What does a board actually do?
The book Governance as Leadership divides the responsibilities of a board into these three categories: fiduciary, strategic, and generative. Personally, I like to think of generative as a method (to brainstorm) that can be applied in any discussion. So with a slight revision, I call that role “directional” instead and identify these three responsibilities within a board of trustees:
Fiduciary – How are the resources being used? The focus here is on financial and operational oversight, ensuring the organization’s resources are managed responsibly and ethically and are being stewarded well. The fiduciary dimension of a board’s responsibility is all about stewardship, protecting the integrity of the organization’s finances, assets, and resources to guarantee long-term sustainability.
Strategic – How do we get there? The strategic role involves setting a roadmap to achieve the organization’s goals. Here, the board works with leadership to develop and approve strategies that align with the mission and vision of the organization. This requires prioritizing initiatives, allocating resources efficiently, and constantly reviewing progress to ensure that the organization is on track toward its desired future.
Directional – Where are we going and why? The directional role is about setting a long-term vision and mission for the organization. The board provides guidance on the organization’s ultimate purpose and ensures that all actions align with its core values. This work includes constantly and consistently examining the big picture, understanding market trends, anticipating future challenges or opportunities, and keeping the organization on course toward its overarching goals. Here, a good board always challenges the status quo, positively disrupting when needed. The key words are “constantly and consistently.” Many times, boards think directional work should be once every few years. No. It should be done in different ways at every meeting.
I find that boards do not spend much time, or enough time, on directional responsibilities. While the three described above need to be in view all the time, the board should give varying levels of focus to different aspects depending upon the current stage of maturity of the organization. Let me explain.
If you trust your executive team (the people running the organization), then you can focus much less of the board’s time on fiduciary or even strategic planning because you know the resources are being well-spent, and once the board sets the direction in collaboration with the CEO, then the team can create a strategy on how to get there.
This is the ideal board, one that is mainly concerned with directional input, pouring their hearts into asking visionary questions, like: Where are we? Why do we exist? And where are we going? Answering these and re-answering them, and answering them in better ways should be the goal of the board.
If an organization is young (or not mature in its capacity and culture), a board will need to be much more involved in the fiduciary responsibilities and assist in strategy.
