Beyond Carver: The Complementary Model of Board Governance

Beyond Carver: The Complementary Model of Board Governance

For years, the nonprofit community has only had two very distinct governance models available to them. Organizations either chose the Traditional Model or the Carver Model. The purpose of this article is to describe a third alternative—the Complementary Model of Board Governance. The title of which derives from a paper by Peter F. Drucker that appears in his book Managing For The Future. Read on to discover a rewarding, practical and effective way to govern your NPO.

Nonprofits waste uncounted hours debating who is superior and who is subordinate—the Board or the Executive Director. The answer is they must be colleagues. Each has a different part, but together they share the play. Their tasks are complementary. The two have to work as one team.

Peter Drucker, Managing For The Future

In this article, you will discover the following:

What is the Complementary Model of Board Governance?
10 Principles of the Complementary Model
Working Boards Vs. Governing Boards: What’s the difference?

What is the Complementary Model of Board Governance?

First introduced by AMC NPO Solutions (formerly known as Association Management Consultants) founder Thomas Abbott, the Complementary Model of Board Governance (Comp Model) focuses on ten core principles. Inspired by aspects of the traditional and carver governance models to create an effective and rewarding approach to governance.

The Complementary Model provides Nonprofits with a modern governance alternative when neither the Traditional Model or the Policy Board Model (Carver) provide the best answer to the question: What is the most appropriate role for our Board of Directors and our Chief Executive Officer?

Tom Abbott – Co-founder AMC NPO Solutions

Yet the complementary model is different because the board is responsible for governing and managing the nonprofit. The Executive Director uses the title of CEO and is accountable to the board for implementing overall management, which removes confusion about management responsibility present in other governance models.

As a result, the boundaries are evident in the Comp Model, giving many organizations the necessary clarity.

10 Principles of the Complementary Model

Ten principles underline the Complementary Model. Some of them are unique to the Model; others are common to the Carver and Traditional governance models. However, in combination, the ten create a governance and management environment that many not for profits will find highly effective, successful, and rewarding.

1. The Board is responsible for both the governance and the management of the association.

Common law has long held that volunteer Boards of Directors are responsible not only for the governance of their organization but also, in a broad way, for the effectiveness of the organization’s management. Many statutes and government regulations, for example, those dealing with labour standards, sales taxes, employee withholding taxes and unpaid employee wages, hold the volunteer Directors liable for management’s failures in these areas.

Consequently, to suggest that the volunteer Directors should work exclusively on policy development leaves the volunteers exposed both legally and financially. Volunteer Boards must acknowledge and accept their broad responsibility for managing their organization.

2. The Executive Director is designated the Chief Executive Officer (CEO) of the association and is accountable to the Board for the management of the Society.

During the twenty years that I have worked and consulted in the NPO community, no single question has been answered with so much hesitation or misgiving as to the question:

Who is the Chief Executive Officer of your association?

Some volunteer organizations respond that the chief volunteer is the CEO. Others respond that the chief staff person is the CEO; many others not for profits refuse to address the question. The Complementary Model requires that the matter be dealt with once and for all—and with significant benefit for the volunteer board and the senior staff person.

First, let us examine the rationale for the principle. The Dictionary of Business Terms defines Chief Executive Officer as follows:

The Chief Executive Officer (CEO) is the officer who has ultimate management responsibility for an organization. The CEO reports directly to the Board of Directors [and] appoints other managers … to assist in carrying out the responsibilities of the organization.

That definition, in fact, describes the Executive Director of a not-for-profit with pinpoint accuracy.

Once there is agreement that the Executive Director is indeed the organization’s CEO, it allows the Board of Directors to hold that individual solely and completely responsible for managing every aspect of the organization.

3. The senior elected volunteer is the Chair of the Board of Directors

As Chair of the Board of Directors, the senior elected volunteer holds all of the responsibilities inherent in that position. Including meeting and agenda preparation and meeting management.

In addition, the Chair is responsible for coordinating the activities of the Board in developing the association’s strategic plan, approving the annual budget, monitoring the performance of the organization and determining the compensation of the CEO.

4. The Board is responsible for determining all governing policies of the association; the CEO is responsible for determining all administrative policies of the association

This principle sets the policy-making boundaries for both the volunteer Board of Directors and the CEO. Yes, the Board is responsible for policy determination, but that responsibility does not extend to defining administrative policies, for example, in areas such as personnel and finance.

Policy matters that are purely administrative should not be on the table for discussion at Board meetings. However, the volunteer Board does debate and decide on policies related to governing matters such as governance, mission, goals, and monitoring organizational effectiveness.

5. The Board defines and approves a Code of Conduct for the Directors and a separate Code of Conduct for the CEO

When a Board of Directors articulates its expectations of Directors by establishing a Code of Conduct, three things occur:

1. Directors are not subsequently surprised by the requirements of their position because they have been forewarned.

2. Directors can be held accountable for their volunteer performance.

3. There is a greater probability that their performance will rise to meet the expectations.

Similarly, when Boards of Directors communicate their expectations of the CEO by establishing a CEO Code of Conduct, the same benefits follow. In my experience, too often, there is a gap between the expectations of a volunteer Board and the CEO’s performance because the Board has simply not articulated its expectations. The creation of a CEO Code of Conduct avoids such misunderstandings.

6. Three different types of committees or task forces exist in the organization

Policy Task Forces

The board of directors establishes the Policy task forces. They regularly report on their activities to the board. As such, a Board Director always chairs them, comprises members of the board, and must examine and develop recommendations on board policy matters.

Overall, these task forces have a limited time horizon and a defined sunset clause in their mandate. They must provide written reports at each Board of Directors’ meeting until they complete the task.

