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The Simplicity of Complexity Science’s Application
to Nonprofit Effectiveness
by
Stan Holt
PhD student
NCSU
Paper presented at the
ARNOVA Conference
2008
Stan Holt
[email protected]
919-220-3087
Stan Holt
ARNOVA 08
The Simplicity of Complexity Science’s Application
to Nonprofit Effectiveness
Nonprofit human service organizations are complex organizations. Their governance
structure, a Board of Directors, distinguishes them from the public sector whose governing
bodies are elected or public appointed officials. Their commitment to improving the human
condition differentiates them from their for-profit counterparts whose focus is maximizing profit.
The variety of funding sources, often comprised of both public and private funding, creates an
array of interests that in some instances might conflict with each other and even with the clients
that the organization serves. The goals of many nonprofits can be rather vague.
One of the most unique and common factors about human service nonprofit organizations
is that people are the “raw material.” According to Hasenfield,
All organizations need raw material as input to produce their products. Human
service organizations are distinguished by the fundamental fact that people are
their “raw material.” By using the term raw material in this context I do not wish
to imply that the people served by these organizations are merely treated as
innate objects without regard to their humanness. Nor does the term imply that
the staffs who work on people do so without compassion. Rather, I want to
highlight the fact that the core activities of the organization are structured to
process, sustain, or change people who come under its jurisdiction…It is this
transformation process to which people are subjected that defines them as the
raw material of the organization, and it is precisely what differentiates human
service organizations from other bureaucracies (Hasenfield, 1992).
In the past few years, scholars have explored the factors that make nonprofit human
service organizations effective. Unfortunately, the nonprofit literature on organizational
effectiveness indicates that there are as many ways to measure nonprofit organizational
effectiveness as there are organizations. Much of the research focuses on the effectiveness of the
board of directors and its relationship to the effectiveness of the organization. The underlying
assumption is that an effective board leads to an effective organization. An assumption that,
despite widespread agreement, is difficult to prove empirically.
Scholars have argued that boards are complex organizations with no “one size fits all”
model and boards are influenced by the context in which they operate (Ostrower & Stone, 2004).
Ostrower and Stone also suggest that it is important to study the contextual and contingent
elements of board governance; arguing for the use of wider disciplinary and theoretical
approaches. They suggest that it would be beneficial to acknowledge these challenges and
integrate them into the ways studies are conducted and designed.
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Robert Herman and David Renz have been studying board effectiveness over the last
decade. Their most recent research suggests that doing things right does not necessarily lead to
overall effectiveness and that so-called “best practices,” while important, are effective because of
“their value within the context of the organization (Herman & Renz, 2004, p. 702).” Their results
contradict much of the literature which suggests that implementing “best practices” improves the
board’s effectiveness. Yet, Herman and Renz’s 2004 research is the only longitudinal study,
among widely used cross-sectional studies, addressing the questions associated with board and
organizational effectiveness. Unfortunately, the longitudinal study is limited to self reporting
questionnaires and interviews of board members and CEOs.
Judith Miller-Millesen (2003) is the only scholar to date to begin exploring the question
of how do boards behave? She combines agency theory, resource dependence theory, and
institutional theory to derive a set of hypotheses about board behavior. The premise of the
framework is that environmental and organizational factors directly affect board behavior and
indirectly affect board behavior through board recruitment practices and the composition of the
board. She suggests several potential empirical studies that include examining board
performance as they mature and develop, exploring how each theory explains board behavior,
and identifying the conditions in which a board takes on certain roles and responsibilities over
others. She also builds the case that we still need to understand what boards actually do.
The quest for determining nonprofit board effectiveness and its impact on organizational
effectiveness has proven to be difficult. However, I would agree with Ostrower and Stone that
we need to look at other disciplines, theories, and research methods in order to understand what
makes boards effective. This paper begins the process of expanding the theories and methods by
which we look at both organizational and board effectiveness.
After an initial discussion of the literature associated with board and nonprofit
effectiveness, I suggest looking at a nonprofit’s system of governance through a different
theoretical framework; complexity science. Using complexity science acknowledges the very
issues that Ostrower and Stone suggest should be integrated if we are to understand board
governance. I outline three specific aspects of complexity science that are important to consider
in examining nonprofit organizations and their governance systems. Next, I share some simple
examples of how these characteristics of complex adaptive systems (CASs) are found in four
organizations that are part of a research project focusing on boards of directors. The final section
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of this paper discusses both the research and practical implications of considering nonprofit
organizations, and their governance system in particular, as complex adaptive systems.
The Futile Chase for the Effective Nonprofit Boards
John Carver in his book, “Boards That Make A Difference,” discusses the features of a
board that are not found in any other management structure. In fact, these characteristics are only
found in governing boards.
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Boards are at the extreme end of the accountability chain. Other managers
must deal with persons both above and below their stations. The buck stops
with the board. It has no supervisor to carve out what portion of a given
topic is it’s to oversee.
The board acts, in a moral sense and sometimes a legal one, as agent of a
largely unseen and often undecided principal, an entity that expresses itself
in curious ways if at all.
The board is a set of individuals operating as a single entity. Melding
multiple peer viewpoints and values into a single resolution is peculiar to a
group manager.
The discipline of individuals tends to suffer when they are members of
groups. A board is likely to have less discipline than has any one of its
members operating alone.
Boards are ordinarily more than the usual managerial arm’s length from the
next lower organizational level. They are not only part-time, but physically
removed (Carver, 1990 p. 18).”
