This document discusses governance best practices for 21st century boards. It advocates that boards act as transformational leaders and strategic assets rather than merely oversight committees. The document recommends that boards focus on tracking a balanced set of performance metrics, engage in regular self-assessments, and recruit board members with the right competencies to provide strategic thinking. It also emphasizes the importance of the partnership between the board and executive team, with the board responsible for setting direction and policy and the executive team responsible for day-to-day management.

1. 21st
Century Governance
as Legacy Leadership
© Signature Resources 2015
Les Wallace, Ph.D.
President, Signature Resources Inc.
November 4, 2015
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2. Leadership Advice
from a Wise Man
“These things happen naturally…
friction, confusion,
underperformance.
Everything else requires leadership.”
Peter Drucker 1909 - 2005
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3. Friction, Confusion as seen from the Board member
Perspective
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4. Governance Process
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5. 21st Century Governance
 Boards as Committees
(‘50s-’60s)
CEO Driven
 Boards as Managers (’60s-’70s)
Operational / Fiduciary
 Boards as Trustees (‘80s-90’s)
Policy and Strategy (John Carver)
21st
Century Boards
Transformational Leaders Governance
as Leadership (Richard Chait)
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6. “Nothing ages faster than
the future.” David Carr
All centuries are different as the
velocity and complexity of change
accelerates. Every generation finds
their traditional models of doing
business tested by new ideas &
demands on leadership.
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“The problem is never how to
get new innovative thoughts
into your mind, but how to get
the old ones out.” Dee Hoc,
Retired CEO Visa Card Executive

7. Legacy Leadership
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Leaders don’t create followers…
they create other leaders.
Transformational leaders…
change the organization to assure relevance.

8. Leading in the 21st Century
From “Heroic” to “Transformational”
“Whereas the heroic leader of the
past knew all, could do all, and
could solve every problem, the
post-heroic leader asks how every
problem can be solved in a way
that develops other people’s
capacity to handle it.”
Charles Handy
A Legacy of 21st Century Leadership

9. A Legacy of 21st Century
Leadership
Legacy Leadership
 Legacy: How capable an organization is to lead
itself versus depend on you!
 Legacy: How well the organization transforms to
stay vibrant, valuable and relevant.
Transforms: not simply manages changes.
Thinking about legacy requires us to move
beyond short term definitions of success.
 To consider a journey from success to
significance.

10. A High Performance
Governance Discipline
As Strategic Advantage
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11. Who is this guy?
 Ideal 21C job: Grandparent!
 University professor / Hospital administrator
 International consulting company…
Touch 20,000 people yr. / Coach 18 Execs / 17 Boards
a year
 50% for-profit / 50% government & not-for-profit
clients
 Security First Bank Board, Counterpart International,
World Future Society Board of Directors
 Joining the board of the Mental Health Center of
Denver
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12. Who is this guy?
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13. 300+ Boards
1,000+ Board Meetings
Over 100 Board Assessments
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The BAD, the frustrated, the disengaged.

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Synthesis of Elements of Governance

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A Board’s Community Promise
 Quality services at or above industry standards.
 Services appropriate for the population and
community needs—we listen, research, identify.
 Access convenient and proactive.
 A financially stable organization able
to withstand downturns.
 Conduct meets organizational standards for integrity
and ethics.

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Balancing Governance & Management
Many new board members see governance as
committee work on steroids.
Community based boards are especially challenged
here because a smaller organization needs
“volunteer leadership” to get things done.