Board Statutory Committees

The Board of Directors establishes Board Statutory committees. They must deal with responsibilities in the bylaws or enabling legislation of the association—for example, member discipline, member ethics, board nominations, or the association’s audit. Moreover, statutory committees must have a Board Director as chair and can also have directors and non-directors. Overall, Board statutory committees are ongoing and provide written reports at each Board of Directors’ meeting.

CEO Working Committees

CEO working committees are established by the CEO and report to the CEO. They are mandated to deal with operational or management matters, such as conferences, professional development, or fundraising. The Chair of a CEO working committee is appointed by the CEO and may be either a staff member or a volunteer. The committee can comprise staff, Directors and non-directors.

It is vital for Directors serving on CEO working committees to recognize that they are not serving as Directors of the organization but serving at the request of the CEO. Reports on the activities of CEO working committees are provided to the Board of Directors through the CEO Report at each Board meeting.

7. Four Monitoring Options Exist For The Board

CEO Report

This is a written report provided for each meeting of the Board of Directors—verbal reports are not permitted. The report is circulated in advance of the Board meeting. It is not read at the meeting, but the CEO can respond to questions from the Directors about its contents. The CEO must report on any breaches of the CEO Code of Conduct and also reports on the activities of the CEO’s working committees.

Task Force and Board Statutory Committee Reports

These written reports prepare members for each meeting —verbal reports are not permissible. Organizations must circulate reports in advance of the board meeting. They are not read at the meeting, but the task force chairs respond to the Directors’ questions about their contents.

External Report

The Board of Directors may, at any time, engage an independent third party to review any management or policy area of the organization. The independent third party will report directly to the Board on the CEO’s adherence to approved policies or compliance with generally accepted management practices.

Board Review of Financial Reports

The Board of Directors will review periodic financial reports that highlight divergences from the approved priorities and the approved budget.

8. The Board of Directors completes an Annual Written Appraisal of the CEO

How am I performing? How can I do a better job in my role as CEO?

These are two vital questions for the CEO. One of the principles underlying the Complementary Model of Board Governance is that this type of feedback must be provided to the CEO annually.

9. The Governance Committee Co-ordinates Written Appraisals of the Volunteer Directors

How are we performing, and how can we do a better job in our volunteer role? These are two equally vital questions for not-for-profit volunteers, and in fact, Drucker writes:

Many of these … volunteers insist on having their performance reviewed against preset objectives at least once a year. And increasingly, they expect their organizations to remove nonperformers…

One of the principles underlying the Complementary Model of Board Governance is that this type of feedback is provided to volunteer Directors at least annually.

In addition to overseeing the volunteer appraisal process, the Governance Committee also identifies training needs for the Board and oversees the Board’s nominations and election process.

10. Training is a Priority, Budgeted Item

Drucker writes of this issue:
What do these unpaid staff people themselves demand? What makes them stay—and, of course, they can leave at any time. The first and most important demand is that the nonprofit have a clear mission, one that drives the organization…. The second thing this new breed requires, indeed demands, is training, training and more training.

Most not for profit Directors agree that a clear mission is vital for the organization. Many boards spend considerable time, effort and money to ensure they do this.

But, far fewer NPOs appreciate the correlation between poor volunteer training and performance.

Hence, the linkage between effective Board Governance training and Board performance should not be a surprise. The Complementary Model requires attention to this important area.

A note on Dr. Peter Drucker

The association community owes a great deal of gratitude to Dr. John Carver. The fundamental governance/management principle, “The board sets policy, and the staff implements policy,” has been recognized for over fifty years.

Yet it is primarily because of Carver’s work that the term “governance” has been added to modern association management’s lexicon. The topic is so widely discussed and debated in the nonprofit community. In the 1980s and 1990s, Carver articulated a new methodology for not-for-profit governance and management.

In some ways, it was a strict departure from what had been operating before: yet it adhered to the fundamental principle that the volunteer board sets policy and that the staff implements policy.

Working Boards Vs. Governing Boards: What’s the difference?

The fundamental difference between a working board and a governing board is, as the names suggest. A ‘Working Board’ works in the nonprofit. The members of a working board also do administrative work, fundraising and any other type of work the organization might need.

Working boards are common in small and new nonprofits when they can’t afford to hire paid staff. Working Boards are also part of the ‘Traditional Board Governance Model.’

On the other hand, a ‘Governing Board’ provides leadership, sets direction, and creates policies. While also providing financial oversight and ensuring adequate resources are available.

The Governing Board governs while leaving the work to the paid staff. Governing Boards are common in nonprofits that can afford to hire paid staff and are typical in all larger organizations. The Completely Model of Board Governance incorporates a Governing Board instead of a Working Board.

The Complementary Alternative

Governance and management? The role of the Board of Directors?The Chief Executive Officer’s role? Questions about these issues have prevailed since the first Board of Directors hired its first Executive Director.

While many accept the principle, “The Board sets policy, and the staff implements policy.” There remain many questions about how to operationalize the relationship.

Is there a single solution that fits all circumstances?  No. But, the Complementary Model provides NPOs with another alternative. When neither the Traditional Model nor the Carver Model seems to provide the best answer to the question: What is the most appropriate role for our Board of Directors and our Chief Executive Officer?

Also read :

Need help increasing your nonprofit’s effectiveness?

An efficient board starts with the implementation of an effective governance model. 

AMC’s governance training helps nonprofit boards navigate governance and management to stay focused on their organization’s mission and visions. It includes valuable tools and clear guidance to address many not-for-profit organizations’ governance challenges.

Join NPO Academy’s Online Board Governance Training and implement the Complementary Model of Board Governance to build an effective partnership between the volunteer board, CEO and staff.

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