The Director’s Dilemma – December 2022 Edition
Contribution by Albert Froom, Managing Partner at Leaders Trust Netherlands / AltoPartners Netherlands. Albert is a founding member of AltoPartners and he was the Chairman of AltoPartners from 2006 to 2009.
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The Director’s Dilemma - December 2022
This month we advise a passionate director who is facing a difficult decision of whether to stay or leave her board.
Yolanda is a young director who joined a not for profit foundation in the education sector. The foundation had a fairly unsuccessful first fifteen years of haphazard fundraising. It was criticised by the community and the school Principal who claimed it did not do enough to support the school.
A new board chair joined last year and instituted a significant shift in the board governance. He introduced a skills-based board and there was almost a complete change over of board directors. He recruited Yolanda who relished the chance to put her commercial skills to use in designing a new strategy for the foundation.
Now nearly all of the newly recruited directors are stepping down. The terms were staggered so some are simply not standing for re-election but others are leaving mid term. One director has openly said it is because of concerns about the Principal’s performance, the others are publicly saying it is because of the time commitment. However, informally, three directors have told Yolanda they are also concerned about the Principal and not prepared to put in the effort when the Principal treats them as an irrelevance and doesn’t help the board in any way. At meetings he is keen to hear about the funds raised but reluctant to divulge information about the school’s plans or to take an interest in the governance and operations of the foundation.
Yolanda’s term has another year and she wants to remain on the board to fulfil her obligations and support the foundation. She just isn’t sure that is a good idea. Perhaps there might be something big that she’s missing.
How would you advise her?
Accepting a Board role brings responsibilities and is not for people that cannot form their own, independent opinions or people that will automatically follow others. Think independent and be resilient.
Yvonne said yes to the Board role and now faces issues in her role.
She can remain in the Board, open up the discussion with the Board of the School (Employer of the Principal) and discuss the issues at hand. A heads-up for the employer on performance of their employee, but also needed input for her from the school for her new strategy; improving the fundraising.
A regular exchange of info, can be organized between the two Boards, they share the goal of improvement for the school at large.
Given her expertise, her base for nomination by the previous Chair of the Foundation, she can work on the improved strategy in the meantime, making sure that everything does not come to a complete standstill. The Chair of the Trust is still there, they should reflect together on the skills based Board composition.
Yolanda is witnessing the impact of poor structure alignment: her foundation raises funds for the school, but it does not have any power to direct the school principal. The school principal reports to the school board. Supporting the foundation not a top priority.
If Yolanda decides to stay, she will need to work hard to establish alignment between the foundation board and that of the school. Unless the school board require the principal to assist the foundation by divulging information about plans, it will be almost impossible to raise significant funds or govern effectively. This is true regardless of whether the principal is a member of the foundation board or merely expected to report to it.
Yolanda should first read both her own constitution and that of the school to understand the degree of alignment, then talk with her current chair and understand what is inhibiting stronger alignment between the school and foundation boards.
She should then use that knowledge to open a dialog with the chair of the school board. If that dialog is productive, she can ask for the two boards to cooperate by sharing information and developing a fundraising program that both boards feel is appropriate and inspiring. The school board must task the principal to support, rather than undermine, the foundation. At present the principal gets whatever is raised, has no need to help raise it, and can criticise with impunity.
No board can lead its organisation to prosperity and success without understanding and building relationships with stakeholders. The school is the foundation’s most important stakeholder. If the relationship is irredeemably damaged, Yolanda should leave the board. It won’t get any better.