Linkages – optimal performing methodology

Section 2.3.5 concluded that the boards’ purpose is to improve the organisation’s performance. In section 2.2.4, it was also revealed that largely the board determines

how they will go about this. It would be rare that a board overseeing a poorly performing organisation could claim good board performance, at least in the long term. Of course, measures of organisation performance may be subjective, and the board is the penultimate arbiter—the ultimate arbiter being members.

To this end, this thesis recommends that the board include indicators of the organisation’s performance. Such inclusion fulfils two purposes:

1. Organisation performance measures should be readily available 2. They provide a good lag indicator of board performance.

As acknowledged in section 2.3.5, an organisation’s performance can be the outcome of many factors, notwithstanding board performance. It is for this reason that the organisation’s performance should not be the only corporate governance performance indicator because there ought to be others.

Furthermore, there is evidence to suggest that where the board integrates its work, it will be better able to perform that work. A board resource that clearly is in short supply is time; it was previously noted that boards meet episodically and, in section 2.3.3, that they often have vague role sets. Shortage of time leads to a situation where boards are often challenged by more than simple tasks, therefore it follows that where these tasks can be integrated this will free up time. For instance, where the fulfilment of one task furthers the performance of another, this will be optimised.

It was noted in section 6.2.3 that boards carry out activities by the use of tools. They use the systems and methods available to them, and this proposed performance indicator’s framework is yet another tool that is available to them. In order to optimise available board time, good sets of tools should be linked to each other and built around the organisation carrying out its work. Section 7.3 dealt more fully with the use of tools; it is suffice to say that this thesis recommends that the board use, where possible, its existing arsenal of tools / methods and systems. In section 7.3 it was argued that the utilisation by the board of the systems and tools available, used in the organisation for measuring performance, will improve the likelihood of board success in establishing its own performance indicators.

In order to be receptive to considering performance, the board must be made open to the possibility that its performance can be improved and that board development initiatives can assist. In chapter five, it was observed that boards develop depending on how long the board has been together, the size of the organisation, and the existence of a continuous improvement culture. It was also noted how difficult the development of performance indicators may be and the reluctance that may be evident in some boards. It is important, therefore, to put the board into a framework where it is receptive to developing and introducing performance indicators.

It was observed in section 3.1.3 that most not-for-profit board members volunteer their time, are conscientious and care very deeply about the mission of the organisation; this in itself bodes well. However, because they are volunteers the exercise must be seen as non-threatening and not unrealistically difficult.

A critical factor in the likelihood of successfully implementing corporate governance performance indicators is the board culture that exists within the particular board. The data suggested that there was a variety of ways that board culture can be manifested and influenced. It was clear that good documentation in terms of constitution, constituent documents and governance documents could set the tone, as discussed in section 7.3. The constitution and regulations of the action research study organisation made it abundantly clear that board performance evaluations and board training were required at Bicycle Victoria Incorporated. This made it clear to all board members that some form of performance evaluation and training would be required; the board were therefore much more open to the task of developing and implementing their own corporate governance performance indicators.

7.5 Chapter summary

Chapter seven has examined the methods for developing corporate governance performance indicators evident in the data collection and concluded that a new framework is needed. The chapter discussed the drivers for the new framework and then described it; central to this new framework is the understanding of the mechanisms that boards use to carry out the roles they themselves have largely determined. This chapter acknowledged that how boards fulfil their roles is highly variable and may be unclear; indeed, this chapter has argued that for many boards it is

more about task fulfilment. In any event, this new framework enables boards to arrive at the critical success factors which influence the carrying out of a particular role set. Key among these is fostering a journey that aims, in the longer term, to lead to improved corporate governance and organisation effectiveness, in essence a just do it

approach is proposed, hence the need for a simple framework. The proposed new model is a simple process model, with sufficient flexibility to enable the board to determine its own roles and critical success factors, and by considering those together with the mechanisms employed to affect them, the board itself assigns valid performance indicators. The next chapter draws some general conclusions, considers the future for corporate governance performance indicators, and considers the limitations of this thesis and how future research can address them.