The organisation’s constitution (its rules, trust deed, etc.) determines the board’s size, how it is formed, and its likely composition. Historically, many organisations have evolved governance structures that encourage practices inconsistent with effective governance and leadership. This has consequently weakened their organisation’s performance.
A particular challenge is the operation of federal and representative structures. Many organisations have a president’s position separate from that of the board’s chair. The basis for the chair’s election (by members at large or by the board itself) may also be a significant factor in board performance. In some organisations, there is a council in addition to a board. Some boards are fully elected; others are a mix of elected and appointed. Some boards are effectively appointed.
No structure is perfect and each organisation should consider what its unique challenges are and ensure its governance structure supports effective governance and leadership. The critical issue is to ensure accountabilities are clear and that each organisation gives itself the best possible chance of electing or appointing (and retaining) people who can contribute to a high-performing board.
Many boards acknowledge the growing expectations on them and that they are working to achieve higher standards of governance effectiveness. A key aspect of this is finding people who understand and can contribute effectively to the governance role.
Previous success in other fields or in other organisational roles is no guarantee of governance effectiveness.
Ideally, every organisation will have a process for ensuring its board has relevant skills and experience.
Because governance challenges are not always well understood, most boards need to proactively communicate these challenges to those who influence board selection. Otherwise, a board position may owe more to personal popularity and profile than to an ability to contribute effectively to the board’s work.
There are various structural and procedural issues to be considered here. A common theme is the need to take a deliberate and structured approach to ensure a board has the people it needs.
A balance is needed between members with operational experience and those with the ability to operate at a conceptual level. Organisations naturally attract passionate people deeply schooled in the organisation’s activities.
There is a critical need to attract board members who can stand back from the organisation and exercise a degree of detachment and objectivity.
Each board should develop a succession plan for the selection and replacement of elected and appointed board members, and for office holders such as the chair.
This does not mean identifying individuals or lining up replacements, as this may be contrary to the organisation’s values and democratic processes. (It may even create distrust if there was a sense the board was being loaded with cronies and confidants.) Nevertheless, there are advantages if those appointing or electing new board members are advised of the board’s strengths and weaknesses, the challenges it is facing, and the board’s view on the skills and experience it requires.
Some organisations have found ways to engage well-qualified people in the governance process who are unavailable for board selection. A ‘chairs’ group or advisory council may be convened once or twice a year to bring together potential future leaders of the organisation. The idea is to have these people contribute to the governance ‘brains trust’ while giving them a taste of the governance role. There are several variations on this theme, some of which have the added benefit of creating a training ground for potential board members.
Many organisations are moving towards having a number of independent directors. This is consistent with good commercial practice. Aside from the skills they often bring to the table, they will bring an invaluable external perspective on the organisation. Too often, organisations struggle to act objectively as members’ passion and commitment take over. Care should be taken, however, to ensure the right skills are recruited into the board. Often boards seek specialist skills that are better obtained on a contracted basis. For example, it’s common to hear board members saying they need a lawyer among their number. While acknowledging the occasional need for a legal perspective, the most valuable boardroom contribution many lawyers make is via their questioning skills. When asked for legal advice in the boardroom, lawyers are more likely to advise that such advice be sought from an independent legal source than they are to offer the advice themselves.
Several organisations now require the independent directors to be truly independent.
Stipulated in the constitution is a requirement that there be no formal connection with the sport for a fixed prior period. This will include paid employment or holding of office at a national or regional level.
It is not uncommon for there to be a 4/4 or 4/3 split between elected and independent directors. Recent experience has shown this to have greatly enhanced the range of skills and perspectives around the board table.
Regardless of the appointment/election process, forming a capable board starts with clarity about what skills, experience, attributes and perspectives are needed.
Boards in the sport and recreation sector have traditionally sought to recruit people onto their boards with specialist skills (e.g. lawyers, accountants, marketing and business people, etc.). While it is important to access this type of expertise and advice, these are functional rather than governance skills. Personal attributes like independence, integrity and emotional intelligence are also important. A list of director competencies is included in the Concepts, Challenges, Structures and Change chapter.
An expert team is needed around the board table, not a team of experts.
Boards should avoid using the appointment process as a means of sourcing functional and hands-on skills. This ensures clear accountability between the board and staff, and encourages the board to focus on governance. If an organisation cannot afford professional advice and must rely on volunteers in this regard, the board should specify the advisers’ role, e.g. as members of an advisory board or panel of experts.
A core function of the board is to consider issues from a range of perspectives. Too many directors with similar backgrounds can tend to produce ‘vanilla thinking’. Sports boards in particular need to reflect the community they serve. During recruitment, factors including gender, ethnicity and age need to be actively considered.
“What you want around a boardroom table is an array of perspectives relevant to the business to guide the board. If you had people around the table all with the same background, you might as well have only one person.”
– John Palmer, Chair, Air New Zealand