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QUESTION 6: How Can We Get the Information We Need to Govern Well?

By John Pearson

“Boards Should Not Get All Their Information From Management Alone”

Warning! Skip this chapter at your board’s own peril. I’ve read my fair share of governance books and articles, but I’ve never read such a comprehensive discussion on structuring the information flow between management and the board—all in just 12 pages!

And, once again, this is a timely book—with references to the financial crisis of 2008. Change the dates to 2020 and COVID-19, and the author’s wisdom and warnings are pertinent again.

QUESTION 6 of 14: How Can We Get the Information We Need to Govern Well? Owning Up: The 14 Questions Every Board Member Needs to Ask, by Ram Charan (Order from Amazon)

“The quality of the board’s output,” writes Ram Charan, “depends heavily on the information the board receives.” The author invokes architectural lingo to inspire boards and management to design the information flow—in other words, to collaborate proactively so the right information is available to the board at the right time. He adds:

“The right information architecture—the right kind of information presented in a way that enables the board to ask insightful, penetrating questions—lifts the focus in the boardroom.”

With the appropriate information, boards will “sort through, for example, the four usual causes for performance deviations:
• shifts in the macro environment,
• change in the consumer space,
• shifts in the competitive pattern,
• and the commission or omission of management actions.”

Try this at your next board meeting: Ask your board to identify your four common causes of “performance deviations.”

Charan cautions: “Boards should not get all their information from management alone. They should be more active in seeking outside voices and hearing directly from employees.” I would add this caution: do this carefully with agreed-upon staff/board protocols. If executed clumsily, staff may blindside the CEO, and/or a board member may ask inappropriate questions about the CEO. Surveys can help. An outside facilitator could also help your board create guardrails for these conversations.

And get this! The author urges boards and CEOs to pay attention to the “ambiance” of a meeting. “Using flip charts instead of PowerPoint slides, for instance, creates an informal atmosphere conducive to brainstorming and discussion. Directors are more likely to get engaged, contribute spontaneously, and ask for clarification on the spot.”

He adds, “That kind of engagement doesn’t often occur in a one-way presentation in a darkened room.”

So…think back to your last two or three board meetings in your Christ-centered organization. Did your board have the right and appropriate information at the right time? Was there alignment between your board reports (written and verbal) and the four usual causes for “performance deviations?”

Shifts in the macro-environment: Did management keep the board assessed of trends in your ministry niche? (Examples: multi-site church campuses, online learning, theological trends, etc.)
Change in the consumer space: While you may be celebrating a five percent increase in giving year-to-date, what if other ministries are experiencing 20 percent increases? Why is this occurring?
Shifts in the competitive pattern: Are your ministry colleagues expanding their partnership/collaboration programs—or pulling back? What should your ministry do?
The commission or omission of management actions: Is your CEO delivering bad news (including omissions) or is your boardroom’s culture so risk-averse, such that program initiatives that flop are rarely discussed?

One final thought: when the board is equipped with the right information at the right time—your prayer can be more focused, and we pray, your ministry will be more effective.

BOARDROOM DISCUSSION: What are our four usual causes for “performance deviations?” Are we discussing these causes at every board meeting?

MORE RESOURCES: Check out these helpful ECFA resources:

SURVEY: According to a recent ECFA survey, “Boards want to monitor impact, but too often don’t track measurable goals to get there.” Per the survey, 79% of board members agree that “our board is very focused on measuring mission impact,” yet only 55% of board members “receive monthly or quarterly dashboard reports that identify agreed-upon metrics or measurements, outcomes, and impact for programs, products, and/or services.” Download the 60-page report, Unleashing Your Board’s Potential: Comprehensive Report from ECFA’s Nonprofit Governance Survey, by Warren Bird, Ph.D.

• TOOL: Looking for an exceptional communication tool? Check out “The 5/15 Monthly Report to the Board,” from the book, ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board. Click here to read the color commentary on Tool #10.

 

This article was originally posted on the “Governance of Christ-Centered Organizations” blog, hosted by ECFA.
John Pearson, a board governance consultant and author, was ECFA’s governance blogger from 2011 to 2020.
© 2021, ECFA and John Pearson. All rights reserved.


This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.

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