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Common Practice or Best Practice or Perhaps Even Future Practice

Anyone who spends time working with nonprofit institutions on governance or who is a trustee who cares about good nonprofit governance is familiar with the tension between common practice and best practice.  This tension often arises when suggestions for governance changes stretch the institution and its board to think about the way it practices governance in new and, for some trustees, threatening ways.  Issues like trustee term limits, trustee mandatory retirement, trustee evaluations, and conflict of interest policies are just a few examples of topics that can produce more heat than light in trustee meetings.    

The response from some trustees to a suggested change in governance policies, procedures, or practices often is, “I am a trustee of several other institutions and all of those institutions have the same policy that we have been using and have had it for years.  It works just fine.”  This is the common practice argument … other institutions do what we do and it works!  The common practice argument is another version of “that is the way we have always done it” and is typically made by the traditionalists on the board.

When changes in governance practices are suggested under the banner of best practice, red flags may fly quickly.  The term suffers from over use and poor definition.  But, in its simplest form, best practice means that the changes suggested are likely to lead to better results in this institution than those that have been achieved with the old practice or with other means.  Note the operative words “in this institution.”  

There are governance best practices that are widely accepted as leading to better results at all institutions … these become benchmarks.  But, nonprofit governance is a contextual activity. Thus, common practice … or that is the way we have always done it … should not be dismissed without a serious discussion of the better results that may be expected from the new policy or practice. 

The tension arises because common practice is often used as a discussion stopper.  The proponents of common practice use it to bar an exploration of the new ways and better results that may accrue from the suggested changes within a particular institution.  Or, they argue it is “best practice” because many other institutions do it the same way, confusing common practice with best practice. In either case, the merits of the suggested changes never get explored and common practice continues to be the standard.

 So, how do boards move beyond the stale-mate?  Every five years, the chair of the board should appoint a special trustee committee to conduct a complete assessment of the institution’s governance policies, procedures, and practices.  The objective should not be either common practice or best practice.  It should be future practice.

Future practice is the effort to do governance better than it has ever been done by this institution or any other institution.  It is starting all over again. It is asking the question, “What would we design for the governance of this institution if we did not have any governance policies, procedures, or practices?”  It is trying to craft governance for the institution that focuses on the strategic, is sensitive to the wall between governance and management, complies with all legal requirements, sets the highest possible ethical standards, and serves the mission of the institution.  Future practice is to institutional governance as zero based budgeting is to institutional finances.

Posted in Governance