In the most recent Conference Board Review (www.tcbreview.com) Roger Martin of the Rotman School of Management states: "Neither inside (management) nor outside (shareholder) directors can adequately represent shareholder interests."
Let's paraphrase and apply this statement singularly to nonprofit boards: "directors can not adequately represent the public's interest". Martin, again paraphrasing, goes on to say, that the job of directors is to ensure that management does not use their preferential access to information to exploit the public.
But Martin says directors cannot really perform their job "owing to problems with capabilities, incentives, and selection". One contributing problem: "no matter how dedicated the individuals involved, they will be largely incapable of achieving what we have asked of them. Independent directors can't know as much as management does about the operations of the firm ... management ... has the capacity to restrict access to infromation it doesn't want independent directors to see."
The best an independent director can do is to bring to bring broad expertise and insight from other markets that management can utilize, if it so desires. Towards the end of the article, Martin states: "good governance is something companies tend to have when they don't need it and lack when they do."
I fear that Martin may be correct in his statement. While I believe that solid goals with solid stats and good illustrative narrative is a good solution, this only addresses the information gap, not the capability gap. If Martin is correct, might we not ask: "what's the point with boards?"
Of course the alternative is to ask: what do we need to do to ensure boards do best! And, can we do a better job of recruiting and seating board members who are "shovel ready".