MANAGEMENT TIP
Imperfect Directors & CEOs
New book focuses on seven disciplines of business governance excellence
Bruce J. Reynolds,Ag Economist
USDA Rural Development
Editor’s note: Made a move at the managerial
or director level at your co-op that you
think would be of interest to other co-op
managers and directors? If so, please contact
the editor at: dan.campbell@wdc.usda.gov.
here is no shortage of
“how-to” books and articles
about improving
organizations and leadership.
This genre typically
provides fairly similar sets of recommended
best-practices to follow. Of
course, learning to recite best-practice
disciplines is one thing, but a genuine
understanding needed for their effective
application is another matter entirely.
A context for visualizing how this or
that discipline would work helps build
genuine understanding. Short of direct
experience applying management disciplines,
the closest approximation is to
read situational scenarios and case studies.
Jim Brown — a founding partner of
Strive!, a leadership development firm
specializing in governance issues — has
written The Imperfect Board Member:
Discovering the Seven Disciplines of
Governance Excellence, which provides an
illuminating look at his subject and
gives vitality to his set of best-practices
for board members and management.
While using a story to demonstrate
best-practices, the author also provides
summary tables of key points and diagrams
to illustrate interactive processes.
But if a reader were to skip the scenarios
and just read through the lists of
summary points and glance at the diagrams,
the lack of context would greatly
reduce the likelihood that the book will
make a real impact.
Furthermore, the situational scenarios
contain insights that are not listed in
summary tables. A few of these insights
are discussed below, particularly some
points with special relevance for cooperatives.
The complete list of key points
and the seven disciplines is not re-stated
here, but should prove of interest for
co-op leaders and others who read the
book.
The Imperfect CEO ought to be
added to the title, because the CEO is
also part of these stories and is involved
in much of the book’s wisdom about
superior governance. Even an excellent
board can perform poorly if its interactions
with the CEO are strained.
The book provides insightful parallels
between the boards of a for-profit
corporation and a citizen group that
directs the work of a community parks
and recreation department.
Surprisingly, the lessons learned are
drawn from the latter and are applied
for the benefit and improvement of the
former. In this sequence, the CEO is
the source of some of the friction in the
corporate board room. As a community
board member, he introduces a few
wrinkles that have to be ironed-out.
The fact that the CEO gains bestpractice
insights from his service on the
community board offers a lesson in
humility. The term “imperfect” in the
book’s title also suggests the author’s
implicit belief that a little humility can
make a positive contribution to good
governance. The need for humility is
especially relevant when boards are
rightly composed of individuals with
diverse backgrounds and have disagreements
to work-out.
Another useful insight that Brown
demonstrates from the workings of the
community board is that directors must
refrain from “talking as a customer and
expecting to be heard as an owner.” In
this case the board members are users
of their community’s parks and recreation
services, yet, as directors, they
have to stay focused on benefits for the
whole community and not specific ones
for themselves. Likewise, directors of a
cooperative are users of the services and
also must adopt a long-term and total
membership perspective.
Brown recommends that organizations
draw bright lines to demarcate the
boundaries of responsibility between
principals and agents. The directors are
representatives of the principals who
are responsible for overall direction,
planning and fiduciary duties. The
agents are the hired management and
staff who are responsible for operations
and plan implementation.
While the manager or CEO participates
in the planning process, he or she
must not control the agenda. Board
members, even when users of the business,
must refrain from involvement
with operations, which is the CEO’s
responsibility.
Brown’s best-practice of keeping
boundaries between the responsibilities
of agents and principals has implications
for the issue of outside directors.
A non-user (outsider) on a cooperative’s
board may contribute to guarding
against a board’s slipping into a tendency
of “talking as a customer.” The
weakness of an outside director is in not
being in a capacity to talk as an owner.
On balance, outside directors may
have useful industry experience, but
in Brown’s conception of governance,
operational issues and decisions should
not be on the agendas of boards.
The Imperfect Board Member draws
many connections between the tasks of
board governance and the challenges of
everyday life. Even some of the most
experienced directors may find this
book quite interesting and useful.
Editor’s note: for more information or to
contact the author, visit: www.strive.com.
