Real vs. Incidental DEI and an Overlooked Role for Non-Profit Boards

Independent Board Director Diversity

There's been lots of talk recently about boards of director diversity. We can debate the feasibility of boards trying to check the box for every subatomic unit into which society is divided today, but there's little doubt that diversity of skills and perspectives is relevant to strong board performance.

Many private company boards are long on executive, owner, and investor directors, and short on independent directors who bring missing skills and social perspectives. Yet the people who can fill many of these gaps are necessarily mid-career, and while they may bring age, gender, community, and skill perspectives that will enhance board performance, their board readiness is limited. In many cases, their daily professional focus is on tactical execution, and they likely operate with limited exposure to and engagement with the C Suite.

Unrealistic Expectations for Director Effectiveness

To drop them onto a board and ask them to oversee strategy and management several levels above their daily engagement is to ask them to fail. The only folks who win in that case are board recruiters who collect placement fees. In fact, sadly, placing unprepared directors in these roles may well reinforce unconscious biases.

Therefore, to improve paid board performance with functional and effective diversity, we need a source of independent directors who bring their domain skills and personal perspectives along with an understanding of excellent and effective individual and aggregate board performance.

While programs like NACD (National Association of Corporate Directors) 's Directorship? Certification provide an important baseline learning opportunity and meaningful credential, only actual on-the-job training as an independent director really builds the muscle. And further, only OJT training on a well-run board will meaningfully prepare a director to fully execute their oversight functions while providing their complementary diverse perspectives.

It's an unusual company that's willing to offer its board as a "farm league," but it's an opportunity for non-profits to contribute to the community in a dimension that compliments their organizational mission.

How Non-Profit Boards Can Develop Directors

Most non-profits work to serve some subset of their community. They are mission/cause-driven with a tight focus on the organization's purpose.

Their boards, therefore, often include a number of independent directors pulled from the community and self-selected for their passion for the mission and/or ability to contribute materially to the organization's development targets.

That challenges non-profit board effectiveness because it limits the pool from which directors are drawn, and often overlooks important skills which are ancillary to the direct mission but important to the overall impact. So non-profits, like for-profit private and public companies, stand to benefit from adding diverse independent directors to their boards.

Doing so, however, requires an organizational commitment and a strong focus on the role and function of the Nomination and Governance committee. Individual director and board evaluations, along with term limits on directorship are important tools. A rigorously implemented board skills matrix will help to identify gaps to be filled, and creative recruiting can identify potential directors who fill the gaps and would benefit from some board experience in preparation for later potential roles.

That means that strong non-profits can simultaneously model great governance, improve their performance, and provide board development opportunities to prepare mid-career directors for expanded later responsibility.

Obviously, this hinges on the non-profit energetically modeling governance and board best practices - to identify strategic gaps, recruit appropriate directors, onboard and mentor them to increase the likelihood of success, and imbue them with a deep understanding of superb board function and the role and responsibilities of oversight.

Non-profit board service must offer clear value for potential directors who are often leading busy professional and personal lives, working long hours, caring for children and aging parents, pursuing advanced degrees through executive programs, and more. There's got to be an explicit and meaningful WIFM (what's in it for me) value proposition for folks who may never have considered directorship.

Why It's Great for the Non-Profits Themselves

Having an exceptional board of directors that performs its oversight role extraordinarily well is obviously an important return on the governance effort and the creative approach. But non-profits stand to gain even more.

If they explicitly position their organization and board service as a professional development opportunity, they stand to differentiate themselves, attract more diverse director candidates, and serve an important public role. They may even find they qualify for grants and receive donations tied to that board development function which they wouldn't have otherwise.

The board's contract, therefore, becomes richer. Common board service offers a simple bargain - give us your time and your money in exchange for a good feeling (and maybe create some business connections) about what you've done. The enhanced agreement asks that you bring us your important skills and perspectives, and work diligently as a member of our board. In exchange, we'll help you become a fantastic director which will help you in your career - and you'll be making an important difference in the meantime as you support our important work.

There's something to love for everyone. The non-profits benefit from diverse directors with important skills and a compelling and differentiating angle. Donors and foundations will love the effort. All directors will benefit from a focus on board excellence. Rising independent directors will develop skills that will help them as business managers and leaders, and in future directorship roles. And companies seeking to add diverse candidates who can contribute meaningfully to the board's function will value quality candidates.

A Role for Non-Profits Who Are Willing to Do the Work

Many non-profits are comfortable operating very casually with a board of agreeable and kind people from the community. They do lots of great work and make a difference for many people in their particular areas of focus.

Some non-profits could do much more. By committing to governance excellence, and to developing diverse directors, they can elevate their performance (and the organization's), provide professional development opportunities, and contribute to the business community as a whole.