Having an appropriate range of people as trustees is important for achieving good governance in a charity’s boardroom. So is having good governance policies, systems and procedures, of course. But equally vital is getting good and professional behaviour by trustees – including both how trustees behave individually and how they work and interact with each other as a group (sometimes called ‘board dynamics’).
Useful guidance was developed on this issue over summer 2018 by ICSA (Institute of Chartered Secretaries and Administrators). They produced a reference guide entitled ‘Improving charity boardroom behaviours’, which proposed a set of 18 types of behaviour, structured around the 7 principles of the 2017 Charity Governance Code, for trustees (with some additional pointers for charity chairs, the CEO and company secretary). The overall number of suggested behaviours stretched to over 120 – which sort of reduces ease of recall – but here’s a summary of what the 18 behaviours are, with a brief reference to some of the specific actions suggested under each behaviour:
Concerning Principle 1 of the Charity Governance Code – organisational purpose – three behaviours were recommended:
Behaviour i): Board members should be committed to the cause: Examples of good trustee behaviour: dedicate sufficient time to being a trustee; spend time understanding all aspects of the charity’s activities; come prepared for meetings; and make decisions in the best interests of the charity’s purposes. For the chair, two particular pointers were: spend an appropriate amount of time to give to the charity; and speak up, on behalf of the charity, when criticism is levelled at the charity or board decisions.
Behaviour ii): Understand the charity’s role and purpose: An effective trustee will be able to articulate their legal and ethical duties and ensure governance structures are fit for purpose (this seems to me to be beyond just the responsibility of an individual trustee). An effective chair will summarise discussions before moving to a consensual/majority decision and ensure each trustee understands the key issues to be discussed at meetings.
Behaviour iii): Be strategic: An effective trustee will ask more strategic than operational questions (what is strategic, though, is not defined); place beneficiaries at the centre of decisions; and review the charity from all relevant perspectives / consider issues from a range of stakeholder views. The chair should reframe discussions that become too operationally focused and encourage trustees to bring their wider skills and experience to the use of the charity.
Concerning Principle 2 of the Code – leadership – two behaviours are proposed:
Behaviour iv) – Lead by example: An effective trustee will behave in a professional manner (too vague in my view!); demonstrate a passion for the charity/live the values of the charity (rather idealistic!); and speak to the widest range of people with an interest in the work of the charity (not very feasible for the average trustee). The chair should moderate different points of view expressed at board meetings; set high expectations of conduct; and cultivate leadership potential on the board.
Behaviour v): Operate as part of a team – An effective trustee will use respectful language and behaviour; accept that not everyone will share the same views; make an effort to building effective relationships within and outside the boardroom; and will support and challenge the executive team. The chair will facilitate in a way that promotes a ‘win-win’ outcome in decisions; promote and foster healthy working relationships with and between the board/CEO/executive team; and speak last when difficult decisions have to be made (a very good tip in my experience); and notice tensions in the boardroom / move to resolve them before open conflict emerges.
Concerning Principle 3 of the Governance Code – Integrity – there are three behaviours:
Behaviour vi): Integrity – An effective trustee will avoid any behaviour that may tarnish the reputation of the charity; declare any real or perceived conflicts of interest; respect the confidentiality of matters discussed; and make decisions that are in the best interests of beneficiaries. The chair will additionally: display political acumen/tact/diplomacy (again, rather vague!); and challenge unacceptable behaviour in the boardroom.
Behaviour vii): Be an independent thinker: Lots of good recommendations here: An effective trustee will challenge established thinking/play devil’s advocate when required; ask questions to understand data and differing opinions; speak up if they have any concerns; question if the right data is being presented; and seek evidence to support what is being reported by the CEO/exec team. The chair should encourage input from all trustees (important); challenge sometimes the accepted wisdom of the board/exec team (good!); and question assumptions / expect others to interrogate data; and not accept the exec team’s reassurances if he/she doesn’t think a matter has been resolved satisfactorily.
Behaviour viii): Be ethical : An effective trustee will maintain high ethical standards in all areas of trusteeship (again, too vague!); take action against illegal or immoral behaviours; and put the interests of all beneficiaries at the centre of decision-making. The chair will: treat all trustees and the exec team even-handedly and fairly (vital); and be proactive in protecting the charity’s reputation.
Concerning Principle 4 of the Code – Decision-making, risk and control – two areas of behaviour are recommended:
Behaviour ix) – Use probing: Trustees should ask questions of the CEO/exec team to check and challenge progress against strategic aims; challenge constructively; and use a range of data to challenge assumptions and assertions of the CEO/exec team. The chair should ensure that appropriate matters are delegated to others, including fellow trustees and the CEO (so as to avoid trustees becoming too controlling).
Behaviour x) – Be risk aware, but not risk averse : Good advice for trustees includes: use sound judgement to take action where actions are uncertain but potential rewards are great (a bit vague/lofty to me, though!); and be up-to-date with the risk register (assumes the charity has such a thing – not always the case!). Good advice for the chair is: challenge the board to set an appropriate risk appetite; encourage the board to be up-to-speed with the top five risks the charity faces; and ensure equal debate is given to the pro’s and con’s of a contentious or unusual proposal. Such a role of the chair, in my experience, is crucial because risk management needs the balancing approach of a group.
Behaviour xi) – Be self-aware: Trustees should reflect on and seek feedback on their performance; ask for advice and support when needed; and recognise their own behaviour and how they can affect those around them;; and be curious/confident/modest. Good, but testing, advice to help deal with the egos of some trustees and foster respect and an overall team-feeling, but it is the chair who has the key role here and this is where the guide was a bit off-beam as its recommended advice for the chair focuses just on ensuring trustees get performance appraisals – rather than saying anything about managing dynamics in board meetings.