17. “Board” and “Executive Team”
Partnership.
The board has legal and fiduciary responsibility for the
financial health, ethical behavior and quality of services
and products of the organization.
The board also has a responsibility to be a “strategic
asset” to the organization—to assure it’s ongoing
relevance.
These responsibilities require a leadership partnership of
trustees (board) and CEO and executive team.
The executive team executes on organizational
management.
The board sets direction, tracks organizational
performance, realigns focus as necessary, and works as a
partner to help the CEO be as successful as possible.
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18. “Board” and “Executive Team”
Partnership.
As a “strategic asset” the board mix should have the
competencies and experience to oversee and point
direction for a complex organization.
“Think of governance as overseeing a forest rather
than growing a single tree.”
Many boards make the mistake of looking for narrow
specialties for their board such as HR, finance,
marketing, technology, etc.
The 21st
Century Board looks for members who can see
the “forest” of how it is all integrated and helps the
CEO find the “specialists” to execute.
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19. “Board” and “Executive Team”
Partnership.
Boards need to “stay in their lane” and resist the
temptation to manage the organization.
If an organization needs help with technology,
marketing, human resources then a board needs to
help the CEO find capable consultants or volunteers to
help out.
Boards who get in the weeds or manage organizational
projects can rob the organization of the capability to
build it’s own capacity to be successful.
But how do boards know the organization
is really performing at reasonable
standards?
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20. Governance vs. Managerial roles
FUNCTIONS GOVERNING RESPONSIBILITY MANAGEMENT
RESPONSIBILITY
Strategic
Planning
• Set mission & Vision.
• Determine organizational values.
• Identify Service philosophy.
• Set strategic objectives (3-5 yrs).
• Ensure operational objectives are aligned
with and support strategic objectives.
• Approve major org. realignment
• Approve new services / expansion,
cutbacks, partnering.
• ID long range operational &
strategic issues for board.
• Translate strategy into operation.
• Implement change & monitor
progress.
• Provide timely market data.
• Execute.
Finance
/Budget
Audit/Sup.
Committee
• Establish annual budget.
• Approve working capital and capital
investment.
• Approve variations from budget.
• Ensure accounting system to track and
monitor use of funds.
• Ensure regular financial and operational
audits by external sources.
• ID Enterprise Risk Management priorities.
•Conduct feasibility studies.
•Investment analysis.
•Financial forecasts.
•Develop / manage annual budget.
•Prepare Pro-forma budget
statements.
•Justify budget exceptions.
•Complete ERM plans.
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21. Governance vs. Managerial roles
FUNCTIONS GOVERNING RESPONSIBILITY MANAGEMENT
RESPONSIBILITY
Operational
Excellence
• Ensure robust constituent feedback and
evaluation of products / services.
• Ensure adequate quality processes:
planning, evaluation, improvement.
• Approve significant corrective actions &
changes in service profiles.
• Determine preferred organizational
culture.
• Regular review and update of policies.
• Collect constituent input.
• Routinely monitor quality
indicators.
• Special studies and corrective
action as needed.
• Review/update procedures.
• Translate all Board guidance
into procedures and operations.
Government /
Regulatory
Relations
Community
Relations
• Develop strategic alliances and
partnerships.
• Maintain appropriate government,
professional and organizational relations.
• Ambassador for the organization.
• Support professional activities.
• Establish & maintain
governmental., professional &
organizational relations.
• Serve as communication link.
• Represent the organization to
community
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22. Governance vs. Managerial roles
FUNCTIONS GOVERNING RESPONSIBILITY MANAGEMENT
RESPONSIBILITY
Human
Resources
• Evaluate performance/set CEO
objectives.
• Approve org. salary & benefits plans.
• Ensure legal & competitive human
resources policies.
• Ensure a leadership succession plan:
emergency & longer term.
• Hire Executive Team
• Recommend salary ranges.
• Develop/manage HR system &
records.
• Performance management
system.
• Highly engaged corporate
culture.
• Recruitment & retention.
• Management/leadership
development systems.
Board
Development
• New member orientation.
• Commit to in-service & conference
attendance.
• Succession planning for board positions.
• Evaluate Board performance.
• Assess committee functions.
• Assist new member orientation.
• Encourage / arrange training.
• Support in governance
leadership development for
potential and new board
members.
• Assist board evaluation
process.
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23. Partnership: What CEOs Ask Me to
Remind Boards!
 A professional relationship: not bowling, golfing, or skiing buddies.
 Feedback / direction / inquiry should be conducted in an
executive manner not @ church or on the golf course.
 Rules of engagement should exist:
 Commit to face-to-face meetings outside of Board meetings.
 Have an advanced agenda for the conversation.
 Effective communication is specific not general.
 Good feedback is timely!
 “What CEOs Really Think of Their Boards.” HBR (4/2013)
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24. CEO Leadership
and Board Partnership
If the CEO’s not scaring the Board regularly, It’s not a robust
partnership!
© Signature Resources 2015
“But Les Wallace said to scare them!”
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25. Questions
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26. A Board Governance Puzzle:
The Big Pieces
Board
Talent Strategy
Performance
& Risk
Governance
Process
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27. Talent
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• Board composition one of the top five
issues in today’s governance
conversations.
• The board as strategic asset.
• Competency mix.
• Board as part of organizational brand.
• Moving beyond “volunteer” mentality to
“trustee” mentality.