These unique features of nonprofit boards have lead nonprofit researchers to try and
define both an effective board of directors and the impact the board has on the effectiveness of
the entire organization. Furthermore, when we take a look at the responsibilities of a board of
directors, we can see that the board is ultimately responsible for the organization in the eyes of
the law and in the eyes of the community that it serves. Stone and Ostrower (2007) nicely
summarize the board’s responsibilities. These responsibilities include,
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Overseeing financial management and ensuring adequate resources are in
place;
Assuring basic legal and ethical responsibilities are met;
Ensuring that the activities of the organization align with its mission;
Making long-range plans and establishing major organizational policies;
Hiring and overseeing the chief executive officer; and
Representing the organization to the environment in general as well as to
key constituencies (Stone & Ostrower, 2007 p. 417).
Some of the first research to look at effective boards was completed by Chait, Holland
and Taylor (1991). Initial qualitative work helped these researchers identify six competencies for
boards of trustees of higher educational institutions. The contextual competency suggests that the
board has an appreciation for the culture and values of the organization it governs. An
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understanding of the board’s roles, responsibilities and practices makes up the educational
competency. The interpersonal competency focuses on nurturing individual members and
creating group cohesiveness. While the analytical competency uses the diverse board
perspectives to dissect a problem and create sound solutions. The political competency focuses
on building and maintaining critical relationships among the organizations stakeholders. Finally,
the strategic competency suggests that the board is key in designing the organization’s future.
The single largest challenge is whether or not these competencies apply to small human service
organizations with budgets between $250,000 and $3 million as opposed to institutions of higher
education.
Despite this concern, these competencies have led to the development and validation of
the Board Self-Assessment Questionnaire (BSAQ) (Jackson & Holland, 1998). The BSAQ is one
of the most widely used instruments measuring self-perceived board effectiveness. It was
initially validated by being administered to 623 board members in 34 nonprofit organizations.
The alpha statistic was collected on all six board competencies as follow: contextual .81,
educational .82, interpersonal .69, analytical .71, political .73, and strategic .87. The overall
alpha statistic for the instrument is .77. With the exception of the interpersonal measure, and it is
only off by .01, the instrument has proven to be reliable.
William Brown (2005) looked at three theoretical explanations of organizations and
attempted to connect the board’s effectiveness with overall organizational performance. Agency
theory, resource dependency theory, and group/decision process theory were examined in
relationship to the six dimensions of board performance, as suggested by Chait, Holland, and
Taylor (1991). His conclusions include the following:
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No organizational or board attributes are associated with board or
organizational performance.
There was an association between perceived organizational performance
and board performance. However, there was no causal direction determined.
Based on board member perceptions, the interpersonal dimension impacted
performance.
Based on the executive’s perceptions, both the interpersonal and strategic
dimensions impacted perceived organizational performance (Brown, 2005).
Herman and Renz (1997, 1998, 2000, 2004) have been studying nonprofit organizational
effectiveness and have argued that it is a social construct. In all of their work they consistently
discuss two important perspectives about organizational effectiveness. First, they use social
constructionism and cite Scott who says, “In the social constructionist view, individuals do not
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discover the world and its ways, but collectively invent them (Scott, 1995).” Social
constructivism argues that reality is constructed from human values, behaviors and beliefs (Fox
& Miller, 1995). Reality is not independent of the individual. Reality is not “out there,” despite
the notion that the reality that is agreed upon can actually appear separate from people. Based on
the social construction of organizational effectiveness they introduce the second issue; multiple
constituencies. They argue that different constituencies have different perspectives each with a
specific criteria associated with a nonprofit’s effectiveness. This makes the definition of an
organization’s effectiveness difficult to assess (Herman & Renz, 2004) in part because it depends
on who is assessing the organization. They go so far in their conclusion to suggest that
determining board and organizational effectiveness is dependent upon the context of the
organization.
Management and board practices are not unimportant. Rather than adopt what
are advocated as best practices by someone, every organization must discover
and continually seek to improve its practices, consistent with its values, mission,
and stakeholders’ expectations. Practices are effective because of their value
within the context of the organization and to the extent they work together
(Herman & Renz, 2004 p. 702).
Recently, Kathryn McDonagh (2006).discovered a correlation between a hospital’s
performance and the board’s effectiveness She used a sample of convenience with 151
respondents completing the BASQ questionnaire, two-thirds of these respondents were the CEO
of the hospital and not board members. These respondents represented 64 hospitals. Her
indicator for performance was the hospital’s ranking on the Solucieant’s 100 Top Hospitals
Program. This program examines nine different performance indicators for each hospital. The
only significant and reportable correlations occurred between the overall BSAQ and expenses
was -.22 (p < .1) and between the BSAQ and profitability, where the correlation was .38 (p <
.005). Unfortunately, those were the only indicators of performance that were significant and
there is still no causal direction associated with that relationship.
Despite the growing body of work, measuring organizational effectiveness is still elusive.
A fundamental challenge is that some criteria (whose and what those criteria are, is largely in
question) needs to be developed in order to objectively and empirically assess organizational
effectiveness. As a result, researchers have relied on self-reporting and cross-sectional data from
survey questions which has some limitations (Ostrower & Stone, 2004). This in turn, has made it
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nearly impossible to actually find a set of criteria that is helpful in defining board and
organizational effectiveness.
The fact that nonprofit effectiveness is elusive is no surprise, particularly, when you
begin to take a new look at organizations through the lens of complexity science. Complexity
science studies systems that have nonlinear dynamics and emergent properties. The next section
explains how nonprofit human service organizations can be viewed through the lens of
complexity science, they are complex adaptive systems.
Nonprofit Human Service Organizations are Complex Organizations
Newtonian science has been the basis of social science research for many years. It asks us
to break a whole system into its parts and then examine each of its parts. Ideally, that would then
tell us how the whole functions. However, with the discovery of quantum physics, cybernetics
and a deeper level of biological understanding, scientists are becoming more aware that a whole
system, is often times, more than the simple sum of each part. The assumption that by knowing
and understanding each part of the system we have a greater understanding of the whole is
becoming obsolete.
