Boards are an important part of corporate governance in most organizations, but an effective board is not the same as good governance.
Background music is Of the Stars by KC Roberts & the Live Revolution
I said earlier this season that board effectiveness and good governance aren’t the same. When I say “board effectiveness” what does it mean to you? I even struggle with this one, which is troubling given that my company is called “Fullbrook Board Effectiveness.” My URL is even boardeffectiveness.ca. If anyone would have a pithy, inspiring definition of board effectiveness it would be me, right? Let’s put that aside for a second and ask another question: “If your board is effective, whatever that means, do you automatically have good governance?” Thinking through the previous episodes from this season, we already know that good governance isn’t box ticking compliance, it’s not good operational performance, it’s not succession planning, etc. I don’t even think it's all of those things mushed together. On top of that, I think we’ll all instinctively feel like having a great board is somehow also not enough to have good governance. Even amazing boards are still reliant on great managers to help them to access the right information at the right time, facilitate great meetings, generate exciting strategic options, and so on. So already we know that great boards are only POTENTIALLY great unless they have great management. But a great board would always hire great managers, right? That one gets a “lol” from me. Anyone who’s ever had responsibility for hiring and promoting people knows that no matter how perfect your processes, you can never guarantee you’ll get it right. There are other ways we could explore this question, but I think I’m already convinced that board effectiveness and good governance aren’t the same thing. But what is board effectiveness? I’m open to suggestions, but for now let’s steal from our definition of good governance a few episodes back. Board effectiveness is when a board is working to create conditions in the organization that maximize the likelihood that effective decisions will get made.