In the second chapter of his book On Board, John Tusa describes his experience on the board of American Public Radio, which he joined in 1991. Ken Dayton, American Public Radio’s first chairman, had a passion for “governance, good governance and the improvement of governance in what Americans call the ‘Not for Profit’ (NfP) sector,” writes Tusa.
A major question arises: if an organization’s governance is good, will this alone assure success in its performance? In the 1990s, American Public Radio grew from 19 full-time employees and some $3 million in revenues to more than 40 full-time employees and $20 million in revenues. After adopting a new mission, it announced the internationalization of its programming and purpose by changing its name to Public Radio International (PRI). It amended its charter to become a “publisher” of programming, not just a distributor. Funds were raised to initiate ground-breaking programs such as The World (international news) in cooperation with BBC World Service, Classical 24, (a 24-hour rolling classical music stream), and the weekly radio program, This American Life. Each development represented a major advance in a pioneering decade.
In retrospect, that looks like consistent progress in line with the original mission and purposes. I also recall hiccoughs, frustrations and delays and a board driven by purpose and professionalism. Was this progress achieved by the rigorous governance principles defined and implemented by Ken Dayton and his successors, Bill Dietel, Roger Hale and others? Did good governance deliver business success? Is it a sufficient condition for doing so? Of and by itself, it is unprovable. I do not believe that the transformation of a tiny Midwestern radio network into a major player on the US national media scene would have happened without a serious, rigorous foundation in the way it was governed. Governance supported and supervised management, it was as simple as that. It needed thought, belief and work and was striking to witness in action. Throughout, I felt that I was witnessing a specifically American approach to board governance.
By the late 1980s, leaders of not-for-profits across the United States had begun to notice that something special was happening in Minnesota —striking new ideas about governance for their world. Ken Dayton was acquiring a wide reputation as a guru on the subject. In 1987, The Independent Sector, a coalition of 700 national non-profit organizations, published his seminal paper, “Governance is Governance“. Over the years, it became one of their most popular publications. In just a dozen pages, Dayton set out the accumulated wisdom and experience of a lifetime in the governance of both business corporations and non-profits. He insisted governance was not to be confused with management and that “governance in the not-for-profit sector is absolutely identical to governance in the for-profit sector.” It needed a businessman to put the point so strongly—both propositions were original and unfashionable.
First, Dayton warned of deficiencies in not-for-profit boards, where either the paid executive surrendered its powers to the chair, or where chairs and boards, volunteers one and all, gladly usurped executive responsibilities. “Why,” he raged, “do so many corporate directors grow horns when they become trustees? Why do they intrude on what should be management decisions?” His answer was that a vacuum of executive authority would always be filled by someone, and at a cost: “Any institution—for-profit or not-for-profit—that has an all-powerful Chair or a weak CEO is an institution in trouble or surely is one headed for trouble.”
Dayton insisted on the separation of powers and authority between chair and CEO. If the roles were combined, as often they were, the result would be “dictatorship”. The correct relationship would be one where “the Chair becomes the CEO’s partner in making a great board”. Always a person to practice what he preached, Ken added from his own experience: “I came to the conclusion that the only role of a trustee of the Minnesota Orchestral Association was the care and feeding of the Music Director.” Few would dare to put it in such an apparently self-effacing way.
In his paper, Dayton expected the chair to define a “position description” of the CEO, adding that the executive should also spell out what he or she expected of the board! “Pretty gutsy,” commented Dayton, “but I’m a firm believer in getting my principles and convictions out on the table right from the very start.” A stickler for hard thinking about the size, age, composition, diversity and committee structure of the board, Dayton insisted on rotation of board members and chairs after stated periods of service: “There is no such thing as the indispensable person, particularly the indispensable volunteer.”
Dayton concluded where he began: “Governance is governance and management is management and the difference between the two must be clearly understood and accepted.” And finally, his unifying call: “Governance is governance no matter what the institution—be it government, corporation or arts institution.” It reminded NfP boards that their conduct had to be on a level with those of major corporations, while corporations were reminded that their governance was not of itself better than that of the NfPs. Making money or not making money was not the issue or a defining characteristic. Only someone who had worked and served at the highest levels in both business and the arts could state such an unfashionable truth with such clarity and authority.
Dayton had a special warning for executives in the non-profit sector, those who said they didn’t want a board “looking over my shoulder, second-guessing me, reviewing my performance.” To any such executive, he advised, “If you really want to build that institution into a dynamic force in society, they can do it so much more effectively if you have a dynamic, effective board.” Supervision, review and challenge were essential elements in the path to good performance.
Ken Dayton’s observations have a pleasing directness and a deceptive simplicity. His advice has no theory in it, no abstractions, just an attractive clarity of thought which should compel acceptance. Yet, over the years, the evidence is that even with the best of advice available to them, many American NfP boards still struggle to put it into practice.
Excerpt from On Board: The Insider’s Guide to Surviving Life in the Boardroom by John Tusa. Reprinted by permission of the publisher, Bloomsbury Publishing.