Some non-profit organizations are governed by “representative” boards of directors. This means that the composition of the board is determined by the formal connection of the directors to particular constituencies or stakeholder groups. According to Australian board consultants Lynn Ralph and Alan Cameron, representative boards are “superficially attractive” but the idea requires a much closer look.(1)
Often the main motivations for specifying the composition as representative is to insure that the board’s decisions reflect the will of the stakeholders. Also, such an organization is, in theory, directly accountable for its actions back to the stakeholders through the directors themselves.
Fantastic, one might say. Ralph and Cameron suggest that the failings of this structure, in practice, often outweigh the strengths.
Representative boards are different in composition than functional boards or diverse boards (2). Functional boards are composed primarily of members who have the skills and knowledge to provide effective oversight and to assist in identifying and helping meet the strategic priorities of the organization. They add value through the supervision of, and leadership with, the senior management team.
Diverse boards are composed primarily with members that represent a variety of different races, cultures, values, opinions and perspectives. Mostly commonly, a diverse board is one that is, or seeks to be, demographically diverse. This approach provides for a board that is capable of holding a holistic perspective and unlikely to exclude the knowledge held by, or discriminate against the interests of, certain groups of people.
Few boards formally distinguish themselves using these terms. Many in the non-profit sector would argue that board design should strive to incorporate the best of a least two structural types. Today, many organizations are aware of the value of having both functional and diverse boards and are striving to become so. The possibility of tying formal representation to diverse constituencies may have merit in some circumstances but begs the question of the capacity of such a board to also be a functional one. This is surely a topic for different post. The idea that a board might be both representative and functional is, I feel, far more problematic.
The ‘Pros’ and “Cons” of Representative Boards
In considering whether a non-profit should start out with, or move to, a representative board, the advantages and drawbacks of such a structure should be carefully considered. The advantages of representative boards include:
- A visible or transparent connection to the membership, particular constituencies or community interests
- Clear source of, and reduced responsibility for, recruiting board members
- Responsibility for member accountability to stakeholders that is built-in to the board’s work
- A means of promoting stakeholder “buy-in” and involvement
- A strong capacity for checks and balances in decision-making where constituencies have different interests
- A measure of public or political legitimacy where organizations operate in the public eye
The disadvantages of representative boards include:
- A limit on the ability of an organization to choose what functional skills and assets it needs from directors serving on the board
- Reduced board member engagement where appointees serve out of duty more than interest
- The abdication of some organizational responsibility to formally consult with stakeholders
- A greater emphasis on constituent rather than common interests which may lead to competition amongst directors about the non-profit’s priorities
- Cumbersome decision-making where directors are required consult with their constituencies on certain decisions
Improving Representative Boards
The following are a few suggestions for enhancing the effectiveness of a representative board as a structure built on formal director relationships to key stakeholders or constituencies.
- Create written position descriptions for representative directors. These should outline the responsibilities and expectations associated with connecting their constituency to the organization
- Require quarterly reports to the board from board members on their representation communication work
- Distinguish clearly between functional and representative responsibilities where directors have both
- Gain agreement on the principle of the board “speaking with one voice” on particular issues for representative communication to stakeholders
- Identify desirable board member candidates from each stakeholder group and make recommendations to the appointing bodies to secure their membership
Strengthening Functional Board Links to Stakeholders
Also, functional non-profit boards can do much to strengthen their community and stakeholder linkages without having representative directors. Here are some ideas:
- Devote some governance work to consulting with the community and key stakeholders through special board faciliated external consultation sessions
- Strengthen the board’s visibility and presence in stakeholder communication such as newsletters
- Involve stakeholders in strategic planning through surveys, questionnaires, and formal needs assessments
- Specify board member responsibilities beyond the board table and schedule some CEO-board member stakeholder visits over the course of the year.
So, as the reader, you be the judge of whether representative boards are a valuable structure to consider? They may make sense for some types of non-profit organizations. Are there other pros and cons or additional ways to improve how well a representative structure works? Offering some examples might also help in our appreciation of their value in the non-profit sector.
For a longer discussion of this topic, including some consideration of where in the sector one finds representative boards and whether “ex officio” directors fit in the picture see “Pros and Cons Of Representative Boards” under Resources – Governance Guides on this site.
(1) See The Challenge of the “Representative” Board” CameronRalph, Board Performance Advisors, originally published in Company Director, June 2006.
(2) This distinction between representative, functional and diverse boards is taken directly from the work of Carter McNamara of Authenticity Consulting. See Julie Garland McLellan, “Some Thought on Board Composition” Board of Directors Blog, July 17, 2011, Free Management Library