Board governance provides crucial leadership to private clubs, offering valuable perspectives on the direction the club should be heading. Who makes up the board, how they are trained and evaluated, and other key factors impact their performance and potential. This article dives into the latest trends in governance.
Who Serves on the Board?
According to a recent study Missing Pieces Report: The 2016 Board Diversity Census of Women and Minorities on Fortune 500 Boards by Deloitte and Alliance for Board Diversity, from 2010 to 2016 Fortune 500 company boards saw increased rates of diversity, albeit slowly. Minority women made up 3.8 percent of boards, minority men made up 10.6 percent, white women made up 16.4 percent and white men made up 69.2 percent.
At nonprofit organizations, only two-thirds of respondents believe their boards have a balance in gender roles, according to consulting firm Heidrick & Struggles’ Association and Nonprofit Boards: Maximizing Effective Service survey. Of the 5,591 respondents, 70 percent were male to 30 percent female. Three out of five were 55 years of age or older, and just 8 percent were younger than 45 years.
A 2017 study, Leading With Intent, by BoardSource discovered that nonprofit boards are still no more diverse than they were two years ago. Ninety percent of chief executives and board chairs were white, along with 84 percent of board members. African Americans, Asians and Hispanics made up a total of 9 percent of board chairs and 16 percent of board members. Twenty-seven percent of respondents indicated their boards were all-white. In 2015, 89 percent of chief executives and 80 percent of board members were white and one quarter of boards identified as all-white. Fifty-seven percent of board members were 50 years or older.
Boards are looking to improve in this area. The study found that 79 percent of chief executives say that expanding racial and ethnic diversity is important, or greatly important to advancing their mission.
For private clubs, a recent McMahon Group/National Club Association (NCA) survey of club managers and executives found that 78 percent of clubs have female board members.
How Long Do They Serve?
A plurality of board members (31%) serve from two to four years, reports Heidrick and Struggles. However, 59 percent serve for at least five years and nearly a quarter (23%) serve for 10 years or more. The survey found that 68 percent of respondents set term limits for members of the board of directors.
At clubs, nearly three out of four (73.4%) board members serve a two-year term, reports McMahon Group/NCA. Slightly more than a quarter (25.8) of clubs serve board terms of three or more years.
Onboarding Lacking
Onboarding represents an area of growth for clubs and nonprofit boards nationwide. According to the McMahon Group/NCA survey, 67 percent of clubs report that board members receive an orientation, leaving much room for improvement. Only 56 percent have a board policy manual for new members.
Nonprofit organizations also do not provide adequate onboarding, according to the 2017 survey by Heidrick & Struggles. Only 53 percent of respondents said their organization had a “defined onboarding process” when they joined the board, while 73 percent said they received an informal orientation. Only 46 percent say their onboarding experience prepared them to be an effective board member. The study reports that board members spend roughly 172 hours per year performing duties for the board.
What onboarding practices do today’s boards do well? Respondents said that nonprofit boards effectively covered the organization’s mission (92%), board responsibilities (83%) and the strategic plan (67%). Just 32 percent said that CEO evaluation was effectively covered.
The Prepared Board Member
How far in advance do you believe is necessary to receive board materials to be properly prepared?
14 days (20%)
7 Day before (67%)
2 days (12%)
Day before < 1%
Immediately before beginning of Board meeting <1%
Uncertain/Don’t know <1%
Source: Association and Nonprofit Boards: Maximizing Effective Service, Heidrick & Struggles
Why Serve on a Board
I support the mission of the organization. (91%)
I believe I could make the organization more effective with my board involvement. (68%)
I feel I had an obligation to the industry or sector. (53%)
I have a personal connection with the organization. (43%)
I see an opportunity to network. (41%)
I was asked to serve by a friend and/or professional acquaintance. (41%)
I see an opportunity for business development. (18%)
I was approached by an executive search firm to serve on the board. (4%)
Source: Association and Nonprofit Boards: Maximizing Effective Service, Heidrick & Struggles
Top Responsibilities of Board Members
Set the vision and mission of the organization (65%)
Set the board direction of the organization (64%)
Oversee organizational finance and performance (54%)
Serve as an ambassador for the organization (49%)
Oversee and evaluate the CEO (41%)
Impact the culture of the organization (18%)
Engage in crisis management (6%)
Oversee the day-to-day operations (3%)
Senior staff talent management (2%)
Source: Association and Nonprofit Boards: Maximizing Effective Service, Heidrick & Struggles
Evaluation
The BoardSource Leading With Intent survey reveals that less than half (45%) of organizations reported using a formal, written self-assessment to evaluate their board’s performance in the past three years. Boards that assess themselves get higher grades across all areas of board performance. Regular evaluation was shown to be most effective in evaluating the CEO, adopting and following a strategic plan, and monitoring the organization’s performance against the strategic plan.
