Thursday, 7 November 2013

My View: Lynne Berry, OBE

Lynne Berry OBE, Advisory Board Member of the Financial Times Non Executive Directors' Club and Deputy Chair of the Canal and River Trust, gives us her views on voluntary sector boards, trusteeship and governance.

The voluntary sector can amaze by its ability to bring the most unlikely people together to achieve   extraordinary things. Where else would environmentalists, ex-prisoners, some of the most excluded in society and some of the best connected, people with a passion for music, for waterways, for heritage or health, campaigners for disability rights and sellers of fair-traded craft come together? Underpinning this vitality are people with skills in leadership, strategy, accounting, the law and marketing; professionals with commercial acumen and the capacity to stick to the mission, be accountable and to exploit opportunities whilst engaging stakeholders, volunteers, paid staff, funders and the beneficiaries of the charities. It may be amazing but it certainly isn’t simple.

Being successful in the voluntary sector takes an outstanding group of people who bring their skills and knowledge to the governance and practice of the charities. Many of them work within the sector - more than ¾ of a million people are employed in charities alone. In addition 22.7 million people volunteer, and of these around 580,000 are trustees in UK voluntary organisations.There are actually 945,278 trustee roles in total, this discrepancy is accounted for by the fact that some individuals hold more than one trustee role.

Being on a Charity Board is one of the most satisfying, and frustrating, experiences you can have.  The satisfactions come from playing a part in changing the world for the better, from using skills - perhaps   honed in another sector - to contribute to governance, strategy, accountability and managing risk.  They also come from experiencing leadership in a world that may be very different from the day job, from making connections - both to the powerful and the powerless - and from learning new skills, strategies and tactics that can be taken back into the public and private sectors. 

It’s a fantastic and, more importantly, a useful and energising place to be. It may help you in your career but more importantly it will, if you get it right, help you to use your skills to make a difference to the lives of others.

Trustees from the corporate sector can bring a business analysis that is worth its weight in gold (though sadly it is not tax deductible, unlike donations of the real thing). They bring an obsession with return on investment that, especially when allied with a focus on measuring the social return on investment, can bring huge dividends. They know the value of tangible assets and can be at the heart of developing innovative and effective models for leveraging finance.

In the way a NED at the corporate board table who asks the innocent question can be revered, so too is the trustee who asks 'why do we do it this way?’, especially if they are clear they are not assuming their own way is the most effective.

They also have much to learn. A great Chair will help a new Trustee work out how best to make their contribution, and how to use their expertise. Sometimes the CEO (who will often themselves have worked in at least two of the three sectors – public, private and charitable) may be able to ‘translate’ between the charity world and the trustee’s.  However it’s done, some learning, some clarification of expectations and even some humility will be in order. 

Charity governance can however be extremely frustrating and both the executive and non-executive members often exhibit what I call irritable board syndrome. People employed in charities, especially the Chief Executives, often complain that charity trustees, despite bringing a range of commercial and financial skills, “leave their brains on the hat stands” and support ideas based more on emotion than analysis. The non-execs, i.e. trustees, will often mutter that charities are amateur and more focused on process than outcomes and less interested in routine business analysis than in participation and engagement.

Neither view is true but both are repeated often enough to need some examination.

I think the frustrations result from a misunderstanding of the motivations and expertise of Board members, senior executives and volunteers. They’re also caused by a failure to acknowledge the different models of governance and good practice that people from different sectors carry in their heads.

Having such a variety of people involved in charity governance ought to be a marriage made in heaven - and it can be. It can also create the sort of marital discord that results from a basic and fundamental refusal to see things from the other’s perspective.

This was brought home to me when I recently interviewed a senior executive from a FTSE100 to be a charity trustee. Their employer - one well known for its commitment to CSR – had encouraged them to become a trustee. There was an implicit message: it would be good for their career.

However, when we talked, it was clear there were many gaps in their knowledge of the sector and in addition they weren’t really sure how it might be helpful in what they called ‘the real world’. 

The gaps were largely about governance and regulation but they were also about good practice in intervention strategies. The person didn't know, for example, that the Chief Executive is not a member of the Board. Charity trustees have all the legal responsibilities and duties of governance and CEO’s are not (except in rare circumstances) able to hold these. Certainly in many well functioning, effective boards of large charities the CEO will, in effect and with the support if the Chair, act as if they were part of a unitary board. But they are not. And effective CEO's and Chairs never forget this. As such it's a great experience for an incoming trustee: they will learn what it is like to carry the full responsibilities of governance without the CEO as intermediary.

They also didn’t know that trustees can’t profit from their trust and that the reason the charity wasn’t going to pay them wasn’t because they were mean or couldn’t afford it but that the regulatory framework generally prohibits it.

There was an assumption that the focus on engagement and participation was a distraction from a focus on the bottom line rather than the normal practice that, together with a focus on outcomes and impact, is the goal of many charities. The different emphasis arises from what those with a stake in the organisation expect and want. In the business world, shareholder management requires tangible results in the form of profit and dividends. In the charity world, stakeholder management requires attention to process so that all those who are involved are motivated to maximise the charity’s impact, to invest in resources such as volunteers and to protect a charity’s most valuable asset, its reputation.

So, given the potential for misunderstanding and frustration, is it worth it? Is it useful for an executive on their way to the top in the corporate sector to spend a significant part of their time as a charity trustee? The answer has to be a resounding yes – but only if you develop the skills of bridging between worlds, learning to respect difference and utilising your skills in new fields - experiences that are, after all, particularly helpful for people who are working in new and emerging markets, in customer focused activities or where the management of reputation and risk are vital.

I’ve noticed recently that there has been a focus on gaining charity governance experience by many who are under-represented on the Boards of the corporate sector. The number of women, the spread of ages, the representation of people from minority ethnic groups on the Boards of charities far exceeds those in the FTSE 350, let alone the FTSE 100. It has along way to go but the chances of gaining a position of influence are greater in the voluntary sector for people from all backgrounds. 

What will you learn? That not all charities are the same, that size does matter (and even the largest charity will seem unfeasibly small to someone from the corporate sector and hugely bureaucratic and process bound by an entrepreneur). That charity governance and the demonstration of stakeholder engagement, impact and the management of risk and reputation will complement a focus on business outputs, investment ratios and efficiency. Neither trumps the other, each is vital.  

You might also meet some useful people. Many suggest it’s a good way to meet senior people in different industries. That’s true and you will extend your networks in surprising ways. You’ll learn how to motivate people without financial reward, about reputation management, engagement, accountability and delivery. You'll learn how to measure impact not just profit and return, you'll develop a more nuanced understanding of costs and benefits, and you'll learn to value above all else the experience and views of those who receive what ever services and benefits your charity offers.
You’ll still need to work out how to ensure your bosses value your new experiences as much as you now do. After all, they may still think it’s ‘just a bit of charity work’. You know it’s made you a better leader and it’s up to you to translate that experience back into the day job.  You’ll also know your skills and expertise are needed. Just over one in seven registered charities report they have a shortfall of trustees. You’ll know that as well as giving your skills and expertise, you've developed. And yes, you’ll get a warm glow from making a difference but you’ll also know you’ve become a more skilled, more expert and a more valuable resource yourself.

Lynne Berry OBE
Commission on the Voluntary Sector and Ageing: Chair
Canal and River Trust:  Deputy Chair:
FT NED Advisory Board member

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