Boardroom Best Practices

Associations Need Robust Boards of Directors

Establishing boards of directors that perform well is a serious challenge. Yet it is a challenge that association must rise to, as their traditional business models are being disrupted. Modern Governance tools can help to enable a better board selection process.

“In many associations,” warns the Chartered Accountants of Australia and New Zealand in a recent report, “there is a big gap between the board and the members.”

In fact, the election of a board at many associations becomes a popularity contest, not an effort to choose the members with the right qualifications and skills for board membership. What happens is that the best-known, best-connected members get chosen regardless of their abilities.

Yet, as the Chartered Accountants point out, this is at a time when association boards need to perform at their highest potential. “Not only must professional associations remain responsive and adaptive in this rapidly changing environment, but the very professions they represent must also address these disruptive forces, particularly the speed and scale of the many technological changes we are encountering in the professions in terms of automation and innovation.”

Associations must ensure democratic governance

To assure processes that establish top-performing, productive boards at associations, strong democratic governance must be firmly embedded.

If associations are to advocate for public policy, economic reforms and improved regulations, then they must themselves have a working governance framework. If the board of directors, which represents the organisation to the public, is not credible, then activities like accrediting programs in higher education or even accreditation at a professional association will not hold much weight.

Governance for Board Selection and Election

The first step in setting up a governance framework is to establish rules for the selection and election of the board. Clear-cut rules, particularly those that govern nominating procedures, can help the association to avoid favouritism in board elections and drive choosing the right board members for the jobs.

The members of the association board are elected by the voting members of the association, usually with elections held every one-to-four years, depending on the terms of the offices and how many positions are held. Within the board of directors, there is a minimum number of officers elected according to the articles of incorporation or bylaws.

Selecting the board involves first, determining the structure of the board – this is usually comprised of the Executive Committee, a Nominations & Governance Committee, and then any specialised committees relevant to the organisation’s work.

In this context, effective recruitment processes are the key to success, according to the American Society of Association Executives. Hi-performing association board were more likely to recruit new board members broadly, by, for example, soliciting nominations from outside the board rather than depending on membership nominations alone. They were more likely to screen prospective board members and to hold competitive elections rather than voting for a single slate. The result? Their CEOs were half as likely to report challenges finding board members who had the qualifications they needed and half as likely to report problems keeping the board members they wanted.

To reinforce the effective recruitment process, the Society adds, there should be a commitment to assessment and skills development. High-performing association boards were twice as likely to set board-level performance goals for themselves, almost twice as likely to invest in board development activities such as mentoring and training, and twice as likely to engage in formal or informal board self-assessment.

The Election Process

The election begins by circulating among the membership which positions are open for replacement (or which new seats have been created).

The next step is to create the electoral role. As election consultants Polyas explain, the electoral roll is one of the most important documents in any election. It should feature a full list of eligible voters and their contact details. Ensure that any new members have been added and any former members have been removed. The electoral roll is also used to determine which members are eligible to nominate themselves to open positions.

The next step is to inform the membership of the upcoming election.  All relevant dates, such as the deadline for nomination submission, must be clearly indicated. It is important to ensure that all members receive this information at the same time, and that the information is transmitted securely, so that it cannot be made use of by those who have no right to access it. There should also be channels created for nominated members to address the voters, sharing ideas, so that voters may make an informed judgement on whom to vote for.

Choose a voting method that is secure. Electronic voting is by far easier to work with than paper methods. Voting can be done entirely online, or at a general meeting, but there should be a verification of any show of hands with online vote counting.

How to structure the board

The board structure, with its division of responsibilities, will help to make directors work productively together.

The Executive Committee comprises the legal minimum for any association board. There are five seats: The chair, chair elect, secretary, treasurer, and the immediate past chair.

As association governance experts Coervers and Byers point out, there should not be too many board seats, even allowing for positions on committees. When there are a large number of board members, too many simply enjoy the prestige of the position without actually taking on responsibilities or participating in the board’s activities.

Diligent Governance Cloud enables effective board composition

The suite of Modern Governance tools that comprises Diligent Governance Cloud addresses every aspect of board composition.

The Nominations app scours thousands of candidates so that boards can find those with the right skills as well as the right chemistry. It also creates channels for discussions with candidates, and facilitates holding elections.

But there are also tools for competitive intelligence, for understanding the sector that the association works in, for rapid and secure communications, virtual meeting rooms for secure exchanges of ideas, for evaluating board performance, for entity management and more.

A world of governance knowledge informs Diligent Governance Cloud.

Good governance isn’t just one thing – so why buy software that only manages your board documents? At Diligent, we empower leading organisations around the world to turn good governance into a competitive advantage for their business. In the ever-changing landscape of the world, governance hasn’t kept up with the fast pace of business. Quarterly board meetings, paper board books and not using secure communication tools for sensitive data have opened up numerous companies to risk.

For more information or to request a demo get in touch with our team.

Board Portal Buyer’s Guide

With the right Board Portal software, a board can improve corporate governance and efficiency while collaborating in a secure environment. With lots of board portal vendors to choose from, the whitepaper contains the most important questions to ask during your search, divided into five essential categories.

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