Are disconnected boards putting their organisations at risk?

Lately, it would seem barely a week goes by that we don’t hear of another drama unfolding in an esteemed private school in Australia.

Knox Grammar, Shore, St Kevin’s and Cranbrook School are just some of the elite schools that have made headlines in recent months, with toxic culture and animosity among leadership being the two most common complaints.

In the case of Cranbrook School, tensions between the board and Principal over governance and the future direction of the school became a public battle – involving parents and students until 10 out of 11 of the board’s members resigned. While this is quite a drastic outcome, it’s not without precedent. We’ve seen similar situations unfold in other schools and non-profits in the past, where a total lack of alignment between board members and leadership leads to so much hostility that it spills into the workplace and even the public domain.

Commonly, CEOs (or Principals in a school) will blame the board for being “out of touch”. They may see them as yelling from the sidelines, without a true understanding of what’s happening on the ground. On the flip side, board members can become very frustrated by questionable behaviour from a CEO who feels the need to cover up certain information or incidents.

At some point, behaviour on both sides is likely to have widespread impacts…not least of which is a loss of confidence from donors, investors, and the very people the organisation is meant to serve.

Is corporatisation the answer?

In searching for a solution to tensions between stakeholders and toxic cultures in private schools and NFPs, we need only take a brief look at some of the failed strategies to see why a different approach may be needed.

For St Kevin’s private school in Melbourne, the appointment of a female Principal in 2020 was intended to help stamp out the school’s notoriety for misogynistic behaviour. Although she did implement several programs to improve culture, years later we’re seeing dozens of female staff come forward with allegations of sexual harassment. The school’s next move is to appoint an independent board, and other news sources have reported a potential plan to introduce a restrictive code of conduct.

While a code of conduct can be useful, its success will always boil down to its intention. If the code exists to restrict open conversation about troubling issues, it’s essentially just sweeping them further under the rug.

The testimony of current and former students, parents, and other stakeholders will eventually come out – collapsing the public’s confidence in the institution as a safe and respectful place for children to receive an education.

With some Principals in private schools taking home an annual pay packet of $1M or more, it’s safe to say that “corporatisation” has already occurred in many of these institutions to some degree. We see the same with national non-profits that overhaul reference groups and advisory committees in favour of corporatised boards. From a corporate viewpoint, excessive pay packets are designed to attract and retain the best of the best to run an organisation. The establishment of a single board is intended to streamline decision making and draw on the expertise of experienced members to guide decision making.

But you can’t take only a few elements of a corporate model and disregard the rest. For example, you can’t corporatise the top layer of a non-profit and then just expect staff and customers to fall into alignment because “it’s for a good cause”. Under a corporate model, meeting customer needs and expectations is first and foremost…otherwise the business fails.

It's here that we may actually find the key to resolving the turmoil in many executive and board relationships: a total re-focus of attention away from the individual, to the collective they’re meant to serve.

The solution starts with you

Every organisation has challenges. Everyone has different perspectives, and in business this means not everyone is going to agree all of the time.  

However, people can agree to disagree. And they can do it in a way that allows them to rise above indifferences and focus on what their customers (or students and parents, in the case of a school) want and need.

How do we know what they want and need? By asking. By being transparent, communicating, and committing to continual improvement based on feedback.

At a certain point, organisations have to realise that no amount of boards or committees or codes of conduct can fix a culture that is fixated on anything other than the humanity of the people who work in it and use its services. Be it outdated rules or traditions, or a sole focus on profits and the success of executives, all serve to undermine the potential any organisation has to make a great impact in the world.

When we shut down conversations and deflect the very people who have enabled an organisation’s success in the first place, we can almost guarantee its eventual demise. You can see this happening with major Australian brands that once offered personalised service, and are now dealing with millions of unsatisfied customers eager to spend their money elsewhere due to a lack of connection and quality service.

For a non-profit with limited resources or a school with an already questionable reputation, maintaining a trajectory of “me first” is absolutely unsustainable.

There are steps that individual executives and board members can take to make a difference. While it may not seem like it, chances are many others feel the same way.

In our work with schools and non-profits, we often find a genuine desire from boards and executives to engage in true dialogue. Sometimes it just needs a bit of support from an independent party who can assist with mediation, analyses, and laying the foundations for a new way forward.

For further information

For a confidential discussion about culture and governance in your organisation, please contact Andrew Bowcher at (02) 6937 7001 or your local RSM office.