Who do your people trust?

Not-for-profit (NFP) organisations’ boards need be self-aware about the level of influence different stakeholders have over their decision making, says Professor Sir Peter Gluckman, director of Koi Tu: the Centre for Informed Futures.

Speaking at an Institute of Directors’ NFP Chairs Forum, Gluckman urged NFP boards to ensure they have relationships with all of their organisation’s stakeholders, and that those relationships are two way, not one way.

This will help NFPs deliver on their purpose and build trust within their communities, he says.

“Board should be thinking, are we really listening to all our stakeholders? I suspect many boards have not even done a stakeholder mapping exercise to identify who their stakeholders are. It’s very useful to think about who is influenced by the board, and who has influence on the board. That may not be as obvious as you think,” Gluckman says.

Anticipation and agility

While it is not unique to NFP boards, Gluckman says the concept of an organisational purpose is incredibly important to how objectives are set and strategies are developed in the NFP sector. Taking on the views of a broad set of stakeholders can help boards strengthen their conception of the organisation’s long-term purpose and, hopefully, avoid becoming side-tracked by short-term demands.

“You need to be clear about what the strategic objective is, not just the tactical objectives. Boards need to have a long-term view and a theory of change, if necessary, as to how they are going to get there. Then they can build tactical objectives alongside that strategy.”

Strategies can seldom be delivered seamlessly, Gluckman acknowledges, because events and circumstances change over time. So NFP boards have to remain agile in their thinking and their action, and be prepared to evolve their strategies on the fly.

“They need to be adaptive. That means being willing to have discussions, which can be difficult, about priorities and how one uses the resources that one has.

“I have seen too many cases where the short-term imperative, whatever it is, has undermined the long-term initiatives of the board.”

He advocates NFP boards have a “session on anticipation” to develop their ability to collectively identify how they may need to adapt to changing circumstances. This should involve asking:

• What are the problems they want to address?
• What are the opportunities they have and what are the threats?
• How that might those opportunities and threats emerge?

Board composition

“An NFP board needs to understand the sector it is working in, and therefore think about the range of stakeholders or of disciplines that need to be at the table to help make strategic decisions,” Gluckman says.

Ideally, the board will have traditional governance expertise in areas such as audit, strategy, managing the CEO, and other expertise that expands the breadth of strategic conversations. Diversity of thought can be a driver of good decision making, he says.

“You can’t set effective strategy if you don’t have people at the table who think differently. New Zealand, even in its private sector boards, doesn’t have that diversity and I think our companies are the poorer for it.”