28. Applying Competency Theory
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29. So, What do we do?
a. Profile the ideal board member for where you’re going, not where
you are. Create a desired board make-up profile.
b. Identify a pool of folks who might fit your vision/profile.
c. Engage / screen / develop the pool.
d. Narrow the pool by giving the most capable and committed folks
greater immersion & development.
e. Encourage the best to stand for board election.
Create a “board” dashboard to reflect “existing profile” and to track
pipeline potentials and their levels of engagement and development.
Maintain an engagement with those remaining in the pool who
retain interest.
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30. Governance Competency
Fiscal literacy about large enterprise business.
Service mindset and experience.
Strategic mindset and experience.
Change & organizational transformation
leadership.
Executive oversight—leading organizational
leaders.
Experienced in the integration of technology into
service and operations.
Ethics / integrity: personal behavior,
confidentiality, respect for diversity—ideas and
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31. Governance Youth Movement
(As seen by some)
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32. Pre-self Certification for Board Candidates
 Ten Basic Responsibilities of Nonprofit Boards, 3rd Edition
(Richard T. Ingram, 2015, BoardSource)
 Board Fundamentals: Understanding Roles in Nonprofit
Governance, 2nd
Ed. (Lakey Berit, 2010, BoardSource)
 Principles of 21st Century Governance, (Les Wallace, 2013)
 Owning UP: The 14 Questions Every Board Member Needs
to Ask (Ram Charan, 2009)
 Governance as Leadership: Reframing the Work of
Nonprofit Boards (Richard Chait, et. al., 2005)
 Culture of Inquiry: Healthy Debate in the Boardroom (PDF)
(BoardSource, 2007)
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33. Strategy
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 Board as strategic asset capable with:
• Business environment sensing / tracking.
• Strategic thinking and Visioning.
• Transformational leadership.
• Innovative thinking.
• Risk management.
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34. 70% Strategy
Board As Strategic Asset
Board Surveys Tell Us…
“Not enough time on strategy.”
“Board as strategic asset.”
“Too much time looking into the
rear view mirror.”
“Lack a strategic orientation.”
“Building a Forward Looking Board,” McKinsey
Quarterly (Feb. 2014).
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35. Strategy progress updates.
Business environment discussions.
New models / benchmarking.
Tracking patient & family value shifts in healthcare.
Developing partnerships / affiliations.
Governance succession and development.
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36. 21st Century Leadership:
Strategic Thinking
Strategic Planning: “What is our
desired business position and how must
we change to get there?”
Strategic Thinking: “How might we
re-design our business to leverage leading
edge marketplace and business models?”
 Identifying an alternative future position
 Anticipating opportunity and threats
 Setting change priorities
 Designing change pathways
 Evolving / adapting systems
 Outlining formal plans
 Three-five year cycle
 Course corrections regularly
 Challenging core business assumptions
 Re-inventing the business
 Exploration of new paradigms
 Sponsoring paradigm shifts/pilot tests
 Bold innovative movement
 Confirming stakeholder value shifts
 Projecting / anticipating lifecycles of
products, services, organizational model
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37. Performance and Risk
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• Consistent corporate performance:
$, quality, outcome impact.
• Tracking a comprehensive mix of
metrics.
• Active “enterprise risk
management” tracking at board
level.
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38. Competent
Performance Oversight:
Uses a Balanced Scorecard/Measures Dashboard
 Monitoring a set of “indicators” across the
“balance” of the organization’s work.
 Distilling the “cattle call” of numbers and
progress reports from management into a
visual report card.
“Balanced Scorecard: Measures that Drive
Performance,” Kaplan/Norton HBR 2/1/2000.
Research on Malcolm Baldridge Award Winners
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39. Competent Performance Oversight:
The Balanced Scorecard/Measures Dashboard
Business Performance Client / Patient Performance Employee Engagement /
Organizational Culture
 Budget performance
 Capital investments
 Operating reserve
 Income mix
Robert Kaplan, Balanced Scorecard
 Constituent value tracking
 Client satisfaction
 Quality measures
 Outcome measures
Community brand survey
Harry Beckwith, Selling the Invisible
 Employee climate survey
 Employee retention
 Employee development
 Leadership development
 Talent succession
 Employee ideas adopted
Marcus Buckingham, First, Break all the
Rules
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Other categories are common: “Learning and Growth,”
“Internal Processes,” “Environmental Citizenship.”
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40. Keeping the right “KPIs” in
Sight
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What else does your board track?

41. Governance Process
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• Informed, efficient.
• Prominent investment in board
development.
• Annual self assessments and learning
plans: annual assessments a 21st
Century
Benchmark!
• Officer development.
• Board talent refresh discussion and plans.

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Self Assessment Annually
 Once every four years or so conduct a full
scope, deep dive assessment.
 In between years conduct “micro” assessments
of single governance elements.
 5 Common assessment methods:
• At end of every meeting.
• Annual single focus assessment.
• Full spectrum assessment.
• Customized telephone survey.
• Board member to member feedback.

43. Reflection on
Governance Process
Board
Competency &
Recruitment
Governance
Practices:
Meetings
Committees
Strategic
Focus /
Innovation
Performance
Tracking
Exec Team /
Board
Partnership
Assessment
& Development
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44. Questions?
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45. What Points will you Take Back to
Your Team?
Your Board?
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46. Les Wallace, Ph.D.
President, Signature Resources Inc.
Les@signatureresources.com
 Signature Resources is a 40 person consulting consortium providing governance and
leadership strategy to public and private sector enterprise globally through two domestic
and three international offices.
 Dr. Wallace is recognized for tracking business environment and workplace trends and
their impact upon business and government. His publications have appeared in
Leadership Excellence, Personnel Journal, Credit Union Management, Public
Management, and Nation's Business as well as numerous research and conference
proceedings. His latest book, co-authored with Dr. Jim Trinka, A Legacy of 21st
Century
Leadership, outlines the leadership organizations need in a global, fast moving business
environment. His governance workbook, 21st
Century Governance is used by 2000 CEOs
and Board members.
 Les is a frequent consultant and speaker on issues of organizational transformation and
leadership, employee engagement, strategic thinking and board of directors development
and governance. His clients include Fortune 100 businesses, Government agencies, and
not-for-profit organizations world-wide. Dr. Wallace is also the 9Minute Mentor, a series of
short video tutorials on governance.
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