Summary

Most organizations follow one of two main board governance models. The first is the CEO-dominated model, which is characterized by a strong CEO who exercises ultimate authority while the board plays a more deferential role. The second is the power sharing model, which is characterized by a strong partnership between the CEO and the board without either side dominating. The CEO-dominated model is more appropriate for the corporate sector where accountability is limited to shareholders. The power sharing model is more appropriate for the nonprofit sector where the board is accountable to multiple stakeholders. Nonetheless, many board members still follow the CEO-dominated model, and view their responsibilities as supportive instead of leading the organization.

The Background

Let`s see how the power sharing board might work in practice. At the fall board meeting of Education Unlimited (a nonprofit that provides mentoring opportunities to low-income children), executive director David Owings presented some disappointing news: contributions by individual donors had dropped by 36%, and the organization was facing a significant budget shortfall. Some board members expressed the concern that David had not done more to increase individual donations, and that the notification had come late in the year. One board member then stood up and reminded the board that everyone shared the responsibility of ensuring that the organization was on a sound financial footing, and that the finance subcommittee needed to lead an initiative to remedy the shortfall.

The Solution

The finance committee members then agreed to meet every month with David to analyze the reason for the shortfall, and to devise new strategies for soliciting additional gifts from individual donors.

Lessons Learned

This example illustrates how an organizational challenge can motivate a board to become more involved, and take its share of responsibility for the problem. When this happens, the CEO should never resist the board`s participation. It may take more work to keep the board in the loop, but a strong partnership between board and CEO is key to an organization`s long term success.