At the forefront of the new way of thinking is complexity science. Complexity science is
a perspective that has come from a wide variety of disciplines including mathematics, physics,
studies of artificial life, biology, computer science, and chaos theory. There is no one definition
of complexity science. However, there is agreement that the focus of complexity science is the
study of complex adaptive systems.
Complex adaptive systems do have characteristics that many theorists agree upon. Agents
interact with their unique individual environments. When these agents come together in a
particular new arrangement they bring with them a schema or plan of how things are. The
resulting chaos created by the interaction of the agents, creates new patterns, leading the system
to self-organize. The systems new order and even its outputs are not traceable to the original
agents. As part of this emergence process, systems also develop nonlinearly and are subject to
feedback loops. These systems also tend to co-evolve with other systems around them.
A growing number of organizational theorists are applying complex adaptive systems to
organizations (P. Anderson, 1999; Mitleton-Kelly, 2003; Morel & Ramanujam, 1999; R. Stacey
& Griffin, 2005). In many ways it builds on systems theory by acknowledging the interrelationships and interdependencies of the parts of the system, and encouraging researchers not
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to separate or isolate one characteristic and study that characteristic to the exclusion of others.
Anderson and McDaniel (2000) identify three characteristics of complex adaptive systems
(CASs). These three characteristics are: the relationship of the agents, self-organizing to
emergence, and uncertainty and unpredictability.
Relationships Among Agents
First, CASs are defined by connections and patterns among the relationships of agents. In
a nonprofit human service agency, agents can be staff, board members, or clients who receive
services from the organization. Agents can be processes found within the organization including,
the system used to raise money, intake and assessment systems designed to determine eligibility,
or case management systems. Agents may lie outside the formal organization and include
foundations providing funding, governmental organizations who contract with the nonprofit
human service organization to provide services, regulatory organizations like the IRS, and
individual donors to the organization. The one common element these agents share is their ability
to process information and react to changes in that information (Casti, 1997).
Agents are diverse and this diversity is essential. McDaniel and Driebe (2001) explain
how health care organizations are being considered CASs. According to the authors, “This
diversity is critical to the ability of the CAS to function because diversity is a source of novelty
and adaptability. If all of the agents were the same, and all processed information in the same
way, there would be no potential for change and/or growth. Agents have different information
about the system and none understand the system in its entirety (Casti, 1997).”
While diversity can be the source of innovation and change, it can also be the source of
frustration. For example, a marketing or fundraising department within a human services
organization may try to portray the agency to donors and the community in ways that direct
program staff experience very differently. Marketing focuses on “the message” and “positioning
the organization,” while program staff understand it as the individual client’s success that
demonstrates the overall success of the organization.
Agents interact with their environment and adjust their behavior based on the information
they receive. Agents act and react to other agents closest to them and no one person really knows
or understands all that is going on within the entire system (R. A. Anderson & McDaniel, 2000).
The very basic governance structure of nonprofits has key connections and relationships that are
complex.
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In his 1989 book, Governing Boards, Cyril O. Houle introduces the concept of a tripartite
system of governance for a wide variety of organizations, including nonprofit human services
organizations (Houle, 1989). The three parts are the board, the chief executive and the staff.
Houle says that the staff does the work of the nonprofit organization; they help the people who
move through a human service organization. The executive gives the staff direction and focus,
plans the future, and monitors the continuing operations of the organization. The board has been
given the power and authority by society to “control and foster the institution (Houle, 1989).”
According to Houle,
The three parts of the system, despite their structural and personal differences,
must be meshed together to achieve this objective (sense of purpose). They are
not three separate entities collaborating with one another; they are three parts of
an integrated whole, and that whole would not exist if it did not have a reason
for being (Houle, 1989 p. 5-6).
The dynamics of this tripartite relationship are complex, yet a lot of research has been
done that is beginning to focus on the relationships between the board and the CEO. Ostrower
and Stone (2004) discuss the relationship between the chief executive and the board. The two
models commonly describing the relationship between board and chief executive, one of
partnership the other of the board with hierarchical power, are both inadequate. They build the
case that dominance between the CEO and board constantly shifts depending on a host of
reasons and that governance is more than the role of the board. Governance includes activities of
the executive, staff, individual and small groups of board members.
One of the studies Ostrower and Stone report on is one completed by Murray and others
who looked at 400 Canadian health and human service nonprofits (Murray, Bradshaw, &
Wolpin, 1992). They identify five dominant patterns of board governance including, CEO
dominated boards, chair-dominated boards, fragmented power board, power-sharing board, and
powerless board. The power-sharing board is a “pattern where power is widely dispersed but
joined together by ideological consensus (Ostrower & Stone, 2004).”
Tsui, Cheung and Gellis (2004) also look at the board-CEO relationship. They first ask
the question, who has power, the board or the CEO? Both types of situations occur. Some boards
exert their power by micromanaging their CEO. In other situations the board may simply “rubber
stamp” the requests of the CEO. According to the authors, the notion of partnership is too
idealistic. They present an optimal model based on the concepts of the two-dimensional
coordinate and the indifference curve from economics, and suggest that the “balance of power
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between the board and the executive should be aimed at improving organizational effectiveness,
and that participation and ownership on the part of both parties, the board and the executive, are
the key to organizational effectiveness (Tsui, Cheung, & Gellis, 2004 p. 177).”
Emergence
The second characteristic of CASs is that their development is emergent. CASs show
emergent properties that lead to self-organizing because of the interaction of the individual
elements (R. A. Anderson & McDaniel, 2000; Mitleton-Kelly, 2003; Morel & Ramanujam,
1999). Complex systems create and exhibit patterns based on the collective behavior of the
system components. According to Anderson and McDaniel, “CASs exhibit the property of
synergy; the whole is greater than the sum of its parts and the system is self-reproducing or
autopoietic in nature. This means that order emerges without the need for a system of
hierarchical control. The organization of a CAS emerges as a result of interaction between
various elements of the system; the CAS is self-organizing (2000 p. 86-87).”