Regarding Principle 5 of the Code – board effectiveness – three behaviours are proposed:
Behaviour xii) – Be creative/innovative. Trustees should embrace change; encourage creative actions to deal with challenges; and welcome different approaches to problem-solving. A chair should recognise when to seek external help and be comfortable in trying new ways of working. Again, this role by the chair is crucial in my experience because many trustees’ default behaviour is to be cautious and avoid being outspoken.
Behaviour xiii): Be keen to learn and improve – Some points here are sound – be ready to learn and improve and learn from mistakes – but others are really too ambitious or unrealistic for the average trustee: maintain a ‘personal development plan’ to improve own effectiveness and understand why each fellow trustee volunteers their time. For the chair, wise/important pointers include: encourage self-reflection and self assessment by the board and (ensure) action from evaluation and feedback is carried out.
Concerning Principle 6 of the Code – Diversity – two behaviours are defined:
Behaviour xiv) – Be open-minded – The guide says surprisingly little on this point: just three points essentially of the same theme: champion equality and diversity in all its forms; contribute to develop a diverse team; and embrace diversity of thinking to make the best decisions. I think some more specific behaviours would have been good e.g. when reading board papers, try to think about viewpoints from a range of stakeholders. As for the chair’s role, useful pointers include: ensure different perspectives are heard; create an atmosphere of open/honest discussion; and create a sense of inclusiveness.
Behaviour xv) – Be courageous – Seven sound pointers here but they’re a bit duplicative of each other. Three of them are: raise difficult issues in a brave but respectful manner; promote a different opinion even when it challenges the consensus; and be comfortable in making unpopular decisions. For the chair, just two pointers are given: seek to resolve misunderstandings at the earliest opportunity to prevent conflict (very wise) and facilitate decision-making in difficult situations (wise, yes, but rather vague).
Finally, regarding Principle 7 – Openness & accountability. Three behaviours are proposed:
Behaviour xvi) Be a good listener – The key advice here is to take the views of all stakeholders into consideration when making decisions and value the different priorities of stakeholders. An interesting pointer is to use different communication styles with different stakeholder groups (I don’t think, though, that the average trustee actually speaks to many stakeholder groups!). Sound advice for a chair includes: be approachable to all stakeholders; introduce stakeholder perspectives into the board; and the specific, wise point to understand that silence does not necessarily equate to agreement.
Behaviour xvii) Inspire trust – Key themes/pointers here for trustees are: do what you say you would do or promised and act as an ambassador for the charity. Specific pointers for the chair include: act with the utmost integrity when representing the charity; act with humility; accept that you don’t have all the answers; and be ready to explain difficult decisions taken by the board and the reasoning behind them.
Behaviour xviii) – Accept responsibility – Eight pointers given that could be reduced to just two or three: essentially: consistently address/pursue the achievement of the charity’s objects; accept collective responsibility; and welcome challenge from inside and outside the boardroom. I was amused slightly by the specific pointer: know when it is time to move on – a good recommendation for many boards where some trustees stay well beyond their shelf-life! For the chair, sound advice includes: approach the Charity Commission in instances of significant non-compliance or governance failure; welcome questions from stakeholders at relevant junctures/events; and only use ‘chair’s powers’ in urgent or emergency circumstances.
All these pointers from ICSA’s reference guide will be helpful and instructive to all trustees, even if the overall number of behaviours is rather unwieldy and several behaviours suggested are rather too vague or lofty.
To complement the guide, I also found helpful the findings of a survey – mentioned also in the ICSA guide too – carried out in the summer of 2016 by consultancy Reynolds Associates (Global Board Culture Survey). They surveyed 369 corporate large public company directors from a dozen countries and asked them what they considered to be the most critical director behaviours that create a ‘high-performing’ board culture and drive board effectiveness. For a board to function optimally, behaviours and culture are as important as the board having the right mix of relevant expertise and experience. The survey’s findings were surprisingly consistent across directors across the world, including different governance structures (e.g. where the chair and CEO are combined as opposed to being separate), so the findings are still worth noting, even if they did not look specifically at charitable organisations.
The top five behaviours which he survey found to be key to giving a strong culture and an effective board were: i) possess the courage to do the right thing for the right reason i.e. not afraid to take the right decision needed); ii) willing to constructively challenge management, when needed; iii) demonstrate sound business judgement; iv) ask the right questions; and v) possess independent perspective and avoid ‘groupthink’.
To reinforce these five director behaviours, the survey also revealed that the most effective boards have three particular, overall characteristics: i) a board chair who is an effective facilitator; ii) adopt a long-term time horizon for making key decisions; and iii) maintain strong relationships with senior management. The effectiveness of the chair is the most important factor, with the survey finding that respondents with an effective chair rated their board’s effectiveness almost 50% higher than those with an ineffective chair. For the chair to be most effective, the survey identified three key skills: fostering high-quality discussion; encouragement of independent thinking; and actively seeking of different viewpoints.
All the above gives, I believe, a raft of very valuable pointers as to what constitutes optimum behaviour for trustees in the charity boardroom. They form a vital underpinning for overall, strong charity governance.
I hope the above is helpful in thinking about and developing professional behaviour in your charity boardroom. If you have any comments or if I can be of any assistance, do get in touch.
Written by Mike P. Owen, Founder Partner & CEO
Copyright of Owen Morris Partnership