Comparison of Board Performance Based on Frequency of Board Self-Assessment
| Area of Board Performance (Ratings reported by chief executives based on a four-point scale.) | Assessed in past 2 years | Assessed ever | Never Assessed | Variance |
| Evaluating the chief executive. | 2.83 | 2.71 | 2.05 | 0.78 |
| Adopting and following a strategic plan | 2.98 | 2.9 | 2.32 | 0.67 |
| Monitoring organizational performance against strategic plan | 2.68 | 2.62 | 2.16 | 0.52 |
| Understanding board roles and responsibilities | 2.99 | 2.93 | 2.49 | 0.51 |
| Legal and ethical oversight | 3.09 | 3.07 | 2.68 | 0.41 |
| Providing guidance and support to the chief executive | 2.97 | 2.92 | 2.61 | 0.36 |
| Thinking strategically as a board | 2.87 | 2.83 | 2.52 | 0.35 |
| Financial oversight | 3.31 | 3.28 | 2.97 | 0.34 |
| Level of commitment and involvement | 2.92 | 2.88 | 2.61 | 0.32 |
| Increasing the diversity of the board | 1.94 | 1.87 | 1.63 | 0.31 |
Source: Leading With Intent, BoardSource
Boardroom Portals
Only 22 percent of board members use a board portal to great extent, reports BoardSource. These platforms allow board members to access and record key board data before and after their meetings in a secure way.
Board portals also allow board members to participate in a meeting remotely. According to a survey of corporate executives by Corporate Secretary, a governance consulting firm, a third of respondents said that at least one board member participates remotely one quarter of the time, while 20 percent of executives said that remote participation occurs at about one half of their meetings.
Another advantage is that it board portals help reduce time in creating board books. The Corporate Secretary survey noted that the process of distributing and archiving those materials was cut dramatically using board portal technology.
Emerging Nonprofit Trends that Impact Boards
While the board helps dictate the club’s direction, it is important to know where most nonprofits are heading in order to have the right board for the job. According to nonprofit consultant and Social Velocity President Nell Edgington, nonprofits are evolving with the times.
There is growing recognition, particularly among millennials, of the roles institutions have in creating change in society and in government, noted Edgington. The line continues to blur between business and social responsibility, putting more pressure on nonprofits to be proactive in creating meaningful change.
Edgington emphasized the need for nonprofits to increase advocacy efforts. The BoardSource survey reflects these sentiments as more than half of all boards are actively working with staff leadership to advocate on behalf of their organization, but most organizations do not have formal policies around this activity.
Last, nonprofits and their board are recognizing the need to use more effective business models in order to find financial stability, said Edgington.
Board Meetings at Nonprofits
Average number of times the full board met in the past 12 months: 7.32
Boards that have five or fewer meetings per year: 33%
Boards who meetings average less than three hours: 84%
Boards that have an annual board retreat: 42%
Percentage of average board meeting time given to strategic/generative work: 40%
Boards that use a board portal to a great extent: 22%
Source: Leading With Intent, BoardSource
The Strategic Board
In BoardSource’s Leading With Intent survey, respondents are not fully engaging in strategy. Survey data show that several key components of board performance are related to the board’s role in strategy. Because of the importance of strategy for organizational performance, ongoing review and assessment against strategic plans goals is a primary board function.
In this study, most respondents (84%) have a strategic plan, and 67 percent of those organizations with a written plan are good at adopting or following it. Even fewer (54%) indicate that the board is good at monitoring performance and impact against the strategic plan. Sixty-four percent of respondents believe the board is good at thinking strategically. Only and 26% indicate that board meetings focus on strategy and policy versus operational issues.
Opportunities for Improvement
Boards are tailored to the organizations they serve, however, governance trends across the country offer key insights for how an individual board should perform. Whether it is through the board makeup, onboarding and education, strategic planning, how it evaluates itself, or what technology the board uses, there are many opportunities for specific boards to boost their performance.
Club Trends Fall 2017