Klijn indicates that emergence can occur in two ways (Klijn, 2008). It can be spontaneous
or, as Klijn emphasizes, the self-organizing can occur through a self-referencing process
whereby there are deeper structures within a system that are not apparent until the observable
structures of the system breaks down. These deeper structures enable self-organizing.
A perfect example of the self-referential emergence of a new system is the development
of local AIDS Services Organizations. In the mid-80s, Gay Related Immune Deficiency
rampantly killed gay men in large metropolitan areas. Mainstream health care providers and
other human service organizations would not help these men who were dieing. The gay
community organized itself to begin taking care of those who were falling sick to this mysterious
illness. Friends and loved ones took care of each other. Over time these informal networks
organized into small nonprofit human service organizations. Many of these networks became
governing board members of the local AIDS services organization. These new boards were able
to coalesce and generate revenue to provide supportive services to friends who needed care
during the end stages of life. In the early 1990’s research identified the viral underpinnings of
what caused AIDS, and as resources became available, AIDS Services Organizations were
awarded government contracts to provide services. With the advent of protease inhibitors, being
HIV+ or having AIDS did not automatically mean death; instead individuals managed their HIV
like other chronic illnesses. This forced AIDS Services Organizations to change yet again. Now
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AIDS Services Organizations interact with the mainstream health care system, clinical trial units,
transportation systems, local department of social services and other human services throughout
a community in providing services to those living with HIV/AIDS.
Miller-Millesen (2003) provides a theory-based typology for how board behavior
emerges. She attempts to begin filling the gap in the discussion of how boards impact the
organization and actually begins to explain board behavior. She weaves together agency theory,
resource dependency theory, and institutional theory to explain both organizational factors and
environmental factors, and their affect on board behavior. She provides a great example of how a
board may undergo strategic planning for several different reasons, each of which can be
explained from a different theoretical perspective. A board might do strategic planning because
there are control issues (agency theory), or because there are concerns about the organization’s
resources (resource dependency theory), or because funders are requiring a strategic planning
session (institutional theory). All of these are examples of the underlying structures at play when
board members (agents) interact. The resulting strategic plan becomes an instrument that is much
more than the sum of each agent’s initial ideas.
Uncertainty and Unpredictability
Anderson and McDaniel (2000) help us to understand the third and final characteristic of
CASs, which is that system trajectory is simply not known. As agents change, the nature and
pattern of their interactions change. As interactions change and as time passes the outputs of the
system change.
Klijn (2008) reminds us that CASs are dynamic and nonlinear. One single change in a
factor does not result in an equal response from another factor, instead the interconnectedness
and interdependency of characteristics within the system create varying responses to the initial
change in a particular factor. Furthermore, CASs are not characterized by stability or stable
equilibrium, nor are they simply chaotic. Instead through mechanisms of positive and negative
feedback loops, the CAS remains in a state of bounded instability.
Systems are not only connected internally, but there are relationships among multiple
systems. Co-evolution can be described as “the evolution of one domain or entity (that) is
partially dependent on the evolution of other related domains or entities or that one domain or
entity changes in the context of the other(s) (Mitleton-Kelly, 2003, p. 7). The concept of coevolution makes predicting the future course of the system nearly impossible. There was no way
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of knowing the impact of protease inhibitors in the course of HIV/AIDS treatment. Let alone, the
synergistic effect they would have when coupled with antiretrovirals. As people began living
longer this changed the way local AID Services Organizations interacted and worked with other
systems.
Within nonprofit human service agencies is the change that occurs when the Board
Chair’s term is completed and a new leader replaces the former Chair. There is no way to predict
the changing nature of the board when new board members rotate on and when others rotate off
at the end of their term. What impact does a new CEO have on the board and the organization?
Changes within the system simply require different responses from different agents and that
change results in unpredictability and uncertainty. In addition, Carver (1990) reminds us that the
board is more than arms length away from management and the only time a board behaves, as an
entire board, is at its meeting. In most instances, boards meet no more frequently than once each
month.
Of course, external factors can have an uncertain result on organizations. What happens
when a funder, who has continuously provided 10% of the organization’s budget, cuts the
funding to the organization? How do these situations impact the interactions and relationships on
the board? How does the board or organization re-organize itself? What type, if any, practices
emerge?
Complex adaptive systems (CASs) have agents that are interconnected. They selforganize in ways that lead to emergent structures and outputs. They are uncertain and
unpredictable as a result of their nonlinear dynamics. Nonprofit organizations exhibit many of
these same characteristics. The next section provides examples from a research project currently
underway at NCSU. These examples demonstrate the characteristics of complex adaptive
systems.
Examples from the Nonprofit Sector
NCSU has a small research team looking at the overall communication patterns of
boards. Two organizations were followed during 2007 and two more are being worked with
during 2008. Critical documents from all organizations have been obtained. These documents
included program performance reports, by-laws, annual budgets, audits, 990s, etc. The board
meetings of all organizations have been observed. Extensive notes and transcripts of the
meetings have been reviewed for this section. In addition, board members from three of the four
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agencies have been interviewed. Those interviews have been transcribed. Using serial coding, I
have been able to code instances of board behavior exemplifying the characteristics of CASs.
By way of introducing the organizations, case 1 is an organization that provides meals to
senior citizens in order to maintain independence in their home. Its annual budget is nearly $2.2
million dollars with 11 full time staff and 13 part-time staff members. They have a volunteer
pool of 2,200, with 150 delivering meals to senior citizens each day. Their board of directors
meets once a month and there are 21 members. In calendar year 2006, they delivered 337,614
meals to senior citizens.
