Setting up your federated board for success
Federated board structures in Australia refer to governance models in which an organisation has a national or central board, as well as regional or state-level boards that operate semi-autonomously under the guidance of the National board.
In Australia, this model is commonly used by non-profit organisations and associations that have members across different states for instance, large organisations with a significant presence across different geographic locations, such as national charities, professional associations, or multi-state corporations.
Benefits of federated board structures
Federated board structures are an effective way to establish a shared commitment to outcomes and objectives across multiple organisations and allow for local knowledge and needs to be accounted for. Organisations with these structures aim for ensuring that all stakeholders are jointly responsible for achieving their common goals.
Responsibilities can be assigned based on individual/local or collective needs, creating a more tailored approach to resource sharing and decision-making. This allows the member states or groups of the organisation to better align their strategies and objectives with overall organisational goals, while also ensuring that each stakeholder group has a clear understanding of their roles and responsibilities.
1. Federated board structures provide a decentralised approach to governance, allowing for more localised decision-making and autonomy.
2. They also enable collaboration among multiple boards that have different geographic locations, missions, constituencies, or areas of expertise.
3. They offer opportunities to improve the effectiveness of organisational efforts by bringing together stakeholders from diverse backgrounds and perspectives.
4. Federated board structures create an environment of trust and shared accountability by allowing for decision-making to be decentralised and closer to the stakeholders who are directly affected.
5. This form of governance also fosters collaboration among organisations, facilitating increased efficiency through the sharing of resources and knowledge.
While federated board structures can have benefits, they also pose challenges.
1. Coordination and communication:
Ensuring effective communication and co-ordination between the national board and state boards can be a significant challenge. Federated board structures require a high degree of coordination to ensure that all levels of the organisation are working towards the same goals. However, coordinating activities and decisions between different boards can be time-consuming and challenging, particularly when they have different priorities and agendas. or may be operating under different local laws and regulations, making it challenging to align strategies and initiatives across the organisation.
2. Culture and power dynamics:
Federated board structures can lead to the development of subcultures within the different boards, making it difficult to maintain a cohesive organisational culture which can lead to conflicts and tensions. These structures can create power imbalances between the national board and state boards as state boards may feel disempowered or marginalised if they perceive that the national board is making decisions without considering regional perspectives.
3. Governance and accountability:
Federated board structures can create complexities around governance and accountability as ensuring that each board has a clearly defined role and scope of authority can be time-consuming administratively. Each board may have different reporting requirements, and it can be challenging to ensure that each is complying with relevant laws and regulations. This can create legal and reputational risks for the organisation.
4. Resource allocation
Federated board structures can create challenges around resource allocation. Regional/State boards may feel that they are not receiving an equitable share of resources or support from the national board, leading to tensions and disagreements.
5. Recruitment and retention
Federated board structures can create challenges around the recruitment and retention of board members as State/Regional boards may struggle to attract high-quality candidates or may experience high turnover rates if board members feel disengaged or disconnected from the organisation.
6. Legal compliance
Federated board structures can create legal compliance challenges, particularly if the organisation operates across multiple jurisdictions. For example, different states and territories may have different legal requirements for non-profit organisations, which can create compliance challenges for federated boards.
Overall, while federated board structures can be effective in certain contexts, they also pose significant challenges that require careful management and coordination.
For smaller organisations it can be a challenge to maintain contemporary good practice governance when replicated multiple times across all the organisations as the resources to do so can be significant.
It is also a structure that is ripe for a focus on internal politics at the expense of strategy when there is competition across the federation for resources, power, and status.
Successful implementation of a federated board structure requires clear communication, effective governance, and a commitment to transparency and accountability at all levels.
We recommend you:
1. Establish a detailed set of procedures for decision-making, communication, and conflict resolution. This should include processes for developing agendas, assigning roles and responsibilities, setting timelines, identifying the criteria used for evaluating decisions, etc.
2. Ensure that each member of the federated board has authority to make decisions within their areas of expertise. Clear delegation of decision-making authority should be established so that each member can act on behalf of the organisation in a timely and informed manner. In addition, all members should have access to necessary information and resources to inform their decisions.
3. Develop a process for problem-solving and conflict resolution that is collaborative in nature, encourages open dialogue, and considers the perspectives of all stakeholders. This should include clear guidelines on how disagreements will be addressed, as well as how decisions can be made when consensus cannot be reached.
4. Establish clear communication protocols for both internal and external stakeholders. This should include formal channels of communication, such as meetings, emails, conference calls, etc., as well as informal channels of communication, such as group texts or phone calls.
5. Ensure that all members have access to necessary information and resources needed to make informed decisions. This includes staying up to date with industry trends, actively researching potential solutions, and promptly responding to questions or concerns from stakeholders.
6. Regularly evaluate the effectiveness of the federated board’s decision-making processes. This should include gathering feedback from stakeholders on their experiences with the board, as well as assessing how efficiently decisions are being made and if the desired outcomes are being met. This evaluation should be used to inform further refinements and improvements to the decision-making process.
7. Encourage openness and transparency in decision making processes. This should include providing stakeholders with timely updates on progress and plans, as well as facilitating open discussions about potential solutions or outcomes. Additionally, all decisions should be documented in detail to ensure their accuracy and validity.
8. Set clear expectations for each member regarding their responsibilities, authority, and decision-making processes. This should include both formal expectations (e.g., attendance at meetings) as well as informal expectations (e.g., the level of participation in discussions).
Yes federated board structures can be an effective way to manage organisations in certain contexts. However, they also come with a unique set of challenges that need to be managed carefully. By following the steps outlined above and ensuring clear communication protocols are established among members of the board, organisations can create an efficient and effective decision-making process that is well-equipped to tackle any challenge it may face.