Most museums are governed by boards. There is an extensive literature on governance in the nonprofit arena but much more prominence is given to the literature concerning for profits. This can lead to the deceptive conclusion that nonprofits need to learn from the commercial world how to run themselves in an effective manner; indeed it is often said that nonprofits, like government agencies, need to be more business like!
What distinguishes exemplary boards isn’t just following key structural tactics, but rather creating robust, effective social systems. The key to generating such a team includes creating a climate of trust and candor, fostering a culture of open dissent, utilizing a fluid portfolio of roles, ensuring individual accountability, and evaluating the board’s performanceâ€¦ It’s not rules and regulations. It’s the way people work together.
Jeffrey Sonnenfeld 2002
In this essay little distinction is made between forprofits and nonprofits as to what constitutes effective governance: it is assumed that the same general principles apply to all boards. However, a scroll through the pages of the Nonprofit Boards and Governance Review website will reveal that nonprofit boards can have very deep insights into effective governance. As Peter Drucker once said, forprofits have a lot to learn from nonprofits.
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Two theories seek to explain the behaviour, actual and desired, of boards and the purpose of governance. They are agency theory and resource dependency theory. A recent special issue of the Academy of Management Review (July 2003) was devoted to governance; the issue is introduced by Catherine M. Daily of Indiana University and colleagues. They define governance as “the determination of the broad uses to which organizational resources will be deployed and the resolution of conflicts among the myriad participants in organizations”.
Agency theory encompasses the proposition that once entities or firms came to be managed by persons other than the owners a potential conflict exists between the self-interest of the manager and the interests of the shareholders; the associated notion is that bureaucrats and officials act in their own self-interest, actions harmful in situations concerning public goods, one of the tenets of public choice theory (see the footnote for Leadership, Management and Governance).
Of resource dependence theory Dailey and colleagues say, “[it] provides a theoretical foundation for directors’ resource role. Proponents of this theory address board members’ contributions as boundary spanners of the organization and its environment.” 
Daily and colleagues report that there is no support from meta analysis for the proposition that firm financial performance is related to agency prescribed independence of directors, separation of the roles of CEO and Chair (or performance pay). Other researchers argue strongly that mere oversight and monitoring of the operations by the Board can be considered coercive, encourage a lack of trust, reduce motivation and effort and lead to feelings of alienation, frustration at failure to recognise achievement and ultimately poorer firm performance.  “Although control is, indeed, necessary in all organizations, a preoccupation with control obscures an organization’s fundamental source of advantage over markets.” 
Resource dependency theory considers the board as a group of individuals who need to function effectively together, to contribute resources of knowledge and influence to benefit the enterprise. Concern is with the role of the Chair, with the building of relationships and the quality of the conversations between the members of the board. And attention is paid to what actually happens at board meetings. The board is seen as a forum for the exploration of important ideas: it is axiomatic that the executive are respected for their contribution and that trust has to be built for the show to work. One commentator said, “The difference between an effective and an ineffective board is often evidenced by a difference in the openness of directors and CEO’s to each other’s influence” 
In successful enterprises, most directors work out a satisfactory relationship with the CEO and each other, feel free during the board meeting to say whatever they want to say, consider that participating on boards provides opportunities to learn and also provides challenges . However, there are some fascinating puzzles:
* Board members are rarely openly critical during board meetings even when they are dissatisfied. They criticize individually and diplomatically.
* For the most part, members do not discuss their accountability among themselves. The CEO’s control their boards by defining the agenda, and such control is rarely discussable during the meeting.
* The directors do not have sufficient power to carry out their defined responsibilities and they permit this condition to continue. In the actual cases reported the directors were slow in confronting the issues; and when they did, they did so first outside the board meetings and later brought the discussions inside.
Cathedral, Zocalo, Mexico City (More)Management theorist Chris Argyris, pioneer in the study of what people say they do (espoused theories) and what they actually do (theories in use) and of the need for even smart people to learn how to learn, observes of these findings, “there may be aboveground and underground dynamics that go on in board meetings. The aboveground dynamics are used to deal with the routine issues. The underground dynamics are activated whenever the business results are hot and threatening. Everyone knows the underground dynamics; they are taken for granted. Also taken for granted are the facts that the underground dynamics (during the meeting) are undiscussable, and that their undiscussability also is undisscussable.” 
Dr Phillip M Nowlen  said, “Board members are not of one mind regarding what to do about the issues that contend for attention, much less in what order to do it. The preparation and seasoning of potential museum board members through service to a variety of cultural institutions over many years presupposes a world of local money, family influence and geographic attachment that has been greatly diminished. The “new board member” is not as likely to have experience in raising or giving large sums. Many board members liken a museum’s troubles to a corporate “turnâ€‘around” situation calling for strong management, cost reduction and a few heads to roll for good measure.