Case 2 is an organization that works with individuals who are both elderly and visually
impaired by having volunteer readers provide radio listeners with access to printed material. Its
annual budget is $287,000 with a staff of two people. They have a volunteer pool of just over
150 volunteers. Their board of directors meets quarterly and there are 16 members. In calendar
year 2006, they had nearly 15,000 listeners.
Case 3 is an organization designed to improve the lives of people with mental illness and
their families. It is a membership organization with 236 current members. There is no staff.
There annual budget is around $60,000. The organization has contracts with two consultants.
One works as a volunteer coordinator, while the other focuses on special fundraising events.
Case 4 is an organization whose focus is on the basic needs of women. The agency
provides crisis oriented services, supportive services and housing for women, and when
applicable their families, who are homeless. They currently have 8 board members, a staff of 10
and a budget of around $580,000.
Like many boards, case 1 has a committee structure. However, like any living system, the
committee structure may or may not function as we would ideally want it to for a variety of
reasons. One of the organization’s board members says,
Our finance committee I think has met very, very well and it really accomplishes
its goals of reviewing the financial statements every month and proposing the
budget for the board and all and then we’ve had some other committees that, this
year, have just not done a good job of meeting. They didn’t have, I don’t know,
maybe they didn’t have good goals given to them. In one instance the chairman
of the committee quit, resigned and there was a void there and the person that
was asked to really fill some of it had some health issues about that time so that
committee just hasn’t been very functional. Other committees have been more
functional. Now with our staff on board there’s less need for some of those
committees to meet cause the staff is doing more of those functions for example
in the fundraising area and all.
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This is a good example of the complex relationships between the board members, the
committees they have and the staff who are part of the organization. Case 2 has similar complex
relationships. When asked about the differing roles board members take in the board meetings,
this board member responds,
So I think that what I find interesting and actually kind of a relief is that those
roles change depending on the meeting, depending on the personalities involved
you will see in terms of the peacemaker role various individuals will take that on
themselves. We’ve got two or three that will kind of switch off with regard to
the joker role to kind of lessen the tension if it gets too high. We’ve got a
number of people, two or three, that are in essence the devil’s advocates. We
have a couple who are the contentious ones that may say what other people are
thinking but are hesitant to state because they don’t want to look like they’re
throwing a pole in the water. So yeah all of those roles are there and they change
depending on the subject matter, depending on the personalities, depending on
who’s at the meeting…
It’s important to remember that best practices for a board of directors require term limits
of its members. This is important to ensure that community trust is constantly maintained by this
group of individuals. The board member above recognizes that roles change depending on whose
on the board and what subjects are discussed. Furthermore, when looking at the attendance of
any board meeting, there are always some board members missing and usually they are different
board members for different reasons. Cyril Houle, once again reminds us, “A board is made up
of individuals, each with a distinctive personality, ideas, prejudices, and habits. Each has reasons
for being on the board and ideas about appropriate relationships to it and to fellow board
members (Houle, 1989 p. 9).” He also indicates,
The board provides to the executive and staff a part of the whole community that
they can readily consult and that can help them reach wise decisions…To
achieve these values, individual personalities must be blended together into a
functioning group with its own spirit, tone, and distinctive quality. The board
must be able to either achieve consensus or to define a majority opinion that
reflects the wishes of as many of its members as possible (Houle, 1989 p. 8).
One more example from case 2 discusses the complex interactions of the board of
directors.
What I meant by “loose” is that the structure of the Board is loose. That may not
be a good term but the thing I meant by that is it’s sort of fractured, it’s sort of
splintered in terms of any kind of composite view of what we’re doing. There
are lots of different ideas, which is good but there’s not much effort to solidify
those ideas, to capsulize them in any fashion that I think would be
profitable…The Board is not, I mean I know all the members on the Board now,
I know who they are, etc., but in terms of really knowing the people, we
don’t…I’m not suggesting that we ought to be family or anything like that, but
in terms of any kind of socialization, any kind of effort to have us meet in less
formal fashion, there’s not time before, there’s not time after to do that at the
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Board meetings, so I mean there might be other times that we could do some
gatherings, some social gatherings that would allow the people to talk more
freely about, not that they’re restricted in doing it at the Board meetings, it’s not
time to talk more freely about where they’re coming from and what their real
feelings are about things, one-on-one, two-on-two, three-on-three, you know,
whatever in a kind of way to solidify the Board or cement it in a fashion that
would perhaps result in a more holistic approach to things. So that’s what I
mean by looseness, and the tightening of it would be what I just suggested.
Emergence
The case studies for this research also provide some specific examples of how nonprofit
human service organizations and their boards change over time. For example a board member
from case 1 describes the organization as follows:
I think that originally it was a, when I first became associated with it, it was
pretty much run by the executive director at the time and it wasn’t, it was run
like a, I’ve got to think of the right words to use here, a very small agency, sort
of a family-oriented agency and now especially in the last year it has changed
tremendously. It had evolved. Not just in the last year but it’s much more
professionally run. We have a much more professional staff now, more focused
staff, longer term roles.
Case 2 has had a similar evolution. The following example talks about how the board of
directors has changed in how and why it is functioning. Notice how the board itself tries to selforganize itself, just like CASs.
