What are some common governance pitfalls and how can you avoid them?

In my experience, clarity is required within the organisation's incorporation documents - constitution or Articles of Association. Many social entrepreneurs pick one of the eighteen plus standard structures without considering how their mission and social impact are protected and enhanced within them. The same clarity in impact and marketing and even pitching, should be in the incorporation documents. It takes time to figure out how structure encompasses mission, and some structures are difficult to update or change once they have been set up. This type of clairty extends to the financial model on which the organisation's impact depends.

Building on Karen’s insight, even before you have incorporated, try to generate buy-in on Mission / Vision / Values through a team-based approach, incorporating the views of the most important stakeholders in the business. You might do this with anything from a Social Business Model Canvas exercise all then way through to a Theory of Change activity that should build consensus but allow room for manoeuvre and nuance amongst team members, whilst linking this straight back to Impact.

It is time for more social enterprises to summon the power of collective will to empower diversity as a core governing and operating capacity. Advancing empowered diversity of staff and volunteers on purpose will propel the organization to create new mission-aligned programs and services. With a strong collective identity in place, organizations can undertake smart risks to tackle the hard work of impact innovation.

Sometimes the attempt to be inclusive results in bad governance, so this needs to be done in a clear and supportive manner. It is not helpful to bring people into governance structures without clarity and support. Furthermore, people do not feel included when they cannot see how their actions and opinions makes an impact on an organisation. To demonstrate this type of inclusivity requires planned and structured engagement at all levels of governance.

I agree, it can be quite daunting for a social enterprise to attract experienced people who are passionate about the purpose as well. In addition to having the right Board members, social ventures can seek voluntary time sharing by people who would like to contribute their experience and expertise to the cause. Attracting the right skill and experience should be the Board’s key deliverable.

Spot on. Attracting a diverse board, building a layer of management below the CEO and continuously building their skillset are key. Just like any other startup, the best way is to work really well in a niche, do great work and a lot of board members will want to help - with governance and attracting exec talent!

Doing governance the way you have always done it or the way some random person says it should be done is not governance. In this case no one recognises that there is bad governance because sometimes advisors and board members take inadequate governance practices from other organisations and count this as time learning about good governance. Building good governance skills starts with reading the organisation's Articles or Constitution and considering what they say in terms of the board; but also reading them as the manual for where governance starts in an organisation. And sometimes a complete update is required that compares between sections and addresses inconsistencies that creep in over time.

In most of my CEO roles the full potential of our mission and financial sustainability was not achieved because agile governance was absent. Even today, as I work with my social enterprise clients to design and scale new ventures, I enter each engagement with the expectation that the number one challenge to creating new ventures will be the Board’s resistance to innovation and the associated constraints on executive leadership. The great irony is that boards are risk-averse because it is perceived to be safer. That is like trying to drive a car while looking in the rearview mirror. Rather than scanning the horizon for the next opportunity to add value, they are staring at the rearview mirror to see what others think about their actions.

In my experience this is the biggest barrier. I do not know of any funders that would prioritise funding social enterprise governance (eg an ongoing governance officer) and it is an ongoing issue, so needs to be a core cost to the business. This means that governance needs to be fit for purpose and the size of the organisation. This is where Board volunteer input can really help in my experience. You can plan for all sorts of things, but if you do not have the resources/capacity to carry out what you have planned a different more pragmatic approach is needed. We need to ask questions - why are we gathering that, what difference does it make, can with gather in different ways....

Good governance starts with planning for good governance. Good governance practices also mean prioritising how governance should work for your organisation thus saving time and resources. One example is that many people recruit a board for support and then waste everyone's time spending the first board meeting deciding when all the other board meetings will be. The first thing you need to consider is can the right executive people be at the board meeting, how often and for how long will support the executive team; so pick the next year or two's dates/venues (IRL or online) that work before you recruit anyone. This way you are starting to plan for a board (which should lead on governance) that delivers for the organisation.

Again planning for adaptation is important. Use a board calendar that builds review and adaptation into the governance processes, so the updates are considered strategically by the board and then they cascade into the operational governance and processes. Good governance requires processes and people to support organisations to thrive: Structures and policies (that embody the clarity of the mission and impact) create a safe space for people to work. When people feel safe they can thrive making it a productive and happy workplace that delivers on the social mission.

Standardise and document your processes and procedures. There are many advantages in standardising what you do and documenting those processes. Let’s us examine some of them in greater detail. It means they can be replicated. It allows you to test these processes for risks and weaknesses that you can then mitigate. It is a veritable tool for training new hires. It enables you to scale up quicker and more easily when your processes are standardised and documented. Introducing automation in future becomes easier.