Boards need a data-driven organization
The rationale for having a board of directors is to incorporate multiple viewpoints into one group that is beholden to the interests of the stakeholders (stockholders, members, community, etc.) , and that can assure that the assets are protected and decisions are made for the benefit of those stakeholders.
Because the board is a group, there are multiple viewpoints represented, viewpoints on what should be a priority, what is the best strategy, how best to accomplish something, what are the external threats and opportunities, etc.
A key to success is assuring that decisions made are rational (def. based on logic or reason, conforming to that which can be validated). So, how do you insure that “rational” is the case? I would submit that it centers on becoming a data-driven organization.
Data-driven as an alternative to what?
Every board member has a viewpoint based on their own experience. For example, what they value or are most concerned about, what fellow stakeholders have expressed concern about, what their personal experience has been, etc.
So, if that is the case, how does a board decide on an issue? Well, often they decide based on who talks the longest and hardest or whether or not management is able to make a persuasive argument that trumps the individual viewpoints of board members. But, such a process is prone to lack consistency and logic. This is the alternative to being data-driven.
Data-driven organizations make their decisions re. priorities, use of resources, strategies, problems to be solved, program/product evaluation, etc. based on facts and trends that are apparent from an analysis of those facts. To have facts, you need data.
Questions data can answer
- What are the greatest needs of those we serve, our customers?
- Which conditions are getting better for those we serve? Which are getting worse?
- What services or products are generating the most demand? What are the trends with regard to demand?
- What is the level of satisfaction with our services or products?
- How does our cost per service compare with others?
- Are our products/services having their intended impacts?
- Are our strategies working?
- What are the most frequently occurring problems?
- What are the concerns of our stakeholders?
- What is the level of turnover of our staff? How does it compare with peer organizations?
How to get there
First, each board member must pledge that they will surrender their view of what is true to what the data is telling them.
Second, the board must define a set of data or metrics (we call the sum of these data sets an Instrument Panel) that are unique for the organization and can be cost-effectively gathered to answer these questions.
Third, the board must insist that this data be presented to them on a regular basis in a format that displays the relevant trends, as you do not want to act on simply one month’s worth of data, but rather trends that are confirmed over a series of months.
Fourth, insist that when management is bringing you a matter for decision on any of the questions above or others, including your strategic plan, budget etc., that they are also bringing you the data that is relevant for that decision.
We offer workshops on how to become a data-driven organization as well as help setting up your own Instrument Panel and using it for decision making. For more information contact us.