The board meetings have really evolved. When I first got on the board there
were a number; well I would say the majority of people on the board were either
retired or who had been with the organization for a number of years, very
comfortable with each other. It was kind of this is the way we’ve always done
things and don’t see much sense in changing it unless there’s an overt reason
to…They met. They talked about things. They talked about things and they
talked about things…We created some standing committees in terms of
fundraising, in terms of public relations, in terms of maintenance and that kind
of thing with regard to the equipment and really tried to focus more on
expanding the outreach of the organization…We have formalized the
fundraising and started some, the fundraisers prior to that time were kind of
catch as catch can…we started really looking at the corporate community and
finding people that were professionals in their job that had abilities to do things
like fundraising, that had connections with different kinds of potential target
audiences for us which is everything from eye care to the radio stations and
those kinds of things…I think we’ve been able to formalize and professionalize
the board in both their understanding of what they’re responsibilities both fiscal
and administration of the organization and even more so I think to give them a
feeling that they’re doing something that makes a difference for the
organization.
Another board member from case 2, has a different perspective, but notice his ability to discuss
and catalyze the change in this living system.
About a year and a half, I guess a year ago, I’d been on it maybe a year and a
half, and I just simply raised the question one day. I said, “You know, I’ve been
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here “X” number of meetings, I don’t mean this to be abrasive or terribly
critical, but we’re talking about the same things and we’re saying the same
things that we did the first meeting I came to, and it strikes me that we need to
begin to look at some new ways to approach things, or we’re either going to deal
with these topics or we’re not going to deal with them, we need to dispense with
them or we need to say what we’re going to do about them and quit rehashing
the same things over and over.” And they all seemed to agree that this was
happening and we ought to do some things about it, and I think some things we
have.
Uncertainty and unpredictability
A clear example of the uncertainty and unpredictability within nonprofit human service
agencies is the change that occurs when the Board Chair’s term is completed and a new leader
replaces the former chair. Board interviews from case 3 provide an excellent example of what
happens when a board chair changes.
A: Well, you know, there's an agenda, set by the president. And it was much
looser before, when M was president. People came together. I didn't know it
very well during that time. But we came together, you'd talk about, I suppose,
what's coming in terms of meetings. There wasn't all that much activity. I'm
trying to think of the year when A came in. A retired. A and G had retired. And
A came in and just immediately took over. She transformed everything. She
started off with having huge thing -- meeting -- at the county, that -- out at Carya
Drive, the county meeting there. She invited -- she had all of the state -- a
number of the state people come in and talk. And she had agendas. There were
work groups, discussion groups, all that jazz. Just a -- and the county
participated in it. A lot of sound and fury. I don't know what came out of it.
Q: So what happens -A: But then she came in and she changed the style. She announced, "I've been a
CEO, and this will be organized." And she came in, then, with a full agenda and
with specific items. And that -- F has been looser. But F has -- a lot of things
have changed. For example, the support groups are going now. All this can be so
accidental. G with the support groups, and he really organizes them well. I
started the CIT, and that became a big thing. Now, let's see. Then A always had
something. She was calling a forum, calling various things. There was much,
much more going on when she started. And then other people -- we just
happened to have more people coming forward. And the hospital, of course, has
been a big concern.
Q: Right. So now that K is the president, what does the typical meeting
structure look like? How are -- the flow?
A: Well, F was in before K. And F had an orderly meeting, with an agenda,
what was going to be discussed. It was a bit looser. And his priorities, he wanted
to get the support groups going. And then people brought up things. And with K,
I don't know, I really have nothing to compare with. She comes in, again, with
an agenda, and the meetings go well. They've all been good presidents.
In case 1, the Executive Director joined the organization about four months prior to the
beginning of this research. Interviews from case 1, discussed some of the changes that occurred
in the organization as a result of this new Executive Director and challenges of a new agent in
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the system. In fact, the Executive Director recounts the challenges of learning and understanding
how to work within this CAS.
One of the key roles I think that the Executive Director plays is to work with
board, to help the board and that was one of the key functions that I did.
Obviously, there’s a formal process when you do have the board meetings. And
I think that the volunteers are successful when you do a lot of foot work up front
and that you match the volunteer with the right volunteer opportunity. And so
that, to me, is the hard work, getting that match. And if you do that then, you
know, the coaching and recognition and retention, I mean, all won’t fall off the
roof. And so, since I’ve been here, I mean, you know, we’ve tried to get people
matched up with things that they’re really trusted in, that they enjoyed. We have
small group meetings, you know. I see some board members come on an
individual basis to deliver meals. I’ll see them outside of work, I mean,
unplanned. We’ve gone through a process too. When I came, I was brand new. I
didn’t have anybody. So there was a big learning process for me to learn how
everybody fit into the organization, to learn idiosyncrasies, to learn how people
operated, their leadership styles and that sort of thing. I think, I mean, so I think
we’re beyond that now and working on building some really good productive
relationships.
From a Board member’s perspective of having replaced two executive directors from
case 1, you can see the different roles the board member had to take based on the changes within
the system.
VK was the original executive director who started it in, I want to say
early ‘70s or something, and ran it for 20 to 25 years, and she was a
very strong executive director, you know. She left and then KA took
over for three or four years, she had been our developmental - no, our
volunteer coordinator, and then she left and we got AW. But I think
when VK left I had been on the board maybe one year, maybe one or
two, and was going to be chairman of the finance committee or
something like that, and scared, like I don’t think I understand our
business very well. And so I sat down with VK for about an hour one
day, and I had a lot of questions and sort of went through them all with
her, and that helped me feel comfortable enough that in her absence I
wasn’t just lost. 'Cause I knew that KA, who was taking her place, did
not understand that stuff that well, her background had been running
the volunteer network, was not knowledgeable about how we got
money or the budget, never had any experience with budget and so
forth. That’s probably when I really worked harder at trying to
understand it than I had been, and I still don’t understand parts of it.
Changes within the system simply require different responses from different agents and
that change results in unpredictability and uncertainty. Of course, external factors can have an
uncertain result on organizations. Right now, because of changes in radio and computer
technology, case 2 is being challenged to contemplate its future. According to one board
member,
We'd gone to the International Association of Audio Information Services
(IAAIS) Conference in Mississippi. They had sent me, along with the Executive
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Director, there specifically to look at the future of high definition (HD) radio.
