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Ten tips to avoid a Governance disaster

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According to the site wbtr.co.uk something goes wrong within associations and foundations 'more than a thousand times a year, with major consequences. Think financial bungling, oversight by supervisors or entanglement of interests'.

In the cultural sector, we know the Culture Governance Code, which hopes to prevent 'anything going wrong' with a series of recommendations. Whenever an 'issue' hits the media, it is almost always about the dysfunction of the director/manager or his counterpart, the chief executive in a classically governed foundation*. The dysfunction of Supervisory Boards is a subject rarely discussed. Nevertheless, the functioning of Supervisory Boards too often leaves much to be desired. This is mainly because the Code is far too non-committal. Ten tips for a Governance disaster:

1: Talk about expectations back and forth and remain realistic

Things not infrequently go badly wrong between the Supervisory Board (SB) and the director/manager. In 2002, the Association of Theatre and Concert Hall Directors (VSCD) did so with the booklet An Unwanted End report on an investigation into the premature departure of directors. It concluded, among other things, that directors are regularly brought in with false expectations. People ask for innovation and artistic inspiration, but what they really want is financial security and peace and quiet. Nobody is really waiting for an innovative go-getter. They do want a sheep with five legs, but they don't exist.

2: Make the SB resilient to outside pressure

The members of the supervisory board must be able to cope with the changes they initially so ardently desired themselves and the counter pressure from various ranks that comes with it. Not long ago, I spoke to a director who experienced first-hand what pushing through a change can cost: namely her job. So, as an SB, know what you are getting into when you seek change and support the director in his or her efforts to make it happen.

3: Conduct a safe two-way performance review

The force field between management/board and SB is unevenly divided within the Code. According to the recommendation, a good SB carries out self-evaluation. However, the director has no say in this. Conversely, the SB does assess the director, because 'the SB decides on the appointment, assessment, remuneration, suspension and dismissal of the management board (aka the director)'.

If you criticise your employer or worse, expose wrongdoing, you are at risk as a director/manager. Within organisations, safety is rightly a hot topic, but whether that safe working atmosphere is also guaranteed for directors, I dare doubt.

4: Hire external expertise during crises and management changes

In practice, I see two vulnerable moments when it comes to good Governance: board changes and crises. To start with the latter: few SBs are able to solve them themselves. It therefore seems the wisest thing to hire external expertise, but the SB's reflex is not infrequently to sit in the director's chair, with all the consequences that entails.

Even when management changes, SBs tend to take the reins. Well-intentioned, but filling in (artistic) leadership and solving crises requires specialised knowledge that is often simply lacking, partly because the distance from day-to-day practice is too great.

5: Secure knowledge of cultural entrepreneurship within the SB

In Boards and administrations of cultural institutions, remarkably, there is often little knowledge about the arts profession. This lack of knowledge is our fault. We have filled our Supervisory Boards and Boards with professionals from other sectors in the hope that they will bring either money or substantive baggage. The former usually turns out to be an illusion and entrepreneurship ends up being essentially different from cultural entrepreneurship.

You therefore need at least two BoT members with knowledge of how an artistic company operates.

6: In addition, teach supervisors the necessary knowledge of the cultural sector

I call for deeper conversations about how our profession works with supervisors. Discuss the mores of the Code. Call it the Governance Dialogues and make them public. I don't expect a million-strong audience, just more transparency.

7: Knowledge can also be hired

The cultural sector is probably one of the few sectors overseen predominantly by professionals from other industries.

Not infrequently, we look for lawyers for cheap advice, ex-politicians for their network, people "with money skills" because we think we don't have them ourselves, HR expertise we haven't yet developed ourselves, or a marketing strategist for whom our own organisation is too small. But knowledge we hope to bring in through the Supervisory Board can often be hired just as well.

8: The Code should be the standard, not a recommendation

What to do when it's all much worse? Like those "more than a thousand times a year that things go wrong, with major consequences?". There are SBs that care little about the Code: terms of office of decades, conflicts of interest, lack of transparency, wrongful actions, shadowy financial arrangements... It's an uncomfortable truth but what is morally right for one person need not apply to another.

Part of the reason for all this is that the Culture Governance Code is exclusively about recommendations that you can just as easily flout. The Code is far too non-committal. Therefore, make compliance mandatory.

9: Appoint a disputes committee and monitor compliance with the Code

The problem with non-functioning board members or supervisory board members is that no one can dismiss them. Faced with mis-functioning or even abuses within the Supervisory Board, there is nowhere to turn as a director-director. Besides: everything that goes public is bad for the company and for the sector. And so much stays behind closed doors.

What is left is silence, leaving yourself or going to court, where your voice as an individual must outweigh that of a preponderance of opponents.

There should therefore be a point of contact for complaints, with an expert dispute resolution committee and an independent body that monitors compliance with the Code and can impose sanctions for violations .

10: Find each other and show solidarity

Until the counter is in place, I think it would be advisable for directors to visit each other to discuss situations with their SBs and boards and provide each other with advice. After all, solidarity always works when it really matters.

( * For the sake of readability, I am talking about Supervisory Boards, by which I also mean boards of traditional foundations). This article is a summary of two blogs that appeared in early April 2024 at www.jeffreymeulman.com

Jeffrey Meulman

Jeffrey Meulman is a creative entrepreneur, consultant and director-director of the Verkadefabriek in Den Bosch and chairman of the international networking organisation IETM. Other articles by him can be found on his blog.View Author posts

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