I think I have a crush on Gretchen Morgenson, the Pulitzer Prize-winning financial editor for the New York Times. If I had to explain my attraction, it would probably be due to her dogged pursuit of fairness, a guiding principle that she believes will be achieved by a determined commitment to openness in all organizations and institutions, especially corporate boards of directors.
Ms. Morgenson’s “beat” is the murky world of for-profit corporate decision making where the practice of democracy is often akin to politically immature nations. In my fantasy date, I would ask her to consider the opaque world of non-profit boards of directors – one of my “beats” – where a generous infusion of transparency and sound decision making would benefit everyone, especially food movement groups.
By my count, I’ve organized, worked as staff to, or served as a member of at least 15 different non-profit boards. While there were definitely some high points – times when our group looked like a varsity rowing team dipping and pulling its oars as one – confusion and tangled paddles were more often the prevailing norms. Post-board meeting gatherings would find colleagues drowning their sorrows at the nearest watering hole. And over the years I’ve coaxed more than one colleague off a bridge after their most recent God-awful board encounter.
Consequently, I’ve often regarded attendance at non-profit BOD meetings in much the same way that I’ve approached a pennant-stretch Boston Red Sox game – great expectations swallowed up by abject despair. The questions I must ask, as I limp bloodied and battered into my dotage, was whether the pain of the board process was worth the gain for the organization; how can we do it differently, and how can we increase the chances that the next generation of community organizers and advocates gets it right?
In thinking about my perfect BOD, I reflected on a recent column by Ms. Morgenson http://www.nytimes.com/2015/01/04/business/whole-foods-high-hurdle-for-investors-.html?_r=0 where she reminds us that “[S]hareholders own the companies they invest in, but they have long been…shut out…of naming…corporate directors.” She then trained her laser beam on Whole Food Markets, a leader in sustainable food merchandising, but a laggard in shareholder democracy. Whole Food’s management has refused to accept a proxy proposal that would allow shareholders with at least 3 percent of the company’s stock to nominate directors to the board. Like many corporations, Whole Foods only allows very large shareholders (count the number of fingers on one hand) to nominate directors. Many investors claim that restrictions like these maintain undue management control, contribute to exorbitant executive compensation, and reduce accountability. If one were to equate eating with democratic participation, it boils down to this: the few people with the biggest financial stake eat locally raised, grass-fed steak; those with smaller financial stakes eat feedlot hamburger; and the workers, community, and consumers eat the soggy leftover French fries.
You could say, “Nothing new here; welcome to the world of American capitalism!” But if you are in Germany, the corporate boards of directors consist of private investors, labor representatives, community interests, and even the public sector. The German state of Lower Saxony, for instance, owns 15% of the shares of Volkswagen and 20% of its voting rights; and that’s the world’s largest automobile manufacturer!
The question that has always plagued me about non-profit organizations is who “owns” them – the founding executive director who’s been there too long; the big donors and foundations; a few highly vocal board members? Or maybe they should be “owned” by the community whose purposes the non-profit supposedly serves. Perhaps the bar to receiving and retaining the highly coveted 501 (c) (3) designation by the IRS should be raised to where it requires a minimum percentage of representatives from certain stakeholder categories, e.g., low-income communities. Those with a significant interest in the organization should have a real ownership stake.
Whole Foods is fighting with the Securities Exchange Commission over this question of who can nominate directors in order to protect the privileges of the few over the rights of the many. They are fighting so vigorously that they postponed their annual meeting, originally scheduled for March, to this coming September giving their lawyers time to strike a deal with the shareholder rights insurgents. Stay tuned!
While not rising to the level of weaponized-management resistance displayed by Whole Foods, non-profits, especially those burdened with entrenched executive directors, have often worked unethically to purge board members they don’t like, and then maneuvered to bring in people who will be complacently loyal. Yes, the occasional gadfly will ask the hard questions like, “why isn’t the community we serve on the board?” or, “I don’t remember that new project you apparently have underway ever coming before the board for approval.” Responsible board members like these are usually put on the first trolley to Siberia.
More commonly, but with as much frustration as the challenges of board composition and control, is the question of board performance. Why is it that supposedly intelligent people who make complex decisions in their everyday lives dissolve into a pathetic puddle of drool when they meet to discuss the non-profit’s work? Yes, they are volunteers, but they would never countenance the sloppiness that too often characterizes their “volunteer work” in their own businesses or organizations. (The assumption that non-profit board members should not be paid, unlike their for-profit counterparts who usually receive generous compensation, is one that should be carefully re-examined. Maybe some kind of stipend would make people take their community responsibilities more seriously).
There are undoubtedly a thousand answers and remedies – please feel free to share yours – but my experience leads me to believe that an appalling lack of knowledge about group dynamics, process, and leadership is often the underlying cause of board dysfunction.
Recently I asked Brian Gunia, assistant professor at the Johns Hopkins Carey Business School, what he thought was the biggest problem afflicting group decision making. He told me, “Typically what you see is that people have very different understandings of the organization’s goal, which will later lead to conflict. The most important step is for everyone to explicitly and individually define the goal(s) that they believe the group is pursuing. It’s much better to deal with differences from the outset.”
We invest so little time – whether it’s at the beginning of our first term on the board or at a strategic planning session – in finding a clear and agreed upon reason for our organization’s existence that it’s only a matter of time before fault lines start to form. If each member truly “feels” the vision for the organization – in their gut and with some passion – and the goals are explicitly shared and articulated by everyone, then the organization will look more like that racing shell, oars sweeping gracefully across the water, silky and seamless in its movement.
The millions of non-profit organizations that are in, or could be in the vanguard for change owe it to themselves, their donors, and their constituents to have the highest performing boards possible. My two ideas for developing the perfect BOD are more transparency and stakeholder engagement, especially from their constituents; and more intentionality in defining and setting shared goals.
What are your tips, lessons, and ideas for creating the perfect BOD?