Through conversations we see how the board works to sound out ideas, encourage debate and examine ideas, how conflict encourages development of appropriate strategies and (when needed) corporate turnaround. From a consideration of such issues at the highest level Irving Janis, noting the frequent poor levels of communication and the often awful consequences, developed what has become known as “groupthink“. Among the numerous historical instances are the Pearl Harbour attack in 1942, the Bay of Pigs invasion of Cuba and the Cuban Missile Crisis and the failure of the Challenger Shuttle. 
Paul Goldberger  observed, “As J. Carter Brown puts it, “. . . a museum is a delicate ecology. It needs to serve intellectual and aesthetic goals, and it can’t be put to the paradigm of another field. When you get a roomful of trustees who are used to getting their way by pounding the table in their own board rooms it gets very difficult.”
Groupthink is “a mode of thinking that people engage in when they are deeply involved in a cohesive group, when the members’ strivings for unanimity override their motivation to realistically appraise alternative courses of action.” The events concerning the intervention in Afghanistan and Iraq and the way in which intelligence information was managed in respect of those two events are current examples of groupthink at the highest level.
Commenting on these kinds of issues, especially as they relate to the Vietnam War, the leaking of the secret US Administration documents which became known as the Pentagon Papers and the role of President Nixon, Daniel Ellsberg  observed that Presidents believed they knew what was best for U.S. interests – underlying U.S. policy at that time was a belief that America knew what was best for other countries – and didn’t want to believe what their “best and brightest” advisors had told them. More than that, “people do things the President wants to do even though it’s wrong, and the President can be wrong”.
It is clear that boards are most effective when they learn to work together to focus on major issues through well managed conversations. They are least effective when they merely monitor performance or focus on financial reports.
Many dysfunctions of boards are due to people remaining silent or going along with, even presenting views they believe will be welcomed by, those in charge; this is as common in the most powerful political bodies as in small bureaucracies. And then there is the agenda, crafted often to conform with management’s concerns. And the perceived dominance of money. One colleague has observed of a museum board he is on, “We get bogged down in the numbers and the Health and Safety Reports and we never get to talk about what is really important.”
Boards of museums (and other nonprofits) are groups of people: there is no evidence that the way they behave is any different from the way other boards, indeed any other group of people, behave. Unless the board is cohesive, has a clear idea of both why it is there and what it supposed to achieve, it is unlikely to succeed. Unfortunately, many people appointed to boards, like those promoted to senior positions, have their own agendas and tend to be loners, not people who value the contributions of others. 
Above all, honesty is essential, disagreement must be sought and examined for productive solutions and the past understood. In decision-making groups from the highest levels of government and business to the seemingly mundane level of the school board and including the boards of museums these behaviours lead every day to mistakes and sometimes disasters and death. We can wonder if these lessons are deliberately overlooked, whether we are learning nothing from the past!
Valencia, Catalunya (More)In all boards the Chair plays the same pivotal role that leaders play in all groups. Members have to be trusting of each other and focus on agreed and shared goals. Boards are there to see things get done, not do them. Nonprofits are effective when executives work through their board : the board chair is there to actively encourage that! We need people appointed to boards who are prepared to work to achieve a genuine understanding of the business and support the enterprise from attending openings to discussing important issues in detail. In the very best organizations people with the greatest responsibility might make less than 10 decisions a year. We don’t need reform driven by decisions based only on belief, supported by consultants given the solution at the outset and imposed on the organisation. We need decisions based on understanding and consistent with the organization’s control of its own future.
As is often the case, Peter Drucker  has already said very succinctly similar things. “Effective boards recognise that both board and executive are essential to the proper functioning of an organisation, that they are equal and need to co-operate rather than waste time arguing about who is superior or who is responsible for policy. Moreover, the work of the executive and the board does not divide neatly into policy-making versus execution of policy. Boards and executives must be involved in both functions and must coordinate their work accordingly. In a well-functioning nonprofit organization, the executive will take responsibility for assuring that the governance function is properly organized and maintained.”
Drucker cites a situation in one not-for-profit where a separate committee was established for every member of the Board, performance targets and indicators established and members reported to the full Board at the end of each year. Whilst that may be extreme it is nevertheless a useful model. Drucker has also made an important point concerning contact between board members and staff: there will always be contact so the solution to any problem which might arise from that is to ensure that all contacts are logged.
There is also the story of the board chairman who, having identified with the CEO the items which needed special attention would, when the meeting arrived at such items inform the meeting that he thought the item was important and then ask a particular board member to speak to it. In the event that the board member did not feel able to do so, the chairman gave a short and direct speech on the importance of reading and considering the agenda before meetings!