And I went in knowing peripherally, I'm not a technological person, but it was
my job to then translate back to the Board, what the meaning of these new
technological changes are going to have in terms of how we're going to deliver
our service. Is it going to have a financial impact? What does it mean? And to
translate that, and was requested to make a report, written. Well, I hadn't really
had time to generate it all in a written format and deliver it until the day of the
Board Meeting, but it created some red alerts in my mind because there are
things that happened with the implementation of HD radio with our partner
station NPR, or with WUNC that may affect, very directly, our ability to
continue as an entity. And it was enough of a red flag in my mind, because there
was some information that we didn't know. In other words, we didn't know what
WUNC's plans were, what their timetable was on it? Can we help control our
own destiny, because if they go to HD full time, or conditional access, it would
impact whether there's a place within their spectrum, their bit-width for us to
even have a home. So there's a serious challenge to our ability to exist.
Anderson and McDaniel (2000) remind us that just because CASs are unpredictable does
not mean they are random. These organizations have similar issues in terms of making sure they
have adequate funding for their programs, challenges with the growing demand for their
services, and similar structures to respond to these challenges. One would think that this is why a
set of “best practices” on how the organizations move forward would suffice. Yet, complexity
science warns us that you have to consider the types of board members, their strengths and
weaknesses, and the nature of their interactions in order to understand the whole system and
make organizational change. The nonprofit literature even has strategies on who should be on the
board and how to recruit the “right” board members, but again, each agency is different and the
“recipe” for the “right” board members may not work between various agencies or systems. This
dynamic is what makes it challenging for researchers to rely on cross-sectional survey data and
determine nonprofit board and organizational effectiveness.
These are simple examples of how the four agencies being studied reflect the
characteristics of complex adaptive systems. These results are not meant to be generalized to all
nonprofit human service organizations. However, the descriptions of complex adaptive systems
coupled with these examples enables researchers to look at nonprofit organizations from a
different perspective. It creates new possibilities for theoretical discussions of the effectiveness
of nonprofit boards of directors and their organizations. It also suggests a rationale for using
different research methodologies; methodologies that encourage looking at relationships and
patterns of the people involved in a nonprofit human services organization. The final section
presents some of these new ideas and approaches.
Is it really too complex to measure nonprofit board and organizational effectiveness?
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When looking through the lens of complexity science, we can validate many of the
reasons behind the no “one size fits all” model for boards of directors. At the same time, the
complex adaptive systems approach enables us to look from a new perspective. For example,
when looking at the self-organizing and emerging phase of a CAS, there are some specific
research questions that emerge when we explore the control parameters of the system. Ralph
Stacey in his book, Complexity and Creativity in Organizations (1996), describes control
parameters; the external influences that impact the behavior of the agents. For example, water on
the stove is in a state of equilibrium, yet the molecules are independent of each other and
randomly moving throughout the confines of the pan on the stove. The application of heat, the
control parameter, begins to stir the molecules. Some rise as they are heated, others settle to the
bottom pan creating a circular pattern. At the critical temperature rises, the molecules begin to go
in a general direction, yet each molecule is unpredictable. At some point the heat creates a
situation wherein the liquid moves into a state of chaos – evaporation. Self-organizing occurs at
certain critical values of a system’s control parameters. Emergence is the new pattern created by
the systems self-organizing and it can not be explained by the actions of individual agents.
CASs are driven by three system parameters: the rate of information flow through the
system, the richness of connectivity between agents in the system, and the level of diversity
within and between the schemas of the agents (R. D. Stacey, 1996). Organizational scholars are
beginning to look at these parameters and their influence on organizational outputs. Anderson,
Issel and McDaniel (2003) explore the impact of these parameters on nursing home outcomes.
After framing nursing homes as CASs, they suggest that management practices which influence
the control parameters of self-organizing produce better resident outcomes in a nursing home.
Applying the three control parameters of CASs to nonprofits, including a nonprofit’s
system of governance, can serve as a new approach to examining both organizational and board
effectiveness. If we go back to the specific role of the board which is to provide oversight for the
resources, both human and financial, for the organization, and that there is a clear strategic
direction for the organization to achieve its current mission, then regardless of the constituency,
it is the board of directors that should be most interested in both its own effectiveness and the
organization’s effectiveness. However, the current challenge with nonprofit boards was captured
in a recent book by Chait, Ryan and Taylor (2005). In the introductory chapters of “Governance
as Leadership: Reframing the Work of Nonprofit Boards,” the authors articulate the fact that
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over the course of the last several years, CEOs are actually leading and governing the
organization more than the board of directors. This leaves the board not knowing their roles and
responsibilities and wondering what work they can do to add value to the organization. Basic
information about the board’s roles and responsibilities is a critical element of a board’s
effectiveness.
Recently, work by nonprofit scholars has verified the very importance of information
about roles and responsibilities. Brown (2007) recently reported that board orientation practices
have a positive relationship with board competency as reflected by the 1,051 board members and
CEOs who were surveyed. While there is evidence that this type of orientation occurs, there was
no assessment of the type of information shared. Wright and Millesen (2008) sought to answer
two questions: do board members understand their roles, and how does understanding their roles
effect their involvement? They argued and successfully demonstrated that board training and
development and board performance feedback improves the board’s understanding of its roles.
Unfortunately, they discovered from their sample that fewer than half of the board members and
CEOs surveyed agreed that an orientation exists, and only about a quarter believe that board
members receive training on how to perform their responsibilities. According to the authors,
“…the lack of consistent board training and performance feedback strongly suggests that at least
some of this disagreement (between the CEO and board members perception of training,
performance feedback and role understanding) may be because of the lack of role-related
communication and information (Wright & Millesen, 2008, p. 331). These examples clearly
indicate how information, particularly with regard to the information received about the boards
own roles and responsibilities, serves as a control parameter for the complex governing system.
