Forbes has an opinion piece on board governance in the corporate world, calling into question Apple’s board appointment of Google’s CEO, while Steve Jobs is already a powerful force on Disney’s board. In theory, the article says, boards are supposed to be uniquely focused on the interests of a corporation’s shareholders, not playing multiple games at once.
Says one expert on the corporate boards:
“When executives take outside board seats at firms where they do business or where they hope to do business, they raise the odds that these potential conflicts will ripen into real ones…. If they do ripen, the only ways to mitigate these conflicts are to (1) step back from considering certain issues in the boardroom or (2) step down from the board.”
In corporate America, the issue of interlocking boards raises questions about free markets and true competition (see a more academic exploration of the issues here). In the nonprofit world, the challenge of interlocking boards is less about competition, and more about mission and public trust.
I’m sure that if most communities did an inventory of all of their nonprofit board members over the past decade, they would see a short list of business and community leaders shuffling between multiple nonprofits. And while the shared governance might resonate with my post last week about the giant mushroom (we’re all connected, so why shouldn’t our boards be?), it’s well worth some thoughtful analysis.
What is the utility and the hidden cost of cycling the same board members among many nonprofits, either through concurrent or sequential terms? Does the short list of active board members in any community limit or expand the health and innovation of the organization’s being governed? And even if it’s a system that can’t be reversed, how might we leverage that system for better results (perhaps more focused and sustained board training for those ”high-end” governance wonks)?
The Forbes piece concludes by suggesting that good results may supercede concerns about policy and protocol violations, and that interlocking boards may indeed offer more good than ill:
In this case, it may be true that having directors who are really smart and deeply connected may make more sense than adhering to the strictest notions of independence. The jury is still out on this one, of course, but smart business may very well trump good governance.
In other words, perhaps abandoning our ethics, standards, and responsibility to shareholders is okay if we can turn a profit.
Of course not-for-profits need board representation by those individuals who are passionately committed first and foremost to their institution, but in my experience successful not-for-profits are ones who embrace meaningful partnerships within the community. Multitasking board members can provide valuable insight when it comes to forging these partnerships.
And, as we all know, the board member who is only on the board of your institution rarely leaves his/her individual interests at the door. How many Broadway producers are on the boards of regional theaters? At my organization we have parents on our board who are extremely committed, but with laser-focused sight on our youth program, rather than the health of the center as a whole. The best part of having a board is that these passionate, directed interests are engaged by the group.
This, rather than multitasking board members, seems to be at the heart of the Google/Apple conundrum.