense of the future.’

6. Many board members adopt an old ‘command & control’ approach to managing the CEO, creating

    problems in the relationship.

    All too often the governance-management relationship looks

    like this:

    GovernanceGovernance

     ManagementManagement

    Article28

    The effectiveness of NGOs is often undermined by lack of clarity concerning the respective contributions of board

    and management to the leadership of the NGO.

The value-adding board

    ‘Our board is like a bunch of ants running around having meetings on top of a log carried by a

    turbulent current swiftly down the river. The ants think they are steering the log.’ (Senior Vice

    President of a Fortune 500 company in Leighton & Thain (1997)

    ‘To be effective, a non-profit needs a strong board, but a board that does the board’s work.

    ‘A board that understands its real obligations and sets goals for its own performance won’t

    meddle. But if you leave the board’s role open and undefined, you’ll get one that interferes with

    details and yet doesn’t do its job.’ (Peter Drucker)

    As many organisations start with do-ers and managers before a formalised board is developed, defining the role

    of the board as distinct from ‘management’ – is often problematic. What is the contribution of the

    board?

    The ‘man who invented management’, Peter Drucker, said that ‘to be effective, a non-profit needs a strong board, but a board that does the board's work. He argues that the role of the board is to

    ? help think through the institution's mission, be the guardian of that mission, and to make sure

    the organization lives up to its basic commitment;

    ? make sure the non-profit has competent management - and the right management;

    ? appraise the performance of the organization.

    He adds that, in a crisis, the board members may have to be firefighters. (p123)

    Doug Matheson (2004), who has written extensively about governance in the corporate, public and nonprofit sectors in New Zealand, points out that the board’s contribution to the organisation’s leadership is based on its

    detachment from day-to-day management of operations. He says the board should bring

    ? a helicopter view of the organisation

    ? an independent check on management on behalf of key stakeholders

    ? breadth of experience, contacts...

    To govern, he says, the board must

    ? ensure the organisation justifies its existence and does no harm;

    ? define and maintain, through management, the organisation’s values and culture, including a

    strong customer-focus;

    ? understand the organization, operating environment, and risks and threats facing it;

    ? have measurements, benchmarking and understanding of how the organisation compares with

    the best;

    ? be satisfied that the culture can deliver the outcomes expected (p23)

    Governance, Matheson says, is about ensuring

    ? direction

    ? performance

    ? transparency

    ? accountability (p41)

    One of the most helpful distinctions in the governance-

    management relationship focuses on ends and means.

John Carver makes the case for boards to

    focus on the development of ‘governance

    policies’ (as opposed to management policies)

     ie policies relating to

    ? the end results the organisation seeks to

    achieve (‘ends policies’) ? the means that management must avoid

    (‘limitations policies’) ? the operations of the board itself.

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