It is also quite possible to begin examining the long list of prescriptive board and
management practices and determine how they might serve as the governance system control
parameters. Researchers can then examine the difference between practices associated with
changes in the systems parameters and other prescriptive board or management practices. It also
begins to suggest different research questions that lead to answers about board effectiveness,
including:

What information is important to making effective board governance decisions?

How does information get shared within board meetings and how does it lead to effective
governance decisions?
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
How do board chairs and CEO’s, as leaders of the organization, increase the board
members’ connectivity?

What board recruitment strategies increase the diversity of thinking and experiences on
the board?
In addition to research questions that are connected to viewing nonprofit organizations
through the lens of complexity science, we are beginning to see nonprofit scholars thinking about
new governance models that are consistent with a complexity science point of view. Chait, Ryan
and Taylor (2005) propose a three pronged approach to board governance: financial, strategic
and generative governance. They argue that the newest element, generative governance, is
essential for nonprofit boards of directors. The notion of a generative process of governance is
consistent with working in complex adaptive systems. This process occurs when board members
notice cues and clues from the information provided by other board members and other
stakeholders (information and interactivity among agents). Board members choose differing
frames to make sense of the organization (schema or mental models agents bring to the table).
Board members must think retrospectively, look at the past as a way to think about the strategies
for the future (self referential emergence). Even though the authors do not mention complexity
science or complex adaptive systems, they are beginning to look at nonprofit governance from
that perspective. On the first page of their book, they say, “Organizations discover “emergent”
strategies as well as design “deliberate” or planned strategies. Strategies in effect, sneak up on
organizations…effective governance rests heavily on a board’s capacity for retrospective “sensemaking”—acting and then thinking, making sense of past events to produce new meaning
(Richarad P. Chait, Ryan, & Taylor, 2005, p. 1).
Finally, when looking at nonprofits as complex adaptive systems, it is essential to
remember that we are not looking at specific objects to study, but rather the patterns and
relationships among agents. Furthermore, the system is not at a point of balanced stability and
can be quite far from equilibrium (Reuben R. McDaniel & Driebe, 2001). Scholars have also
argued that we have to look at the context of boards in order to really understand effectiveness
(Herman & Renz, 2004; Ostrower & Stone, 2004). Because of this it may be essential to step
away for a moment from quantitative, cross sectional explanations of board and organizational
effectiveness. Instead, looking at the whole system and context may require us to adopt
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qualitative methods in order to gain an understanding of the context of board behavior and
subsequent effectiveness.
Case studies are often thought of as research methods you carry out at the beginning of
theory development in order to learn about a given phenomena. However, others are recognizing
that case studies contribute to learning and understanding regardless of the level of current
knowledge development (R. A. Anderson, Crabtree, Steele, & McDaniel, 2005). Case studies
viewing organizations through the lens of complexity science provide some of the most valuable
means by which we can gain an understanding of organizations as complex adaptive systems. It
is a valuable tool when studying CASs. According to Anderson and her colleagues, “Complexity
theory is a useful companion to case study, because it simultaneously fosters an attitude of
attention to emerging patterns, dynamism, and comprehensiveness while focusing attention on
defined system properties (p. 681).”
Continuing to use case studies is crucial for studying the whole system, and in this
context this refers to the nonprofit organization’s system of governance. Newtonian science has
encouraged us to “cut up” a system, look at its parts and once we understand the parts, put the
system back together again, where conclusions can be made about the whole (R. A. Anderson,
Crabtree, Steele, & McDaniel, 2005). Yet, when you try to apply the knowledge gained from the
research into the practical setting, the recommendations simply do not work because of the
unique players making up the board and staff, the differing organizational missions, and diverse
constituencies. On the other hand, complexity theory suggests that studying the whole system
enables us to study the agents, their interconnections, how self-organizing occurs, the emergence
of the unique systems properties, and how this open system changes both the organization and
it’s environment (R. A. Anderson, Crabtree, Steele, & McDaniel, 2005). These authors give good
suggestions about how to extend the case study design, using complexity science, in order to get
more information about the organization. The list includes:
1.
2.
3.
4.
5.
6.
7.
Watching for and understanding the interdependencies found within
interactions. Specifically, watching for situations where we see discrepancies or
consistencies between ideas and actions.
Looking for the dimensions within relationships.
Focus on nonlinearity by looking for small events that lead to large outcomes or
large events that have small outcomes.
Look for the unexpected and examine these events in depth.
Pay attention to sense-making as a process.
Watch for and describe self-organizing and emerging events.
Describe patterns that can be seen at all levels of the case, notice if they change,
and notice when they are successful.
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8.
9.
Shift the foreground and background ie., focusing on the connecting lines and
not the boxes in an organizational chart.
Note the system’s history (R. A. Anderson, Crabtree, Steele, & McDaniel, 2005,
pp. 673-680).
Conclusion
This paper was designed to begin thinking about board effectiveness in a different way.
Thinking of a nonprofit organization, particularly its system of governance, as a complex
adaptive system, presents a new opportunity for nonprofit scholars. Nonprofit boards are made
up of members who each bring mental models of how a board or organization should govern.
Those board members interact and, as Chait, Ryan and Taylor (2005) indicate, strategies are
either deliberate or they emerge. This emergence is controlled by three parameters, the amount of
information coming into the governance system, the connectivity of the board, and the diversity
of the board. The lens of complexity science enables us to look at new research opportunities,
and encourages us to use different methods to design and analyze data about nonprofit
organizations and their effectiveness. The hope is that this framework stimulates new ideas and
new ways of thinking that promote ongoing scholarship around determining what makes a board
of directors effective.
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Notes
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