Governance for Co-op and Nonprofit Boards Part 2

Governance for Co-op and Nonprofit Boards Part 2

  |  October 10, 2022

Author’s note: Part 2 draws heavily upon the work of Art Sherwood and Marilyn Scholl; their 2014 article may be found in the Columinate Library (https://columinate.coop/four-pillars-of-cooperative-governance-cg/). The present article, while relying on their valuable presentation, is intended to be useful to a broader audience than just co-ops.

The Four Pillars of Governance is a framework for connecting an organization’s values to governance activities at all levels: staff, management, board, and stakeholders.

The Four Pillars of Governance

  • Teaming: successfully working together to achieve common purpose.
  • Accountable empowerment: successfully empowering people while at the same time holding them accountable for the power granted.
  • Strategic leadership: successfully articulating the cooperative’s direction or purpose and setting up the organization for movement in this direction.
  • Democracy: successfully practicing, protecting, promoting, and perpetuating healthy democracy within and around our organizations.

In 2014, Columinate introduced co-ops to the Four Pillars of Governance in an effort to show how the Policy Governance model fits in a broader framework of governance. As part of his work as a Visiting Scholar at the Vincent and Elinor Ostrom Workshop on Political Theory and Policy Analysis, Art Sherwood collaborated with Marilyn Scholl and others from Columinate to create this model to help organizations govern flexibly and effectively.

A model is a way of framing so that the parts and processes make sense. Our Four Pillars model is not about changing systems but is a new way of making sense of governance. In the eight years since we introduced it, we have found that it helps organize board thinking about the complex task of governance. It does not supplant other theories or systems of governance, but rather provides a framework for boards to use in developing and applying those systems.

The Four Pillars of Governance is a framework for connecting an organization’s values to governance activities at all levels: staff, management, board, and stakeholders. Each of the four pillars—teaming, accountable empowerment, strategic leadership, and democracy—is relevant to each constituency in a different way.

The board of directors is the body that is entrusted with setting the framework and the tone for governance throughout the organization. A board can, if it chooses, use its governance responsibility and authority to set the tone for the culture of the organization. Organizations that effectively accomplish their goals in accordance with their values do so by bringing skill and wisdom to their governance. The Four Pillars model of governance is a framework intended primarily to assist the board in working toward excellent governance.

Teaming

The board of directors is responsible for perpetuating board excellence and for organizing and managing its own work. To accomplish this, the board must work together effectively as a team. This includes having a common agreement about the work, clear expectations of individuals and the group itself, an effective decision-making system, and effective leadership of the group.

The board has power as a unit. An individual director’s only power, beyond that of any other co-op owners, is the ability to influence the board group. Diversity of opinion is necessary and valuable. Yet the group must be able to think and learn together, to come to a decision and support that decision. Viewed through the lens of the Four Pillars of Governance, self-responsible teaming is the first step for board effectiveness.

Accountable empowerment

To fulfill its fiduciary duty, a board needs to be vigilant. The board also delegates power to the executive director, general manager, or CEO to empower that person to act. Power is the ability to get things done and to be effective. Power is necessary and good. The ideal situation is having both a powerful board and a powerful executive.

Unaccountable power is a problem, however, so boards must have effective systems of accountability.  Accountability is having clear expectations, assigning responsibility, and reviewing. Carver’s Policy Governance model is one useful tool for ensuring accountability, and for many organizations it has been an excellent method for role clarity, accountability, and focus.

 Accountability is a notion that arises from a paradigm of agency, which presumes that an agent will, if not closely monitored, act in their own interest rather than in the interest of the principal from whom the agency’s power, or authority is derived. In contrast, a stewardship theory assumes alignment of interest between the steward and the principal who passes power to the steward. In other words, when the steward acts in their own interest, the principal’s interest is well served as well.  These systems should not be viewed as mutually exclusive.  The strongest organizations work to foster a sense of stewardship throughout, and yet they do not discard the concept of accountability and do create respectful and clear expectations and efficient systems for checking to be sure those expectations are met.

Democracy

To uphold the trust placed in them upon incorporation, boards of directors reflect and put into practice the basic principles of democracy. The board must practice, protect, promote, and perpetuate democracy through their governance for their decisions to have legitimacy.

Democracy is less about majority rule or voting and more about voice and engagement. A healthy democracy gives all stakeholders opportunities to participate meaningfully in reflection and change in their organization. Boards, as fiduciaries and stewards of their organizations. must ensure that stakeholders have information, voice, and representation in a manner that is consistent with the organization’s values and goals.  It is important that this work be viewed as dynamic, ongoing, and ultimately imperfect.

Marilyn Scholl has described the work of the board to engage with its stakeholders as similar to unrequited love: the board wants a deep relationship with its many stakeholders. But, sadly, the stakeholders are too busy even to have a cup of coffee with the board!  This is a normal state of affairs. The organization is strengthened and stabilized by the board’s desire for stronger relationship, it’s commitment and passion for understanding its organization’s stakeholders.  Board members should never reject an idea for engagement with, “We’ve tried that before,” but instead should be open to new and old ideas in an ongoing, passionate effort to initiate and sustain dialogue with stakeholders.

Strategic leadership

Strategic leadership is about defining purpose and setting direction. How can the organization most effectively determine and achieve its goals? What learning is needed to move the organization forward in its planning? What is the organization’s vision for the future?

The board has a responsibility to establish direction and to facilitate movement in the desired direction through their choice of management, ensuring adequate resources, and monitoring progress. Providing strategic leadership requires information, knowledge, and wisdom. Boards need to be able to learn and build wisdom together in order to develop foresight and make informed decisions. Boards need a way to free up their agendas to focus on strategic thinking and to have a process for building the knowledge pool. Finally, boards need to apply what they learned with care and thoughtfulness, attentive to their organization’s values and objectives and conscious of the conditions and trends in which they are operating.

The Four Pillars of Governance can be used in many ways to strengthen an organization’s governance. It can be used as a framework for a board of directors to assess its performance and plan for growth and development. It can be used as a planning framework to design the board’s work for the year. It can be a tool for the development of staff and volunteer training. It provides a way of educating and cultivating prospective board members. And it offers a roadmap to successful stakeholder engagement.

We hope that these pillars will be a support to your good work.  We encourage you to apply them in the context of your own organization to help you achieve wisdom in your governance.

About the Author

Thane Joyal

Board & Organizational Development Consultant

thanejoyal@columinate.coop
315-380-4522

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