The best performing boards of governors are more than the sum of their parts: the members of the board ideally share a common goal in the organisation’s mission and work well together to achieve this.
Obtaining the right mix of skills, experience and qualities is a key ingredient in building an effective board. The starting point in determining whether the board has the requisite expertise to make it effective is to review the attributes of existing governors. This is important because existing governors may possess a range of skills or knowledge that have not been identified or called upon. One such process that can be employed to help identify existing skills, knowledge or experience is a skills audit.
Once the board has agreed that a skills audit is in the best interests of the organisation it is good practice for an individual (the chairperson, a governor, or member of the management team) to be nominated to coordinate the process. Alternatively, it can be through a formal or informal group such as a governance working party, committee or nominations committee. Before initiating the skills audit it is advisable to review the exact requirements of the organisation’s governing document. This is an important consideration, particularly if the skills audit is to result in a recruitment initiative as there may be restrictions on board numbers and in some cases, the ability to appoint new governors may rest with third parties.
Identifying whether there are going to be governor retirements in the near future is an important factor. Sometimes these cannot be avoided, for example, if the rotation of governors is required by the governing document. If so, then it would be wise to consider the skills audit excluding the results of governors that are about to retire. This will make it easier to identify whether short-term retirements from the board are likely to take away any key areas of expertise.
Carrying out the skills audit also presents a good opportunity to ask other questions to collate information that is useful to the organisation. Examples of additional questions include those aimed at identifying areas where governors may be able to become more involved as well as helping to understand the motivations behind individuals becoming governors which can aid future recruitment.
Once the results have been analysed and recommendations determined these should be reported to the board and/or the relevant committee. It may be appropriate to report the results of the skills audit to the board on an anonymous basis. For that reason, they are sometimes carried out by an independent third party.
Typical next stages would then include one or all of the following:
- arranging formal training for existing governors to cover any identified weaknesses;
- actively recruiting new governors to fill any gaps;
- buying-in any missing expertise;
- co-opting individuals with specific skills on to sub-committees; and
- agreeing a date for a future review of skills if no weaknesses have been identified.
Training and board development
One of the requirements of charities SORP FRS 102, which is the accounting and reporting recommended practice for the charity sector, is for organisations to disclose the policies and procedures for the induction and training of governors. Having established that some gaps in the board need or must be filled by recruitment it is possible that some areas of expertise or skills could be brought to the board by the development of existing governors. Despite this being a requirement of the accounting regulations under SORP it is an aspect of board development that every organisation should consider. This also extends to informing the board about the work of the organisation and the environment in which it operates. For example, there may be an imminent change in the regulatory regime in which the organisation operates and one way of up-skilling the board could be to arrange for some training on mass or appointing individual governors to become the recognised specialists.
The importance of governors working together is the starting point for better board dynamics. Therefore, any tools to develop the board will ultimately benefit the organisation. Popular activities designed to integrate and provide a better understanding of teams include team building exercises and board away days. Although these may not be considered to be educational, as such events do not directly pass on knowledge; they are building the team and, therefore, contributing to board development for the good of the organisation.
If an organisation has a governance or nominations committee then this is also well-placed to consider the individual contribution of governors. Alternatively, this can be undertaken by a small working party or the chairperson. Continual appraisal of governors is considered to be an effective method of achieving engagement and ensuring that efforts are of a sufficient intensity. Some organisations implement a formal process to consider the contributions of governors and this can also extend to a 360-degree review of the board itself incorporating feedback from management and staff as well as other stakeholders.
Request your copy of our charity governance 2020 report.If you would to discuss any of the points further, please contact Heather Wheelhouse, or your usual RSM adviser.