How working boards work- a working paper

There are a number of studies that classify governing boards into different types. Some classifications are based on management form. Some are based on the form in which authority is exercised. Some are based on the form of institution that the board serves. Most of these classifications include "working boards" but few offer a clear definition of them. Even those that do attempt to define this type of board acknowledge that little is known about how they actually function. This study examines a small public not-for-profit institution with a "working board" to determine how that type of board functions, where it succeeds and where it fails, and how it is different from other types of boards. hep.oise.utoronto.ca, volume 1, issue 1, 2004, pp.78-110. How working boards work – a working paper 79 Introduction IN 2001 THREE PROFESSORS from the University of Toronto were asked to conduct an external evaluation of the Canadian Centre for Language Benchmarks (Lam, Cumming, and Lang, 2001). The purposes of the evaluation were accountability and program development. The CCLB is a small, not-for-profit, independently incorporated organisation that provides a variety of services that have to do mainly with measuring facility in the English language. In terms of accountability, the CCLB answers to a board of directors and an executive council. Indirectly, the CCLB is also accountable to its principal sources of funding: the Federal government and several provincial governments that, in effect, purchase its services. Program development for the CCLB does not mirror its responsibilities for accountability. The array of clients served by the CCLB is very broad, varied, and highly dispersed. Implicit in the agenda for the evaluation was an assumption, if not an outright recognition, that the CCLB's governance structure was being stretched between two different spheres of responsibility. Because of the strain on governance, the Centre often found itself in an organisational dilemma as management and staff had to choose among many priorities that, given the CCLB's small size, were competing for scarce resources. Because priorities were many and resources scarce, some members of the CCLB board were involved directly in the organisation's management and administration. Some aspects of the board's committee structure directly mirrored the administrative organisation of the CCLB as professional staff reported to chairs of board committees as well as to the CCLB's executive director. To the extent that the members of the CCLB board who were involved in management also represented constituencies that the CCLB served, two outcomes were assumed. They either served accountability by bringing the CCLB very close to its constituencies or circumvented accountability by favouring certain constituencies with "insider" status. Whether the CCLB was performing well or poorly, the structure of its board had a lot to do with it. When the CCLB was incorporated no thought was given to whether or not its board either should or at some time would shift into a mode of operation that we now associate with the terms "working board" or "line board." Even if prior thought had been given to that question, few answers would have been found because, among the several models of governing boards, working boards and line boards are the two types about which the least is known. By using the evaluation of the CCLB as a case study, we may come to know more about how working boards work. Types of Boards: A Taxonomy of Function GOVERNING BOARDS IN the public sector may be classified in at least three different ways. The first and perhaps most common classification is to identify boards by the types of institution that they serve. Thus a board might be described as a university board or a not-for-profit board. Another basis for identification centres on what boards do and how they exercise their authority. Examples of boards that are defined this way are a governing board or a working board. The third definition is based hep.oise.utoronto.ca, volume 1, issue 1, 2004, pp.78-110. How working boards work – a working paper 80 on a board’s relationship to management, for example, an administrative board or a management board. This taxonomy is not rigid and exclusive, as would be the case in botany in which each plant species can occupy only one classification. Instead, as various classification schemes or forms of governance have evolved, there has tended to be overlap between them. For example working boards and line boards, which are the principal topics for this discussion, have some times been characterized by what they do and how they do it, and at other times by their relationships to management. In terms of a case study, then, it is important to determine generically to which class of governing board the case belongs, or, if it doesn’t, whether it is an anomaly or some sort of new form of governance. Of course, it is also possible that previous classifications were inaccurate and required further examination. Corporate Forms BOARDS MAY BE DIFFERENTIATED by the corporate forms that their respective organisations take (Bowen, 1994; Carver, 1990). This template quickly leads to a distinction between profit and nonprofit boards (Bowen, 1994). For profit boards may be subdivided further into public (publicly traded) and private (not traded). Nonprofit boards may be subdivided further into boards of public organizations that relate directly to a government or government agency, and private boards that oversee organisations that, other than being sanctioned by government, have no direct connection to a government. There are some “in between” templates. For example, Carver (1990) identified a third category -governmental boards – that seems to occupy a position somewhere a not-for-profit public board and a not-for-profit private board. In this case the board is delegated by government to oversee other organizations in which government has an interest but which the government does not necessarily support. This arrangement is sometimes called “management by contract” (Rekila, 1995; Lang, 2002). Another “in between” type of institution may be public and not-for-profit, but operates in a market that is created and regulated by government. This would, for example, be the status of public schools under a voucher system, or of public colleges and universities that are funded partially by tuition fees that government regulates. Profit boards govern public or private business corporations as stockholder representatives Their main responsibility is to create wealth for the investors by increasing share value and/or distributing. Public nonprofit boards govern corporations chartered to serve charitable or governmental interests. Their main responsibility is to build and maintain an effective organisation within the charter’s purpose. There is no stock ownership and therefore no distribution of profit. Any surpluses must be re-capitalized. These organizations receive a large proportion of revenue from funding and donations rather than from sales of products or taxation. Private nonprofit boards are similar to public nonprofit boards but serve charitable non-governmental interests. Governmental boards govern quasi-governmental organizations like water or health authorities and fully governmental organizations, like municipalities and school boards. hep.oise.utoronto.ca, volume 1, issue 1, 2004, pp.78-110. How working boards work – a working paper 81 They have no profit distribution, and they derive the largest portion of their revenue from taxation and/or user fees. Action and Authority Forms ANOTHER WAY OF THINKING about boards is to ask about their authority and how they exercise their authority. (Carver, 1990; Paquet, Ralston, and Cardinal, 1989). Seen from this perspective, boards can be classified into a different set of groups. Governing boards are legal entities and authorities for incorporated organizations whose authority is exceeded only by their owners or the state. Governing boards are at the top of the organisational pyramid and have total authority and accountability for all aspects of the organisations' activity. Line boards derive their powers from the organisation’s ultimate authoritative body, which in the case of public institutions is usually the state. Line boards may establish policy and oversee subordinates. They are not positioned at the top of the organization, but function lower in the organisational hierarchy usually in lieu of a single manager. Although line boards are described in the literature of governance (Carver, 1990) not much is known about how they actually function and how or whether they differ from working boards. They certainly differ in terms of organisational location because a working board could also be a governing board at the peak of the organisation. At lower levels in an organisation, however, working boards look a lot like line boards, and vice versa. Advisory boards are functionally like standing committees, but without delegated authority. They are formed and empowered by a host organisation, and at the discretion of the organization. They are not legally required. Their advice may or may not be taken and acted on. By this definition advisory boards usually co-exist with some other form of board that is superior to it in terms of authority. Management Forms GOVERNING BOARDS CAN be also be classified in terms of their relationship to management of their respective organisations (Paquet, Ralston, and Cardinal, 1989). Working Boards are perhaps the most difficult to define. They can be understood conceptually but are problematic in practice. They tend to be associated with organizations that have few or even no full-time staff. Members of working boards perform operational and administrative tasks. In that sense they are like line boards. Administrative Boards are also closely involved in management. They set priorities for staff and rev