“Industry foresight requires a deep seated curiosity. Executives of a top company were asked, “Could you sustain a debate for a full day, among yourselves, about the implications of this trend to you company and the industry? Do you understand how fast trend is emerging in different markets around the world, the specific technologies that are propelling it, the technology choices competitors are making, which companies are in the lead, who has the most to gain and the most to lose, the investment strategies of your competitors vis-Ã -vis this trend, and the variety of ways in which this trend may influence customer demands and needs?”. The top team agreed they didn’t know enough about this critical driving force to answer these questions, and certainly couldn’t keep a detailed, intelligent debate going for a full day.
They were then asked, “Could you sustain a debate for eight hours on the issues of how you allocate corporate overheads, set sales targets and manage transfer prices?” Now this was a fair question. “On this we could keep going for eight hours, no sweat,” replied a senior executive. Suddenly the point hit them: This group of managers was not in control of their company’s destiny. They had surrendered control to competitors who were willing to devote time and necessary intellectual energy to understand and influence forces shaping the future of the industry.
Gary Hamel and CK Prahalad 
In the early seventies a small group in Sydney called ARTS published a booklet “Strengthening the Governance of Arts Organizations”: it recommended that board members believe in the goals of the organisation and be prepared to work to achieve them. This remains an issue for far too many boards in the arts and heritage area.
The consequences for the nonprofit board of finding that control and independence do not improve organizational performance could well be that executives should join the boards as full members. Amongst the further consequences of that would be a move away from seeking to control or instruct to a concern with long-term opportunities and a pursuit of agreement between board and executive as to what constitutes quality and how to arrive at it.
In the arts and scientific area many would see this as highly dangerous, as something that should be left to the professional executive. But so long as there is serious doubt, and most of the time there is either bland or reluctant acceptance of the professional’s view, there will be unproductive tension. The consequences can be the generation of a culture of conflict as the norm and a consequent decrease in the allocation of resources to productive pursuit of the organization’s goals. Boards are social groups with common objectives but differing perceptions, groups in which the best decisions will only be made through careful exploration of opposing views in a context of trust and respect. Only in such groups will we be confident that we can achieve the future we want.
In summary, five issues emerge for consideration by all concerned with governance in museums. (The need for board members to understand the nature of the business and the ‘industry’ in which the museum operates as well as the goals of the museum is not something that would seem to need elaboration but surprisingly it often does .)
1, If there really is no benefit in the board having oversight as its primary focus and independence of board members does not lead to better performance – and the evidence does support such a view – then would it not be appropriate for the chief executive and perhaps other executives, to be full members of the board? Would this lead to more informed decision-making? Probably! Certainly it would remove that archaic and disabling tendency of boards to treat the executive like trade and the executive to treat the board as no more than partially sighted whose attention they can divert from important issues which management would rather deal with by careful structuring of the agenda or even confrontation when difficult issues are raised.
2, The criteria used to appoint people to boards is one of the most important considerations; appointees must be able to work with other people as well as be able to think and be prepared to question and be questioned. So far as the chair is concerned, prominence in the community or possession of technical skills or community contacts are only part of the requirements: the most important essential skill is the ability to build cohesive groups of people, to be able to encourage and manage constructive conflict, and be able to engender a spirit of support for the organization and its goals, even taking action to give effect to such spirit. Where governments are involved they must clearly communicate to appointees the role of the board members and support the board, not simply use it as an instrument for actions they would rather not take themselves. It is axiomatic that the nature of the appointee’s role and what the government expects of the enterprise and the board as a whole be unambiguously set out.
3, Where governments are involved by virtue of financial contributions or otherwise, their most important role is to encourage best practice including best practice in governance, not interfere through the financial allocations or pretend that greater efficiency will result from a leaner organization or that restructuring and/or limiting tenure of the executive will generate higher levels of performance. These actions do not lead to success and the persistence of such strategies constitutes a major abrogation of responsibility where it occurs. As one leading write has observed, the principal role of the board is to encourage above average performance by the organisation. That requires care and attention and considered thought, not the application of practices from other domains even if they did work there.
4, Whatever the underlying philosophy, unless it is that government is itself a constraint on freedom, one of the tenets of a civil society is the belief that one of the roles of government is to build and maintain infrastructure or capital, both physical and social. Unfortunately governments have tended to see the law as the almost single tool for achieving its role and doubt the utility of voluntary agreement. Governments must see that exercising their responsibility requires persuasion, highlighting issues, advocacy for change, not simply resort to the law or mere populism. Laws are necessary but not always the most efficacious way to the future. It is ethical behaviour that will make the most difference and ethical behaviour can not be mandated: to encourage it requires hard work.
