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One of the most important elements of a not-for-profit organization is the leadership and governance infrastructure, especially in light of current issues involving ethics, conflicts of interest, financial stewardship and management oversight practices. When McKinsey and Company conducted a governance study in 2002, a number important issues were identified:
- Self-Evaluation--associations primarily undertake self-evaluation of the Board, of themselves, of their meetings. While self-evaluation is a definite step in the right direction, associations should have some external evaluation done periodically
- Turnover--a significant problem is the lack of turnover on the board. Many non-profit organizations avoid this issue through such measures as term limits. Some non-profits may even have too much turnover, and lose some Board knowledge and corporate memory as a result. It is critically important to include reasonable turnover provisions in bylaws and to have strategies to recruit and retain Board members.
- Conflicts of Interest--some association CEOs are still too involved in selecting Board members. This can create insider-related problems. In addition, association Boards must address a wide range of other conflict of interest issues. Some have made progress, but many have not. All associations and non-profits should have a clear conflict of interest policy.
- Micro-Management--because of the difficulty in evaluating performance of the organization and management, Boards are leaning to micro-management. This is not an effective use of Board members.
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EAI’s executives can conduct a comprehensive review of an organization's documents and current practices, then develop governance recommendations to the board of directors. Specifically, EAI can provide the following assistance:
- Evaluate bylaws and other governance documents for alignment
- Determine if the current governance system is agile and responsive to changing member needs and market conditions
- Strengthen Board member understanding of governance
- Recommend new governance structures
- Evaluate Board composition
- Examine all operating functions of the Board
- Evaluate the nominating process and suggest improvements
- Evaluate the Board Committee structure and suggest improvements
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