There’s a Difference
Boards of directors of member-based organizations (MBOs) have more in common with each other than they do with corporate boards. While many MBOs use practices at corporate boards as models of best practice, much care and evaluation must be undertaken before adopting such practices.
MBOs consist or organizations that have a membership base. They can be:
- co-ops
- labour unions
- non-profit
- community organizations
- Even your strata council or Neighbourhood Watch is an MBO
Each of these types of organization has much in common and can benefit from a clear understanding of how to apply governance rules to make themselves more effective, to engage their members and to succeed.
An MBO may simply be a group of people who come together to accomplish some shared purpose. Lots of organizations remain at this volunteer stage — growth is not a necessary or even a desirable process for every organization. However, other MBOs may need part- or full-time staff to carry out the work of the organization. The founders may continue to work alongside the staff in a supplementary role, continuing to carry out practical tasks, and probably not even thinking of themselves as a “board.”
The Role of Leadership
In MBOs, as in the corporate world, directors must act in the best interest of the organization. Those best interests must be defined and agreed upon. In the corporate world, directors are statutorily mandated to act in the best interests of the corporation. There is legal precedent that sets out what behaviour is expected of corporate directors. With any corporate board of directors there is a principle of oversight of management. The board is charged with review of management’s actions to determine how the organization is performing. Often the review will be compared to what the plans are for the firm.
In even with the most grass-roots organization, it is good to engage in some sort of annual planning process. As the organization has more volunteers and fewer staff, the planning process will be less elaborate. It is wise for the governance of the organization to at least have a budget predicting sources of income and expenditure. In more sophisticated organizations, an elaborate business plan may be developed by management and used by the board to gauge the performance of the MBO. Also, try to identify possible reasons why there might be a deviation from the predictions.
No matter how directors are selected and what political divisions may exist in the quest to be a representative, those must be put aside in order to work together to accomplish the common goals of the organization.