5, Clearly, the purpose and nature of the business and the context in which it is conducted are central to a consideration of decisions about the business. And just as clearly, the ability to openly discuss these issues in a fruitful manner in which any conflict is managed productively, depends very much on the extent to which participants trust and respect each other, attitudes developed only through contact in a casual and relaxed atmosphere. To achieve that requires work! Only in a vacuum does the maintenance of momentum not require the application of effort.
Yet it is astonishing in how many boards – of museums and arts and heritage organisations, government and non government – new members arrive with little understanding of role and purpose and never receive any briefing; these boards go on to conduct their business with dispatch, hardly pausing to consider if or why there might be differing views on issues. Members of such boards may proceed for many months or even years without the simplest idea of what attitudes their colleagues have on major issues which bear on the enterprise. The consequences include inappropriate appointments to senior positions and the adoption of inappropriate or even damaging strategies. These are the consequences of hasty and ill-explored decisions and no enterprise can afford them.
Therefore, it is of the utmost importance that board members gather together at not infrequent intervals to increase their knowledge and understanding of each other and develop that respect and trust essential to the conduct of the business. Equally, such occasions will be appropriate for the review of the nature and purpose of the business, for elaborated conversations traversing those issues which have been put aside in the hurly burley of the regular board meeting. Executives must be present at such meetings if they are not to continue to demonstrate the damaging consequences of isolation and being considered as ‘the other’.
Volterra, Tuscany (More)If we consider Hamel and Prahalad’s story about the management team that could not sustain a discussion for eight hours about the industry they were in, the trends in that industry and what their competitors were doing, but could manage a discussion of financial matters, we might think about whether a museum board could sustain a discussion on trends in the museum community and profession, the encouragement of scholarship, the latest in audience research and community involvement, what truth meant and how a museum should best deal with competing versions of it in its public programs, how one deals effectively with controversy and the nature of learning and how to encourage it.
 Catherine M Daily, Dan R Dalton & Albert A Cannella Jr, ‘Corporate Governance: Decades Of Dialogue And Data’, Academy of Management Review, Vol. 28/3, p371, 12p (2003): further details are given in New in Leadership, Management and Governance; the findings reviewed in this paper have not stopped many prominent writers continuing to assert that one of the major requirement for superior board performance is having a significant proportion of board members independent of management.
 Chamu Sundaramurthy and Marianne Lewis, ‘Control And Collaboration: Paradoxes Of Governance’, Academy of Management Review Vol. 28/3, p. 397, 19p (2003): further details are given in Leadership, Management and Governance.
 Sumantra Ghoshal & Peter Moran, “Bad For Practice: A Critique Of The Transaction Cost Theory”, Academy of Management Review, Vol. 21/1, p. 13, 35p (1996): further details in Leadership, Management and Governance.
 Then Director of the Museum Studies Institute and Dean of Continuing Education, University of Virginia, address to the 100th [British] Museums Association Conference, Brighton September 1994, now Director of the Getty Leadership Institute, Los Angeles.
 Daniel Ellsberg, Secrets: A Memoir of Vietnam and the Pentagon Papers, New York: Viking Press (2002); see reviews of this book in â€œEllsbergâ€™s â€œSecretsâ€ and Bushâ€™s War: An Intersecting Historyâ€ by Bernard Weiner, CounterPunch January 6, 2003; and â€œWartime Liesâ€ by Jonathan Mirsky, New York Review of Books Vol 50/15 (2003).
 Robert D. Herman and Richard D. Heimovics, ‘An Investigation of Leadership Skill Differences in Chief Executives of Nonprofit Organisations’, American Review of Public Administration Vol 20/2, 107-124 (1990)
 In a major museum in 2002-2003 a board adopted a proposal to depart from the existing multidivisional structure which recognised the importance and distinctive nature of public programming as not merely a way of attracting visitors and gaining money but one requiring understanding of the visitor experience and a recognition that education was a lifelong experience to which museums contribute. In its place a two divisional structure was established in which scholarship and collections were contrasted with all other functions which were placed together in the other division! Activities such as merchandising which previously were joined with marketing and promotions were taken into administration indicating that the prime purpose of that function was to generate revenue rather than enhance the visiting experience.
In another museum in 2002-03, government arranged that a review be conducted to inquire into the exhibition programs following allegations of bias. Earlier, the government had indicated its intention to not renew beyond a further year the contract of the museum’s director after her first five year term. Following completion of the review, members of the board who had supported the director did not have their appointments renewed; new board members were appointed who espoused political views coincident with those of government. There were also allegations that provision of funds to expand the exhibitions would require that government see the detail of the proposed content of the exhibitions.
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